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10 little known – or often ignored – facts about gas prices and ExxonMobil’s earnings

It’s quarterly earnings season for many energy companies, which means it’s also the season to be alert to those who will seek to misinform or mischaracterize our earnings for their own political purposes.

So I thought I’d share with you what I think are some of the little known – or often ignored – facts about gas prices, the oil and gas industry, and ExxonMobil in particular.

Often ignored fact: Global markets ultimately drive gasoline prices.

  • Gasoline prices are largely determined by crude oil prices. Both gasoline and crude oil prices have fallen since reaching recent highs in late April and early May. The average U.S. regular gasoline retail price for the week of Oct. 17 was about 50 cents less than the high of $3.97 reached May 9. Not surprisingly, the price of crude oil also fell during this period, down about $25 from a high of $113.39 on April 29 to $88.34 the week of Oct. 18.

 

  • Crude oil prices are largely determined by global markets. As I’ve said before, crude oil is one of a number of globally traded commodities like gold, corn, coffee and many others. The prices of such commodities are set in worldwide markets comprised of millions of buyers and sellers reacting to economic fundamentals for each commodity.

 

  • Global markets are determined by economic fundamentals including supply, demand, valuation of the dollar and more. A recent New York Times article covers many of the market fundamentals accounting for the dip in crude oil (and therefore gasoline) prices: declining demand worldwide due in part to slow economic growth; a stronger dollar due in part to a weaker Euro as a result of the European financial crisis; and reduced uncertainty after the spring uprisings in the Middle East.

Little known fact: ExxonMobil actually buys more crude oil than it produces. While we produce more than 2 million barrels of crude oil a day worldwide, our global refining network processes more than 5 million barrels each day. To make up the difference, we need to purchase crude oil on an ongoing basis for our refining system. When we buy the crude, we pay the prevailing market rate – in 2010, we spent about $198 billion for crude oil and product purchases, which we used to make refined products such as gasoline. So when the price of crude oil rises, ExxonMobil is paying more to get the crude we need to keep producing the fuel products that our customers need.

Often ignored fact: ExxonMobil makes pennies per gallon on gasoline, diesel and petroleum products it refines and sells in the United States. In the first and second quarters of this year, ExxonMobil made 7 cents and 8 cents, respectively, on the gasoline, diesel and other petroleum products it refined and sold in the United States. Comparatively, local, state and federal gasoline taxes average nearly 49 cents per gallon nationally, with a high of 67 cents in states such as California and New York.

 

 

 

 

Often ignored fact: The vast majority of ExxonMobil’s earnings are made outside the United States. From 2009 through the first half of 2011, more than 75 percent of ExxonMobil’s operating earnings came from projects outside the United States. Yet the majority of our workforce – about 40 percent – is based in the United States, and the vast majority of our shareholders are in the United States.

 

 

Little known fact: ExxonMobil controls less than 1 percent of the world’s oil reserves. ExxonMobil may be the world’s largest publicly traded oil company, but we control a relatively small amount of the world’s oil reserves. When it comes to production of energy, our global numbers are still very small – ExxonMobil accounts for about 2 percent of total global energy production; about 3 percent of global liquids production; and about 9 percent of global gasoline production.

 

 

 

 

 

Often ignored fact: Collectively, the companies commonly referred to as “Big Oil” plus other investor-owned companies control only about 6 percent of world oil reserves. More than three-quarters of the world’s oil reserves are controlled by national oil companies in countries where many of the supplies exist. This is a complete reversal of the situation from 40 years ago, when investor-owned companies did control the majority of the world’s oil reserves.

 

Little known fact: The oil and gas industry’s overall earnings per dollar of sales are significantly less than many other industries. In the second quarter of 2011, the oil and gas industry made 9.5 cents per dollar, which is below the average for all manufacturing and significantly less than industries such as computers and pharmaceuticals, which both make more than 22 cents on every dollar.

 

 

Often ignored fact: ExxonMobil’s U.S. tax bill is often greater than its U.S. operating earnings. In the first half of this year, ExxonMobil incurred $6.7 billion in tax expenses in the U.S. on $5.5 billion in operating earnings in the U.S. Over the past five years (2006-2010), our total U.S tax expense was almost $59 billion, which is $18 billion more than the company’s operating earnings in the U.S. during the same period.

 

 

 

Little known fact: ExxonMobil regularly invests more on energy projects in the U.S. than it earns in the U.S. From 2009 to the second quarter of 2011, ExxonMobil’s capital and exploration expenditures in the United States totaled about $19.8 billion dollars – $3.4 billion more than our U.S. operating earnings during that period. Such projects support jobs and economic growth around the country because they create demand for raw materials, supplies, contract work and countless other services that help put other businesses to work.

 

Often ignored fact: The people who benefit from “Big Oil’s” earnings are hardworking Americans, from teachers to police officers to public sector workers. From 2005 to 2010, ExxonMobil distributed $177 billion to its shareholders, including public sector and teacher retirement funds in states such as New York, California, Texas, Ohio, Michigan and more. Why do individual investors, pension funds, mutual funds, IRAs and others continue investing in the oil and gas industry? A recent study of public pension plans in four states found that from 2005 to 2009 (despite a deep recession), “oil and natural gas investments significantly out-performed the rest of the portfolios of the statewide public employee pension systems,” as the chart below shows. In fact, the public pension funds’ returns on oil and natural gas investments were 41 percent to 49 percent over a five-year period, compared to returns of 10 percent to 17 percent for the same funds’ non-oil and natural gas investments.


92 Comments

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  1. Don Hatch says:

    Very interesting and informative report. However, it doesn’t square with your recent reports stating $40,000,000,000 +- annual earnings. The higher oil prices rise, the more profits you earn – you just can’t help it, can you? How can you earn so much on the little profit margin you state?

    • steve bloomberg says:

      Well said, Don.

    • jason close says:

      Don, A large percentage of their earnings is from the 2 million barrels of oil they produce every day, which are sold at market price. That totals 730 million barrels a year. At (for easy calculations) $100 per barrel, that is 73 billion in revenue. Then when you add in the amount of fuel they sell, 5 million barrels a day x 365 days x .08 cents per gallon profit, you will find that the profit on their distribution is around 146 million per year. Add in their other revenue streams, and the profits are enormous.

    • John Shuey says:

      Math not your strong point Don?

      Simply put, 3% of 1,000 is 30, but 3% of 1500 is 45.

      The profit MARGIN can remain unchanged, or even decline, while still producing a higher gross and/or net PROFIT on a greater total dollar volume. (Whether that increased dollar volume is due to increased sales, a higher cost of goods sold, or the declining value of the dollar in world currency markets.)

