Who is subsidizing whom?

In its lead editorial yesterday, The Wall Street Journal took a hard look into the Obama administration’s campaign to end so-called “subsidies for Big Oil.” The paper’s conclusion turns the administration’s claims on its head: “The truth is that this industry is subsidizing the government.”

This is the flip side of the coin that few realize – the oil and natural gas industry is an enormous source of revenue for the U.S. government. In fact, the industry pays the federal government approximately $86 million a day – or about $31 billion a year – in rents, royalties, bonuses and corporate taxes. That doesn’t even include the payments made at the local and state levels.

At times, the industry is actually sending more to local, state and federal governments in taxes and fees than what it earns in the United States. According to the Journal:

“Not paying their ‘fair share’? Here’s a staggering fact: The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders.”

And, keep in mind, the taxes the oil and gas industry pays are only part of a much larger contribution to the U.S. economy. Our industry and the activities that support it accounted for more than $1 trillion of the U.S. economy in 2009, or about 7.7 percent of U.S. gross domestic product, according to a recent study. The industry contributes an estimated $470 billion a year in spending, wages and dividends alone.

So what about those “subsidies” that oil and gas companies supposedly get?

“These aren’t direct cash handouts like those that go to the green lobby,” the Journal says. “They’re deductions from taxes that cover the cost of doing business and earning income to tax in the first place. Most of them are available to other manufacturers.”

I’ve talked at length on this issue, but it bears repeating – attempts to misrepresent the industry’s tax contributions are nothing more than an attempt to pick winners and losers in the marketplace. The fact is that taxpayers would benefit far more from the revenues associated with increased access to U.S. energy supplies than they would from punitive tax measures aimed at oil companies. Policies that support greater energy development could generate $800 billion in government revenue by 2030 through lease sales, royalties, production fees and taxes, according to a recent study.

So when taxpayers see these claims about “subsidizing” oil companies, I think it’s valid to ask: “Who is subsidizing whom?”


68 Comments

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  1. William Inglis says:

    Tax breaks that are unique to the petroleum industry should be repealed if there is no compelling reason to keep them. The rest of their tax breaks should be left alone. Their tax increase will be added to the cost of the product; we’ll all pay more at the pump, including new taxes on top of oil company taxes, and everyone will be happy now that we will have “dealt with the oil companies”! Then we can get on with the business of the country without constantly hearing about “unfair” tax breaks for BIG OIL

    • Democratic Customer says:

      Why should that be? Why should a company that makes record profits in the billions PER YEAR be allowed to protect profits by passing the cost of the tax break loss to us through their product costs? There should be laws against that.

      Its pure greed. If a company can have over $40 BILLION in profits (profits, meaning that they earn more than they spend), then they can stand to absorb the rise in cost from their lost tax “breaks” and STILL earn a considerable profit for their shareholders.

      To be clear, the rise in their costs due to the loss of the tax breaks would be felt much less by ExxonMobil, than the rise in gas prices will be felt by their customers.

      • Ted Moore says:

        Using a strawman shows either ignorance or falsehood. You can decide which you resemble the most. The rate of return for most of the oil industry is lower than if you were selling pop at that gas station where you got your gas. If you need to invest trillions you would need to expect billions. If not, you would not invest the money. If the money had not been invested you would be paying much more for your fuel.

        Thats right, much more for your fuel. If you want to make something more expensive then you just penalize the success of those doing the work.

        Why so much difference in gas costs? The main difference between, say California and Wyoming is the size of the slice taken by state taxes. The next biggest reason is the amount of hoops you force the producers to jump through.

        Greed, you say? The desire to do well, so you can make a profit, is the main driver in lowering costs for the customer. Competition is good for the consumer. It is less so for the business involved. Competition costs drive many companies out of business. Only in a monopoly or a closed market can greed set the price.

      • ddd mmm says:

        Democratic Customer,

        You probably have some investments, if you have any sense. You want those investments to pay you a reasonable return. Most people would like to see something around 8-10%, so they can comfortably stay ahead of inflation. Furthermore, if a company can’t earn a profit of 10% or so most years, they can’t make it through lean times.