      • Jay Audette says:

        The consumption of protroleum based products is relatively inelastic against it’s price. People still have to drive to work, plastics and lubricants companies still have to meet demands for their products, and power companies still have to feed their generating plants. This makes turning record profits during periods of record costs/prices at minimal margins possible. If I only make 8% margin, but the price of my product doubles, and demand only drops say, 25%, I’m still going to be making more than ever.

    • Edward Desmarest says:

      Perhaps you suggest Exxon Mobil stop paying the estimated 29,500,000,000 in Annual Dividends they pay to shareholders (including many public pension funds). Did you read that part of the article ?

    • Edward Desmarest says:

      We all should be concerned where the “Comparatively, local, state and federal gasoline taxes average nearly 49 cents per gallon nationally, with a high of 67 cents in states such as California and New York.” is going to, with are crumbling infrastructure. When you calculate the Revenue the various government entities receives. Remember, this calculation should be based on Annual Gasoline Consumption in the USA.

      • Randy Coff says:

        You do not work in the road industry I can tell. The problem is the last time a gas tax increase occurred was in 1993. Think about that, if you had no increase in pay in 18 years. The worst problem is that during the recession people carpooled more people got laid off and the U.S. drove less. The aveage miles in 2009 was about the same as 1999. The federal Government mandated higher milage for cars too. The higher milage cars will further rive down the amount of fuel sold. Look on the road today less SUV that get 8 miles to a gallon more cars that get around 30. each car burns a third less fuel. Your own gas tax has probably decreased a lot since 1993 and especially compared to your salary. You wonder why your roads are decaying? il is over a $100 a the asphalt is mae out of oil. In the 90′s the bitumenious material was around $3 a ton now it is $20. Asphalt in the state I worked went from $30 a ton to $80. You also need diesel to delivery the asphalt too. Tripke the delivery cost and in for higher wages etc. Your lucky your roads are not in further decay than they are most states DOT’s have did well with the limited funds. The DOT’s try new things that are cheaper to conserve cost. The DOT I used to work for, the accounts were worried about how they would… read more »

        …fund roads especially with the electric push for cars. I know more than one guy that traded a SUV in for a prius about a 5 times increase from a ford explorer. Go check the amount of fuel sold and the inflation rate for almost 20 years and figure out how much all that money for roads are wasted. The miles driven now in 2012 are the same as 2003 so your total gas tax is the same while automobile get 20% more miles per gallon. The state and federal gas tax from 2003 to 2012 fell by 20%. Plus there has been 23.4% inflation. That is almost 50% less money to build and maintain roads can you live with a 50% decrease in pay in 8 years? I have a brother who is a republican all he wants is to get private business to build toll roads then you would pay about 10 times more in tolls than gas tax

    • Michael O'Rourke says:

      Good for them. Good for America. Make more next year! Don’t listen to losers that say you make too much money. Better you then any Russian or Chinese company.

    • Debbie Beard says:

      reading comprehension. that is their over all earnings. which means the profit they made in the US as well as outside of the US ( where there are less regulations on how much they can charge). In the US they can only charge around 7 to 8 cents above the actual cost ( materials+production+taxes) to stay competitive and due to regulations. Overseas where ( if you paid actual attention) 75% of their business is they can and do charge more because they can.

      The other factor is if they earn say 25cents on every gallon sold ( 7% ish profit at 3.50 a gallon) and a typical car takes 20 gallons ( just a number so you can put it in persepective).. that is 5.00 a fil up. how many cars are there in the US? How many people drive more than one tank ( est. 20 gallons) a week? if you sell enough even at a penny profit you will make alot of money if it is something that alot of people use.

      on a side note, they also do diesel ( for long distance and short distance trucks) and how many are out there in the US.

    • Charles Jensen says:

      What does square with the $40B of PROFIT is discussed in my post at 4:10 CT.

      This line about only making “pennies per gallon” is known as “lying with facts”.

    • Charlie Kiley says:

      The chart shows “US earnings” and your $40 billion is refering to global earnings. And the reason you can make such high profits on low margins is because everyone uses crude products. The margins do not have to be high if it is a resource people have yet to prove they can live without.

  2. Will Holman says:

    Higher oil prices do not necessarily result in a higher profit margin. Profit and profit margins are two different things.

    • steve bloomberg says:

      So, how do you explain Exxon’s record profits last year?

      • Scott Broderson says:

        This is a reply to steve. Dotson. Pay attention. I am a simple old glass installer, but I’ve thought this through before. Let’s go back a few years. I won’t pretend I know the actual margins of these companies, but I will show you a quick example of how higher prices, and yet, lower demand, can equal higher profits.

        Let’s say it costs $1.00 to produce a gallon of gasoline, and it can be sold for $2.00. Your profits are now $1.00 (2-1).

        Now, let’s say gas prices skyrocket to $4.00. It may well cost $1.75 to $2.25 to produce a gallon of gasoline depending on transportation costs etc. Let’s pretend it costs $2.00.

        Now, when we sell a gallon of gasoline, we profit $2.00 per gallon (4-2). We used to profit $1.00 (2-1).

        So, even if demand drops 25%, because we are profiting double on the original gallon of gasoline, we will have at least a 50% or more increase in profit. However, gasoline consumption never drops 25%. It might drop 5 or 10%, but not 25%.

        So, by keeping the same 100% markup (aka a 50% margin…not to be associated with the 50% in the previous paragraph), we have nearly doubled our profits.

        But wait, there’s more. Do you really think that the cost of producing the oil doubled. Probably not. It probably only cost them $1.50 e.g. in the above example. Their labor costs remained the… read more »

        …same, health care etc. Only the acquisition cost of the raw product increased. And, if Exxon owns the same percentage of oil as always, their profits on their own oil are out of orbit…probably a 800% increase in profit.

        So, it would be easy to believe if the prices doubled, their profits could quadruple.

        This is not a true mathematical analysis, but I think it’s valid and reasonable for a good example.

        That’s how the good old boys do it. And…let’s not call for any new taxes on oil companies (like Obama-lama-ding-dong). You know who pays those taxes…us. The oil companies just add it to the cost of doing business, and we pay for it at the pump.

        And taxing big oil will not help. We know who pays that bill. Yes, all Americans pay that bill. And American that thinks differently, is not thinking very objectively.

        • Scott Broderson says:

          I made a typo in the last paragraph. It should read Any American that thinks…

          I was also a bit redundant by saying basically the same thing in the previous paragraph, but the thought is good. Forgive my quick CLICK on the Submit button. Respectfully, Scott

    • H Dotson says:

      That doesn’t really make sense to me. Higher prices decrease consumption, so in order to increase net profits, the profit margin must increase greatly.

      So while higher oil prices do not NECESSARILY result in higher profits in this case, near-record prices coincided with record profits. All the while we have over 10% unemployment in this country. Please explain.

      • Jay Audette says:

        Record prices come from global factors such as higher demand in foreign markets (eg: China) and reduced production due to political and environmental disruption (eg: hurricanes and the orderd shutdown because of the BP spill).