        Exxon Mobile is a 400+ billion dollar company. That means that stockholders have paid more than 400 billion dollars to own a part of the company. So the 40 billion dollars that you are complaining about is actually a reasonable profit for a company as BIG as Exxon Mobile.

        I have heard that about ten cents out of the $4 you pay for a gallon of gas is profit for the oil company. Have you paid any attention to the stickers on gas pumps that tell you that 45-50 cents a gallon is state and fed tax?

        The govt gets FIVE times as much as the oil company gets to keep. And the company doesn’t even keep it all. They pay DIVIDENDS to owners. If you have a pension plan or a mutual fund, YOU are one of those owners.

        You better hope Exxon Mobile makes decent profits so your pension will be enough to keep you fed when you can’t work anymore.

      • Neel Patel says:

        I never heard anybody saying Apple should pay more for being greedy, there was barely any blow back from the articles showing all the steps they take to exempt out of US taxes. Oh wait, they just make a expensive product that everybody wants, so they are exempt from ridicule.

      • Gary Graves says:

        Pure greed. Nice, especially considering that the government takes far more in taxes. Is that pure greed too? I’d rather have the money in the hands of job-creating industrialists than greedy, corrupt bureaucrats.

  2. Jeff Drake says:

    Oil companies should send significant revenue to the states and federal government. Why? Because the oil, and gas that the oil companies make their profits on come largely from underneath U.S. soil and coastal waters, and because the states where drilling takes place incur huge costs in building infrastructure (roads, bridges, etc) robust enough to accommodate oil drilling and shipping equipment.

    The U.S.’s natural resources are a national resource, not simply a private resource. The oil industry contributes greatly to the country’s economy… but only because of the oil and gas under U.S. territory which therefore should benefit the entire country.

    Furthermore, it is in the country’s best interests to not only produce oil and gas, but to also reduce our use of oil dramatically and increase solar and wind energy. This has huge military and economic advantages over sending hundreds of billions of dollars annually to Saudi Arabia and other countries because we use so much oil.

    • Fred Schmurtz says:

      It is hard to even know where to begin. You seem to think that drilling for oil and gas is like going down to the corner grocery store and just picking up whatever you want. There is enormous expense and risk involved. My father was a wildcatter for many years, spent millions, and never recovered a dime. Those underground resources would just be sitting there doing nobody any good unless someone took the risk to develop them.

      “Significant revenue to the state . . .” No one says oil and gas companies shouldn’t support the state and the infrastructure needed in development. That is a straw man. What is said is that what is touted as “subsidies” is anything but.

      Your comments about solar and wind also indicate you haven’t been reading the newspapers for the last few years. We have many hundreds of years of oil and gas reserves (let alone coal) right here in the USA. We have no need to send any money to Saudi Arabia if those were developed.

      As for solar and wind. I live near a wind farm that is so fragile and expensive to maintain that even on the windiest days only about half of the windmills are generating anything. As for solar, can you say Solyndra?

      Beyond Solyndra, a battery company touted and subsidized by the current administration, A123, was just bought by the Chinese at bankruptcy pricing.

      Another great alternative energy investment.

    • Daniel Allison says:

      Actually the oil and gas are not national resources, they are private property that belongs to the landowner or some one that owns the mineral rights under the land. They are national resources only in socialist countries, like Venezuela for instance and Federally owned property. The oil companies pay me for the privilege to drill on my property, that is called surface rights, then if I own the mineral rights they pay me for the product they remove from my property, this is known as royalties. If they need to put in a pipeline, then they pay for an easement for that. If you make oil and gas a national resource be prepared to pay more than twenty dollars a gallon based on the efficiency of the government in other areas. Unfortunately there are many ignorant fools like you and they vote. That is why the country is failing. They don’t teach much in public schools any more, do they?

      • Finley Miller says:

        I don’t think they are national resources only in socialist countries. Are there any countries at all, other than the USA, where the individual landowners own the mineral rights under the ground? I’m not saying there aren’t, I just seriously don’t know of any.