        There is a general misconception that a slight reduction in U.S. oil consumption means a global reduction in demand, which is not the case. Another misconception is the drop in demand relative to the the price of petroleum products. A doubling of price does not cause demand to drop by 50%. Thus, the margin does NOT have to increase greatly for there to be record profits. See my response to John Shuey (above) for an example.

        Also, people continue to complain about unemployment being over 10%. This is rediculous. Unemployment was just below 5% percent before the “crash” in 2008, and it was around 4% at it’s lowest in the early 2000s. Judging from this image ( http://en.wikipedia.org/wiki/File:US_Unemployment_1890-2009.gif ) unemployment has ranged from 5% to 10% for the last 4 decades. The last time unemployment peaked liek this was in the middle of Reagan’s FIRST TERM! Complain all you want about 10% unemployment, but we’ve been spoiled by low unemployment that hadn’t been seen since the sixties. Finally, don’t forget that 10% unemployment, still mean 90% EMPLOYMENT!

  3. Lowell Michalove says:

    THE big issue facing the planet is over-consumption of energy and over-population. All caring entities should be screaming for Americans to STOP the/our/your Energy WASTE ! American continues to waste over 70% of the energy it consumes. 100′s of millions of lights burn unnecessarily every day and night. Americans continue to overDRIVE, overHEAT, & overCOOL as if energy consumption does not matter.

    Lowell Michalove, PhD Energy Conservation Advocate
    lmmicha@gmail.com

    • Richard G says:

      You must be making this post on your typewriter then.

    • David James says:

      Lowell, there is no such thing as “over population.” If you gave each of the 6 billion people on the planet 9 square feet in which to stand then grouped them all together in a single location, they would fill an area a little smaller than the land area of Delaware. This would leave the rest of the planet completely unpopulated. Is the planet over populated? No. But Calcutta, Sao Paolo, and China certainly are.

      • Pete Previte says:

        9 square feet? What does it take to provide heat,food,water,clothing and an employment source for each of us. How many square feet does it take per year just to dispose of the average American’s garbage? How many square feet are mined and drilled to provide the things we use every day. How many square feet of land mass on this planet are uninhabitable? Pretty poor argument , bud! Do all the math and then get back to us.

    • Bruce Drotleff says:

      I’m 60 years old and I’ve been hearing this overpopulation vs. scarce resources argument since grade school. The population has increased astronomically in the intervening years while the quality of life has improved nearly as dramatically, except in areas under oppressive government. I’m tired of your chicken little whining. Time to look at real, untainted data and analyze it through the lens of reality, not some socialist’s utopian rose colored glasses.

  4. Michael zibensky says:

    Gee Exxon now I get it! Huge oil companies like Exxon-Mobil are our friends. Boy I sure wouldnt want to think how things would be without you guys!

    • Ken Barber says:

      You are absolutely correct: you certainly would NOT want to think about how things would be without ExxonMobile et. al.

      Because without them, we’d all be riding horses and bicycles. And ships and trains powered by steam.

      There would be no automobiles. No trucks delivering groceries to your supermarket. No city buses. No airliners.

      Most pharmaceuticals would be impossible to produce, and it would also be impossible to produce enough food to feed the world’s current population.

      And the computer on which you’re reading this would not exist.

      So without Exxon-Mobil et. al. we would be living in a pre-Industrial-age existence. Poverty and massive death through starvation and disease would be the order of the day.

      Sorry I’ve made you think about it.

    • Chris Siebs says:

      I mean, they pay great dividends, they fund our government with their giant tax bill, they employ thousands of people, and they produce a product that you use on a daily basis. Yeah… they’re your friend. You know why there’s no mom and pop oil companies? Because there are barriers to entry. Thus, there will always be big oil companies and that isn’t a bad thing.

      • Gregory Kreider says:

        Chris,

        There are many Independent oil companies in the US and internationally. Chesapeake, Petrohawk, Apache, Devon are but a few. They (not the Majors) lead in the exploration and production to the non-conventional shales.

        There are no restrictions to getting in the oil business in the US.

      • WALTER CAMPBELL says:

        I actually work for a Mom and Pop oil company. It has my boss and his 2 sisters as shareholders, and grosses about 15 million per year. Most of the money goes to investors in the individual oil & gas wells. They’ve been in business about 30 years. He and his dad started part time with 2 wells they operated (owned less than 20%). The only barriers to entry is stupidity and laziness.

  5. Richard Greer says:

    General comment about the Perspectives. Are they sent to members of Congress and others in the government?

  6. Ted Steiner says:

    Ignored fact: Most local gas stations make one penny of profit (not 7 cents like Exxon) per gallon of gas. 7 cents per gallon is much higher than I had expected.

    Skewed fact: Anyone who has taken basic economics knows that commodities sold at high volumes generally make little profit per dollar, but cumulatively result in high overall profits.

    Genuine concern: If Exxon has such low profit margin, comparatively, within the U.S., what does this mean about it’s corporate ethics in countries with less regulation in place?

    This blog post is a wonderful example of how easy it is to skew numbers to make them say whatever you want using graphs. It goes against many things we learned about the ethics of the presentation of data when I was in engineering school. Regardless of what company put’s out information in this style, it always makes me uncomfortable.

    • Tom Ford says:

      I expect a company to present data in a way to make themselves look good – do you expect the opposite? Why? Are there any outright lies here that you spotted? As we often see in Government data?

      If not for companies like Exxon, we would have government controlled oil and gasoline here – as the cuirrent government would like to have. And, we would have the gasoline prices our government would like to have. I know Obama has said he expects “Energy prices will necessarily skyrocket.” I believe he mentioned gasoline should be in the $9 to $10 range here – is that wht you want? Yes, there are environmental crazies who DO want that, but they have no plan other than to bring down the USA to realize their version of utopia; but few Americans would actually agree to that. Would you? What alternatives would you offer, other than close down “Big Oil,” and let the government take over – ala Soviet Union?

      • Steven Mitchell says:

        Can you give an example of an outright lie spotted in government data? Thanks.

        • Bruce Drotleff says:

          Yes. The Obama administration insisted that Obamacare would cost $790B in the first ten years. Now, the number has been revised to $1,760B in the first ten years. The original number was an outright lie. Particularly in light of the many who were shouted down by the administration and by the media when they tried to dispute the gross under estimation of what the real costs would be.

        • steve Alger says:

          Yes! How about the 8.3 % reorted unemployment rate? Apparently the government no longer considers you to be unemployed once you have exhausted your unemployment insurance benfits.Gallop polls and other data show the real unemployment rate still hovering at about 19%. A nifty accounting trick to hide the true effect of this administration’s disasterous fiscal policies. Its akin to saying only 48% of Americans pay federal income tax therefor the other 52% must not exist.

  7. lenny j says:

    You can’t really fault ExxonMobil here. They’re really just not very good at math. “Yet the majority of our workforce – about 40 percent – is based in the United States”. So usually more than 50% is a majority.

  8. Destry Vargaz says:

    Little known fact: Exxon’s net profits for 2010 was 19 billion.
    Often ignored fact: Exxon did not actually pay any US taxes in 2010

    • Troy Juzeler says:

      They are quick to point out what their tax BILL is, but not eager to point out the amount that they actually paid. If this were an honest presentation they would show all of the tax credits that they received against that bill, which actually turned into a profit paid to them.

    • Justin Cook says:

      Completely false. They paid billions in taxes in the US in 2010. Their US corporate income tax may have been zero. But only because the current tax laws allow them to deduct the billions that they pay in other taxes. Don’t confuse corporate income tax with all other taxes.

      • Troy Juzeler says:

        Excuse me for not being comprehensive enough. There are still millions and millions of us who think that they deserve to pay some corporate income taxes.

        • Chris Goldstein says:

          If you really believe that corporations should pay income taxes then I suppose you also believe that consumers should also pay higher prices? When margins are already tight and shareholders demand consistent returns, increased expenses result in increased prices to the consumer. It’s just math.
          If it costs me $1.00 to produce a widget and I need to make $1.00 to pay my expenses and shareholders, I sell the widget for $2.00. When the government decides I need to pay $0.25 in income tax, that tax goes into my expense column. So now it costs me $1.00 to produce a widget and $1.25 to pay my expenses (which include the income tax) and my shareholders, so now I sell the widget for $2.25. See, I paid my income tax, but I paid for it with your money! Still want corporations to pay more in income tax?

        • Ken Wallace says:

          Would these be the same millions who also whine about “corporate person-hood” while whining about corporations deserving to pay its own income tax?

    • Marilynn Melton says:

      Another example of Exxon’s great support to United States. I was a mobil member all of my adult life. When they were partnered with Exxon I thought about dropping them( I still am not forgiving of their oil spill cleanup many years ago.) but I kept on purchasing the gas. Then a few years ago when the CEO of Exxon bragged about their profits when everyone else was suffering due to the economy I decided that they had received my last dollar. I have not purchased gas from them since. I think that it is disgraceful that they made 19 billion dollars in 2010 and paid no taxes. If they paid their fair share our debt would not be so great. If they were true americans they would want to pay their fair share.

  9. x boy says:

    Exxon needs to get it together. 1) Drill baby drill, 2) Get your refineries going in the United States again. Otherwise you will have to play patsy as usual to the eastern countries.

  10. x boy says:

    Oil Sand….please, no one believes that commercial.

  11. F J says:

    wow. seeing the crowdist nonsense in the comments section just confirms my suspicions that people see what they want to see. “it’s all the fault of the big, bad oil company!”

    most of you have cars (even those Priuses suck up a lot of gas on the highway, and many people that own them don’t exactly drive them like Grandma used to drive), may use home heating oil, use pens, and would like to have a catheter – should you ever need one – made of petroleum-based plastic, rather than something more…uncomfortable. Like glass.

    Most of you look at raw numbers in an inflationary time and figure, “$40billion??? unfair!” They’re a for-profit company. No one is denying that. they’re also heavily regulated, taxed to the hilt, and refine much more oil than they produce. Someone has to do it, someone (or something – a corporation) with immense resources. ExxonMobil fills that need and what’s unfair is not how much money the company makes, but an angry mob dictating how much is fair for them to make per gallon of gas produced.

    the anger here seems to be directed at ExxonMobil as if there’s a “Mr. ExxonMobil” sitting somewhere with a top hat and pools of cash to swim in each night. Not the case. There are top execs at EVERY company, boards of directors at EVERY company, and yes, they pull in a hefty salary because they make so much money and they are… read more »

    …publicly traded, providing a great investment opportunity for, as this article mentions, pension funds among others.

    Shouldn’t we also call out recently deceased Steve Jobs for using plenty of PETROLEUM-based plastics in his designs – by the millions – for the sake of entertaining us with our precious iPhones and iPods and laptops and whatever else? He also is guilty of employing child labor in Asia via the contractors that actually make the products many of us love and buy – were any of you calling for his head before he died? How much profit did Apple make as a result of that child labor, vs. if those items were all produced in the States by Americans?

    Also, kudos to Lowell Michalove for mentioning the dreaded “O” word: Overpopulation. Globally, we need to stop supporting policies that result in far more people than any finite resource will ever be able to support, or the price of oil won’t matter, as there won’t be any left.

    • F J says:

      and where’s the outrage at the amount of taxes collected by the government here? i’m fine with the state & local gov’ts doing what they have to do to an extent, but our federal gov’t should not be benefitting from our consumption when they already over-regulate the industry.

  12. Lizzy Scully says:

    Hi, in regards to this statement: “ExxonMobil’s U.S. tax bill is often greater than its U.S. operating earnings. In the first half of this year, ExxonMobil incurred $6.7 billion in tax expenses in the U.S. on $5.5 billion in operating earnings in the U.S. Over the past five years (2006-2010), our total U.S tax expense was almost $59 billion, which is $18 billion more than the company’s operating earnings in the U.S. during the same period.”

    This was interesting to read. Thanks for the info. However, could you please clarify something for me? You write that your tax expense was almost $59 billion. Does that mean Exxon actually paid $59 billion in hard currency to the US government? My understanding is that oil companies have quite a few tax credits and subsidies, and therefore the actual cash transaction is much lower than what you owe on paper. Thanks very much.

  13. richard naylor says:

    A Few points:
    Exxon charges about the same for a gallon of gasoline, including taxes, as 7-11 charges for bottled water. For this one can carry four people or a load of goods for 20-30 miles. Their profit is about 7 cents. What a benefit for a small price! Try walking or cycling carrying all that stuff for 20 miles and you will bless them. That Exxon & the other majors can go through all the risks and effort to discover, produce, refine & transport petroleum product so that the result is the same price as bottled water at the point of use is a marvel and testimony to their skill & efficiency. Contrast that with government, whose manifold efforts to improve the people’s lives keep them mired in poverty and threaten to bankrupt the country.
    The enviro-fascisti would like to have the price double and more so that their alternative sources (wind etc) become competitive. Most informed opinion suggests that it will take decades for these technologies to come close to supplying our needs. In the meantime, the enviro movement would have us mired in depression. There is a reason we recess every time gasoline prices rise substantially. Every recession since the 60′s, by the way.
    The right thing to do is “all of the above”; drill up and use what we have domestically, which is abundant, and, if one wishes, let the private economy produce wind etc – which it will when there is sufficient economic incentive to do so.
    Exxon is… read more »

    …the most efficient oil company out there. They and their brothers have done and are doing, through the provision of heat, cooling, light and mobility, more to increase the standard of living than any other entity in the world . Socialist governments, on the other hand, have an almost (Nordic countries excepted) unblemished record of creating and keeping their peoples mired in poverty.
    The enviro movement, much based on false science, is nothing less than a new vehicle to attempt to assert fascist control over peoples who would prefer to be free, and free to prosper.

    • Troy Juzeler says:

      Since you decided to throw socialism into the mix (for no apparent reason), let’s look at Venezuela. They are using their increased oil profits to get people OUT of the poverty they were pushed into by the former capitalistic regimes. They are providing food, medical care and–quite importantly–education to their poverty-stricken masses. So you can group ALL socialistic countries into a lump, but it’s not going to be accurate. A country can choose to learn from the mistakes made in history and steer a new course. Unfortunately, in our own capitalist country we can see ourselves repeating the very mistakes that led to the Great Depression.

      • Lucas Bowser says:

        You must be talking about a different Venezuela than the one in South America. Venezuela’s record reflects an oil price boom. Nothing more and nothing less. In fact, their move towards socialism drove out the most talented oil workers, which left their fields far less productive than they could have been. In fact the current fields are in a state of decline. This “model of Socialism” is creating an environment that will soon meet the norms of non-oil boom poverty rates for Venezuela at a time when they should be their most successful.

        Now someday, there may be a country that makes socialism work long term, but that country does not yet exist or at the very least has not proven it.

  14. charlie tuna says:

    why not take those huge profits and develop an energy source that is more profitable?

  15. Verlon Smith says:

    FACT: Big companies cook books and hide numbers in all kinds of ways to make a report look how they like. This blog would have us believe that for half a decade, Exxon has losing money for operating in the US (despite what 22 record quarters?). They would suggest that they earned $5.5 Billion in the US for H12011 while being taxed to the tune of $6.4 billion. There is no 125% tax bracket. The US Corporate tax rate is 35% BEFORE tax breaks.. They would additionally pile on and have us believe that, due to their good nature, they continue to invest more in energy research than they earn in the US.

    So, for every dollar you earn in the US, you spend
    $1.25 in taxes in the US
    $1.50 in energy research in the US
    $.10 donated to charity to clean up your image
    $.05 cleaning up environmental messes (accidents happen and it IS good you help)
    and that doesn’t even cover what you spend lobbying our congress. The best government money can buy doesn’t come cheap!

    On the bright side, you’re still making 6-7 cents a gallon. So, why do you charge stores more for gas if THEY are charging more? If store A is a mile or so away from Store B and owned by the same guy and under the same contract, why isn’t their supply of gas from the same truck on the same day the same price?

    If your US taxes… read more »

    …are so unbearable, and we have the “worst corporate tax structure in the world” as some politicians would have us believe, why not relocate? Grand Cayman is gorgeous.

    I have nothing against making a profit, but don’t come telling me how bad you’ve got it and how you’re barely getting by as you TRIPLE the franchise fees for your small business station owners while announcing ANOTHER record quarter and paying $400 million severance packages (to ex CEO Lee Raymond).

    Don’t expect me to believe that you refine so much more oil than you produce that you have to buy oil at vaguely commercial prices, but that most of your earnings come from selling oil that you produce.

    I may not know all the ins and outs of accounting to let me keep your books, but I have more than a sneaking suspicion about being played here.

    • Mark Richards says:

      I would like to know the difference between what was “incurred as a tax expense” and how much the check was that ExxonMobil wrote to pay their taxes.

  16. Brendan Koop says:

    The biggest question I have is how many of the commenters are employees of Exxon or paid by Exxon to defend them on this comment board? My guess is most of the pro-Exxon commenters.

  17. Chuck Cintron says:

    Isn’t part of the answer here the fact that these giant oil companies pay contract or futures prices for oil, and even though the “market price” for oil might be $100/gallon, they actually have locked-in contracts for prices far lower than that? I do not think this is the kind of business where they wake up in the morning and say “gee I wonder what we are going to be paying for crude oil today”.

    I bet they are paying prices on a significant portion of their inventory that was locked in 10 or 15 years ago.

    That model, where the spot market rate for raw materials is disconnected from what the actual prices paid are, is the only reason I can think of why their profits soar when the end product retail prices go up.

    • chris lenegar says:

      Yes and no, futures are certainly not 100% correct bets all the time, they may experience years of being on the wrong side of a hedge, usually, because of onging reversals and re-reverals and trading around the hedges they will win some and lose some and neither in a huge way

  18. David W says:

    I’m expected to take all of this as gospel considering it comes from the company that routinely brags about it’s massive profits? No thanks.

  19. Richard G says:

    To all the people that don’t want to buy gas from them, feel free to buy it from the company I work for. I could use a better bonus.

  20. Brian Joynt says:

    I’m all for capitalism and a company’s right to make money, but let’s not cry too much for a company that is consistently in the top 5 most profitable companies on the entire planet earth every year, often taking the number one spot.

  21. Sean Hogan says:

    Having been a shareholder since 1964 (then Std of NJ) I have noted with concern the company’s apparent inability to effectively defend its good name in recent decades.

    The media – were always at some level and have become ever more keenly aware that they must be sensitive to be at the very least fair to their advertisers, and in general are somewhat solicitous. Its plain that BP’s Gulf coast tourism promotion has been a masterstroke. Ostebsibly the purpose of the media campaign is to mitigating potential damage claims from affected industries. It has had the far more beneficial effect of muting the media on the subject of residual environmental effects. There’s every reason to expect that the number and quality of press releases crafted to add public support for everyone seeking a research grant, cleanup contract, or compensatory damages is far greater than after the Valdez incident. The media coverage of the Valdez incident 2-3 years out still featured the incident roughly once a week.

    The public – Exxon has done nothing to “sell” the public on its products for more than a generation. While the products are themselves in most respects difficult to market as having any unique advantage, that’s not the point. People want to be sold a respectable product by a solicitous vendor, even without any claim other than the vendor wants their business.

    The body politic. I’ve never learned why the industry caved in to the federal law prohibiting the display of… read more »

    …the fuel taxes.at the pump. Commercial speech isn’t as protected as other forms, but this was, and remains an over-reach that has damaged the the public’s perception of the industry and could still be challenged.

    Public Image advertising – the old school ads and commercials showing the kids who get the scholarships, the fuel donated to the disaster shelter, and so on. The little blurbs before PBS shows with <1% media share don't do much. Exxon makes significant charitable contributions, and should let the public know.

  22. Tom Marino says:

    Here is an often ignored fact by the company: In 2009 the company posted $45.2 billion in profit. As reported by Forbes, 4/1/2010:

    “Though Exxon’s financial statement’s don’t show any net income tax liability owed to Uncle Sam, a company spokesman insists that once its final tax bill is figured, Exxon will owe a “substantial 2009 tax liability.” How substantial? “That’s not something we’re required to disclose, nor do we.”

    Now you can go over to CNN Money, May 4, 2011. “In the first months of this year, Exxon (XOM, Fortune 500) says it paid $3.1 billion in taxes in the United States — more than even the $2.6 billion in profit it made selling oil and gas.”

    The real truth is that “To get to that number, the company includes the federal and state gasoline taxes that the company collects from drivers and passes on to government coffers. It also includes payroll taxes the company pays on behalf of its employees.”

    In other words, its counting money that never belonged to them. They simply collect it, like every business in the US does in one form or another.

    So it is withholding payroll taxes from its employees, and then saying they are paying those taxes. That’s a LIE. Its a LIE to promote the continuation of the $4 Billion in subsidies the government pays to the most profitable industry in the history of human civilization.

    • Marlin Mote says:

      Now you’re on to something. But you’ve only gone half-way. ALL taxes paid by a business entity come from the consumer. No income, no tax. Even the payroll tax paid by an employee had its roots in what the consumer paid the employee’s employer for goods or services. So if you want to raise prices to the consumer, you just raise the taxes on business.

      The real point Exxon is making about total taxes paid is that this is the portion of what it charged to consumers that it doesn’t keep or pay in dividends to shareholders. As I look at financial statements, I can’t fail to reach the conclusion that the oil and gas industry is probably the most heavily taxed of all U S industries.

      • Chas Minguez says:

        Your right Marlin, it is. And we, the consumer bear a substantial burden of those taxes. It’s a fact, no way around it. Let domestic oil companies get the crude out of the ground, so they don’t have to buy it from our “friends” in Middle East and South America. I bet they can get the cost per gallon of crude down 50%! Keep the taxes where they are, and use them to r&d and invest in alternate energy, or hell just fix some the roads and bridges quicker. But here ya go, somehow we have to make sure those revenues are used wisely, and responsibly. So what do we do to assure that? Privatize as much as we can, get it out of the hands of Politicians. Alternatively, elect the right politicians, historically the smart money should be on Private Enterprise.

  23. Rick Schubert says:

    Please discuss the billions and billions of dollars that US taxpayers spend annually on maintaining fleets of warships keeping ocean shipping lanes open and protected exclusively for the benefit of oil companies. Did you factor that into your cost/profit analysis?

  24. Sharon Jeffrey says:

    All consumers do is think about is the price at the pump. All news media reports are the GROSS PROFITS and then the consumer is thinking about the greed of the oil companies. Gross profits are defined as profit before expenses. Does anyone even look at the expenses. This article spelled is out to many of you. Oil and Gas exploration is very time consuming, expensive, and heaven help them when the environmentalist’s get their noses involved. Oil companies spend millions in exploration, construction, transportation of said oil products.

    I always say “Don’t criticize what you don’t understand” Don’t take the news media for gospel. Research it for yourself or better ask an employee in the R & D department of any company.

    Before you complain about prices, get the facts.

    • Toro FX says:

      It is not only gross profits but we see but what about what we dont see that they are getting. When they are getting subsidies from the government to drill in which they are getting paid to discover this “black gold”. The tax cuts that they get, How the oil that they drill today will be worth way more money in a week? They control it all and the only way to make it not worth it for them is to seek alternative ways, but until we do they have the world by the jewels!

      • Chas Minguez says:

        Wake up. It cost the oil companies about $2.50 to BUY crude. Yeah, they BUY it because we don’t have enough domestic production of crude, billions of gallons but the fed won’t let them go get it. Who do they buy it from? Do I have to tell ya that? Exxon makes 2cents profit on a gallon of gas, read the AR. We PAY .18 cents on a gallon to the Federal Gov and about .40 cents on a gallon to state Govmts. Stop regurgitating the political rhetoric “BIG OIL” and get the facts. By the way, Tyson Foods P/E is way better than Exxon, so let’s try and go after “BIG CHICKEN” and their Execs. What ya say.

      • WALTER CAMPBELL says:

        Oil companies don’t get subsidies from the government. They get the same deductions and credits that any other business gets. Deductions for the cost of exploration and development of the well, and an allowance for the depletion of the pool over the estimated life of the well. Every business gets a depreciation allowance for the depreciation of the equipment over it’s estimated life. A natural resource, be it oil, coal, gold, silver, has to be purchased and depletes as it is developed and extracted.

        Claiming deductions and credits are subsidies is a way for anti oil politicians and environuts to demonize the oil & gas industry. Nothing more.

        • Joseph Blough says:

          The large oil companies DO get special subsidies. They may be the same special subsidies as some other industries, but nevertheless they do exist.

  25. Charles Jensen says:

    “ExxonMobil makes pennies per gallon on gasoline, diesel and petroleum products it refines”

    Often cited factoid that is so intentionally misleading as to approach a lie. Yes, Exxon, and all the refiners make just a few pennies per gallon of fuel from REFINING….but they don’t mention the obscene profits made on the production, transportation, hedging and reselling of petroleum products.

    Refining has always been a low margin business. The rest of the petroleum business, including Exxons, borders on Wall Street quality greed.

  26. Mike B says:

    Even if you do only make $.07 per gallon of gas. Gas is a commodity that people HAVE to buy. I have to work so I have to drive to get there. Gas isn’t something I can just not use or can cut back on.

    The US uses 400,000,000 gallons of gas per day. At $.07/gallon, that’s $28 million dollars per DAY. That’s obscene and is why gas companies have such a bad name. There’s no reason any company needs to make as much profit as gas companies do when they sell a product that has no alternative to 99% of the population.

    I don’t think gas companies control gas prices, but when you make obscene profits and the rest of the population is barely getting by because the price of gas keeps going up, you’re going to look bad no matter what. Making ridiculous profits just makes it that much worse.

  27. neil cochran says:

    This is very interesting information in this article. One thing the writer left out is, since the Bush Administration, Exxon has reported more porfit per quarter than any other historicaly known entity. Exxon and their associated oil producers now feel that their profits outweigh the economic health of the nation.
    These companies should understand the oil and gas they extract belongs to the American People. Therefore before they export a single barrel of gas anywhere, the American market should be met at a fair pirce. To do anything else is un-patriotic. Blue Bell Ice Cream understands this principle “they eat all they can, then sell the rest”
    Big oil should take a lesson but presently are blinded by their gluttoness greed.

    • roger smith says:

      what are the amounts for barrels exxon mobile pumped stateside versus the amounts from elsewhere, overseas or spot market etc averaged say, in a month? How many barrels do we require here in the american market per day averaged over the same period. Bluebell is great ice cream

    • dano m says:

      why do you think “the oil and gas they extract belongs to the American People”? It belongs to the company who paid for it…just like the farmer who buys land and seed and converts to fruits and vegetables to sell and make a profit.

  28. roger smith says:

    Why not read a curent prospectus of the biggest and the smallest in this sector then come back and argue the facts. The argument here so far is about agendas. A politicians vision is never farther than the next election and the lenses they look through are only as good as your money can buy

    • roger smith says:

      one last thing, our oil producers have been and will be constantly watchdogged at every turn but they are what keep our economy supplied with the most overall efficient form of energy we have by all measures including waste byproducts after conversion. now and for the forseeable future. Then theres Bank of america that has ceased “producing” anything given access to 7 TRILLION dollars at a rate of nothing % to lend themselves for the possibility of having to pay no more (capped) 25 billion in restitution to a very limited few while others who were cut off at the knees by their politicians to block class actions or further legal actions can’t get a 60 day reprieve on a mortgage their bank can’t produce

  29. Joseph Blough says:

    I don’t begrudge Exxon’s right to profit. They are a huge company, one of the largest in the world. Their profits will and should be large.

    But when a private company makes $40,000,000,000 it doesn’t need to be subsidized. Even though the subsidies are relatively small– that is, relative to both their profits and to the US government budget– the money they receive is not necessary. Exxon will continue to search for reserves, do its research, grow its business, and build as necessary with or without these subsidies.

  30. Doug Richards says:

    I love that people see a big number under profit and think of it as a bad thing. What if they made no money. Where would we be? No $.49 a gallon tax nationally……. Do we need that money?……. You think about it. A company that makes no money is not in business long. Look at the solar companies our government is throwing money at….. What would that do to unemployment? Nothing another stimulas to bail them out too. I think the article shows they pay more to the US than they MAKE IN THE US. Get rid of of the business in the US and just worry about over sea.. Then what would you do? Should we tell you what your hard work is worth? How much should you be paid for your 40-60 hours a week that work?

  31. Jonathan Hackman says:

    Another “little known fact”. THE number one EXPORT from the USA for 2011 was,,,GAS 88 billion dollars worth..The less gas people use the MORE there is to export. So it’s supply and demand..and the oil companies dictate supply and demand…period…so you won’t forget…NUMBER 1 EXPORT FROM USA IN 2011 WAS GAS….

  32. Mike Stabernski says:

    So…. I’m gonna be the super stupid one in all this. Everyone “agrees” that Exxon’s profits are at about 7 cents a gallon. Heck, just to make the math easier, lets make it TEN cents a gallon, for arguments sake. Right here, right now, gas is at $3.89 a gallon. Lets COMPLETELY ELIMINATE Exxon’s profits and knock them down to the bottom of the financial business pool. Great!! I’m STILL PAYING $3.79 A GALLON!!! Maybe I don’t pinch my pennies correctly, but uh….. shouldn’t we be worrying and griping about where the OTHER $3.79 is going?????????

  33. Joel Zink says:

    Milton Friedman: Greed is good!

  34. Don Hatch says:

    Very interesting and informative report. However, it doesn’t square with your recent reports stating $40,000,000,000 +- annual earnings. The higher oil prices rise, the more profits you earn – you just can’t help it, can you? How can you earn so much on the little profit margin you state?

    • steve bloomberg says:

      Well said, Don.

    • jason close says:

      Don, A large percentage of their earnings is from the 2 million barrels of oil they produce every day, which are sold at market price. That totals 730 million barrels a year. At (for easy calculations) $100 per barrel, that is 73 billion in revenue. Then when you add in the amount of fuel they sell, 5 million barrels a day x 365 days x .08 cents per gallon profit, you will find that the profit on their distribution is around 146 million per year. Add in their other revenue streams, and the profits are enormous.

    • John Shuey says:

      Math not your strong point Don?

      Simply put, 3% of 1,000 is 30, but 3% of 1500 is 45.

      The profit MARGIN can remain unchanged, or even decline, while still producing a higher gross and/or net PROFIT on a greater total dollar volume. (Whether that increased dollar volume is due to increased sales, a higher cost of goods sold, or the declining value of the dollar in world currency markets.)

      • Jay Audette says:

        The consumption of protroleum based products is relatively inelastic against it’s price. People still have to drive to work, plastics and lubricants companies still have to meet demands for their products, and power companies still have to feed their generating plants. This makes turning record profits during periods of record costs/prices at minimal margins possible. If I only make 8% margin, but the price of my product doubles, and demand only drops say, 25%, I’m still going to be making more than ever.

    • Edward Desmarest says:

      Perhaps you suggest Exxon Mobil stop paying the estimated 29,500,000,000 in Annual Dividends they pay to shareholders (including many public pension funds). Did you read that part of the article ?

    • Edward Desmarest says:

      We all should be concerned where the “Comparatively, local, state and federal gasoline taxes average nearly 49 cents per gallon nationally, with a high of 67 cents in states such as California and New York.” is going to, with are crumbling infrastructure. When you calculate the Revenue the various government entities receives. Remember, this calculation should be based on Annual Gasoline Consumption in the USA.

      • Randy Coff says:

        You do not work in the road industry I can tell. The problem is the last time a gas tax increase occurred was in 1993. Think about that, if you had no increase in pay in 18 years. The worst problem is that during the recession people carpooled more people got laid off and the U.S. drove less. The aveage miles in 2009 was about the same as 1999. The federal Government mandated higher milage for cars too. The higher milage cars will further rive down the amount of fuel sold. Look on the road today less SUV that get 8 miles to a gallon more cars that get around 30. each car burns a third less fuel. Your own gas tax has probably decreased a lot since 1993 and especially compared to your salary. You wonder why your roads are decaying? il is over a $100 a the asphalt is mae out of oil. In the 90′s the bitumenious material was around $3 a ton now it is $20. Asphalt in the state I worked went from $30 a ton to $80. You also need diesel to delivery the asphalt too. Tripke the delivery cost and in for higher wages etc. Your lucky your roads are not in further decay than they are most states DOT’s have did well with the limited funds. The DOT’s try new things that are cheaper to conserve cost. The DOT I used to work for, the accounts were worried about how they would… read more »

        …fund roads especially with the electric push for cars. I know more than one guy that traded a SUV in for a prius about a 5 times increase from a ford explorer. Go check the amount of fuel sold and the inflation rate for almost 20 years and figure out how much all that money for roads are wasted. The miles driven now in 2012 are the same as 2003 so your total gas tax is the same while automobile get 20% more miles per gallon. The state and federal gas tax from 2003 to 2012 fell by 20%. Plus there has been 23.4% inflation. That is almost 50% less money to build and maintain roads can you live with a 50% decrease in pay in 8 years? I have a brother who is a republican all he wants is to get private business to build toll roads then you would pay about 10 times more in tolls than gas tax

    • Michael O'Rourke says:

      Good for them. Good for America. Make more next year! Don’t listen to losers that say you make too much money. Better you then any Russian or Chinese company.

    • Debbie Beard says:

      reading comprehension. that is their over all earnings. which means the profit they made in the US as well as outside of the US ( where there are less regulations on how much they can charge). In the US they can only charge around 7 to 8 cents above the actual cost ( materials+production+taxes) to stay competitive and due to regulations. Overseas where ( if you paid actual attention) 75% of their business is they can and do charge more because they can.

      The other factor is if they earn say 25cents on every gallon sold ( 7% ish profit at 3.50 a gallon) and a typical car takes 20 gallons ( just a number so you can put it in persepective).. that is 5.00 a fil up. how many cars are there in the US? How many people drive more than one tank ( est. 20 gallons) a week? if you sell enough even at a penny profit you will make alot of money if it is something that alot of people use.

      on a side note, they also do diesel ( for long distance and short distance trucks) and how many are out there in the US.

    • Charles Jensen says:

      What does square with the $40B of PROFIT is discussed in my post at 4:10 CT.

      This line about only making “pennies per gallon” is known as “lying with facts”.

    • Charlie Kiley says:

      The chart shows “US earnings” and your $40 billion is refering to global earnings. And the reason you can make such high profits on low margins is because everyone uses crude products. The margins do not have to be high if it is a resource people have yet to prove they can live without.

  35. Will Holman says:

    Higher oil prices do not necessarily result in a higher profit margin. Profit and profit margins are two different things.

    • steve bloomberg says:

      So, how do you explain Exxon’s record profits last year?

      • Scott Broderson says:

        This is a reply to steve. Dotson. Pay attention. I am a simple old glass installer, but I’ve thought this through before. Let’s go back a few years. I won’t pretend I know the actual margins of these companies, but I will show you a quick example of how higher prices, and yet, lower demand, can equal higher profits.

        Let’s say it costs $1.00 to produce a gallon of gasoline, and it can be sold for $2.00. Your profits are now $1.00 (2-1).

        Now, let’s say gas prices skyrocket to $4.00. It may well cost $1.75 to $2.25 to produce a gallon of gasoline depending on transportation costs etc. Let’s pretend it costs $2.00.

        Now, when we sell a gallon of gasoline, we profit $2.00 per gallon (4-2). We used to profit $1.00 (2-1).

        So, even if demand drops 25%, because we are profiting double on the original gallon of gasoline, we will have at least a 50% or more increase in profit. However, gasoline consumption never drops 25%. It might drop 5 or 10%, but not 25%.

        So, by keeping the same 100% markup (aka a 50% margin…not to be associated with the 50% in the previous paragraph), we have nearly doubled our profits.

        But wait, there’s more. Do you really think that the cost of producing the oil doubled. Probably not. It probably only cost them $1.50 e.g. in the above example. Their labor costs remained the… read more »

        …same, health care etc. Only the acquisition cost of the raw product increased. And, if Exxon owns the same percentage of oil as always, their profits on their own oil are out of orbit…probably a 800% increase in profit.

        So, it would be easy to believe if the prices doubled, their profits could quadruple.

        This is not a true mathematical analysis, but I think it’s valid and reasonable for a good example.

        That’s how the good old boys do it. And…let’s not call for any new taxes on oil companies (like Obama-lama-ding-dong). You know who pays those taxes…us. The oil companies just add it to the cost of doing business, and we pay for it at the pump.

        And taxing big oil will not help. We know who pays that bill. Yes, all Americans pay that bill. And American that thinks differently, is not thinking very objectively.

        • Scott Broderson says:

          I made a typo in the last paragraph. It should read Any American that thinks…

          I was also a bit redundant by saying basically the same thing in the previous paragraph, but the thought is good. Forgive my quick CLICK on the Submit button. Respectfully, Scott

    • H Dotson says:

      That doesn’t really make sense to me. Higher prices decrease consumption, so in order to increase net profits, the profit margin must increase greatly.

      So while higher oil prices do not NECESSARILY result in higher profits in this case, near-record prices coincided with record profits. All the while we have over 10% unemployment in this country. Please explain.

      • Jay Audette says:

        Record prices come from global factors such as higher demand in foreign markets (eg: China) and reduced production due to political and environmental disruption (eg: hurricanes and the orderd shutdown because of the BP spill).

        There is a general misconception that a slight reduction in U.S. oil consumption means a global reduction in demand, which is not the case. Another misconception is the drop in demand relative to the the price of petroleum products. A doubling of price does not cause demand to drop by 50%. Thus, the margin does NOT have to increase greatly for there to be record profits. See my response to John Shuey (above) for an example.

        Also, people continue to complain about unemployment being over 10%. This is rediculous. Unemployment was just below 5% percent before the “crash” in 2008, and it was around 4% at it’s lowest in the early 2000s. Judging from this image ( http://en.wikipedia.org/wiki/File:US_Unemployment_1890-2009.gif ) unemployment has ranged from 5% to 10% for the last 4 decades. The last time unemployment peaked liek this was in the middle of Reagan’s FIRST TERM! Complain all you want about 10% unemployment, but we’ve been spoiled by low unemployment that hadn’t been seen since the sixties. Finally, don’t forget that 10% unemployment, still mean 90% EMPLOYMENT!

  36. Lowell Michalove says:

    THE big issue facing the planet is over-consumption of energy and over-population. All caring entities should be screaming for Americans to STOP the/our/your Energy WASTE ! American continues to waste over 70% of the energy it consumes. 100′s of millions of lights burn unnecessarily every day and night. Americans continue to overDRIVE, overHEAT, & overCOOL as if energy consumption does not matter.

    Lowell Michalove, PhD Energy Conservation Advocate
    lmmicha@gmail.com

    • Richard G says:

      You must be making this post on your typewriter then.

    • David James says:

      Lowell, there is no such thing as “over population.” If you gave each of the 6 billion people on the planet 9 square feet in which to stand then grouped them all together in a single location, they would fill an area a little smaller than the land area of Delaware. This would leave the rest of the planet completely unpopulated. Is the planet over populated? No. But Calcutta, Sao Paolo, and China certainly are.

      • Pete Previte says:

        9 square feet? What does it take to provide heat,food,water,clothing and an employment source for each of us. How many square feet does it take per year just to dispose of the average American’s garbage? How many square feet are mined and drilled to provide the things we use every day. How many square feet of land mass on this planet are uninhabitable? Pretty poor argument , bud! Do all the math and then get back to us.

    • Bruce Drotleff says:

      I’m 60 years old and I’ve been hearing this overpopulation vs. scarce resources argument since grade school. The population has increased astronomically in the intervening years while the quality of life has improved nearly as dramatically, except in areas under oppressive government. I’m tired of your chicken little whining. Time to look at real, untainted data and analyze it through the lens of reality, not some socialist’s utopian rose colored glasses.