        That said, I agree that the word subsidy is used in a very misleading way by people in the press. In the USA we have a peculiar system of corporate taxation where we have a high nominal rate (35%), but then we have all sorts of tax breaks that bring the effective rate down significantly, and into line with the international average. All industries have their tax breaks, including oil. But a subsidy and a tax break are certainly two different things.

      • p mcc says:

        “Unfortunately there are many ignorant fools like you and they vote”

        Yes and you appear to be one of them…. offshore oil rigs… who owns the land? No one except the people… they are U.S. territorial waters. National parks… also happen to belong to the people.

  3. Phineas Worthington says:

    The idea that a tax break is a subsidy is just plain economic ignorance. As is the idea that government spending is an investment.

    That the tax burden of companies can exceed their profits is simply unjust.

    Great articles! Keep up the good work!

    • John Brown says:

      Your comment doesn’t make much sense to me. The scenario of tax burden outpacing profits applies to consumers as well but you make no mention of them. The average citizen doesn’t get to deduct things such as rent (lease), gas (travel expense), groceries (entertainment) and subcontract employees (maintenance).

      I’m not arguing that the oil and gas industry isn’t paying their taxes. At least they do pay some. But as a whole, the industry does reap a lot of profits. Shareholders get the short end of the stick because that profit usually needs to reinvested in new exploration and technologies. That is the nature of the beast.

      Besides, shareholders aren’t innocent bystanders either, if they didn’t like how things were being ran, they can take their money and run.

      … now that that’s all been set aside. I think the argument over oil and gas subsidies is mute when you have companies such as General Electric paying nothing.

      In a perfect world, every company would pay. We could then lower the tax burden across the board and everyone would be happy… everyone except those screwing the system now.

      I have no sympathy for them.

      • xxx yyy says:

        >> Your comment doesn’t make much sense to me. The
        >> scenario of tax burden outpacing profits applies to
        >> consumers as well but you make no mention of them.
        >> The average citizen doesn’t get to deduct things such as >> rent (lease), gas (travel expense), groceries
        >> (entertainment) and subcontract employees
        >> (maintenance).

        You make an excellent point, but you are forgetting the 36th Amendment (C) and the 37th amendment (TM):

        XXXVI: The profits of corporations should always be upheld and favored over individuals and their lives, happiness, dreams, desires, wants, goals, welfare, and well-being; the right for a corporation to have double-standards when money is involved shall not be disturbed; the role of the Governnment is to serve corporations, not individuals.

        >> Besides, shareholders aren’t innocent bystanders either, if >> they didn’t like how things were being ran, they can take
        >> their money and run.

        And you call yourself a citizen! You really need to be informed before you start spouting such nonsense. It is embarrasing.

        REAL citizens know the principles our country was founded on:

        XXXVII: The business world is allowed to tell people “you can always work somewhere else” and “if you don’t like it then leave” and “noone owes you a living” but reserves the right to be hypocrites when the same “standards” are applied to their existence; The Government shall not infringe on this right, for lying and selectively spinning information by omission of important details is an imperative aspect of commerce

        Who has been feeding you this propaganda that people matter?

        Seriously, George Washington, Inc. (R), The Thomas Jefferson Co. (TM), and Abraham Lincoln and Associates (All rights reserved) would be spinning in their graves if they saw your rhetoric.

        If you did any research at all, you would find they all LOVED to have their face plastered on currency,
        because it made them appear more… read more »

        …like the royalty that they knew they were.

        Ben Franklin was a DirecTV executive for 30 years for crying out loud!

        You should REALLY get your facts straight before you go around criticizing others!

        • Michele Thrash says:

          I can’t tell if you’re trying to be sarcastic or if you really believe what you’re writing here. To what constitution are you referring? Because there are only 27 amendments to the United States Constitution.

          Perhaps it is you who needs to be informed before you start spouting such nonsense.

      • Daniel Hofford says:

        Are you brain dead? The oil companies have historically and continue to this day to make between 8 & 10 percent profit on their investments. In what world is that too much? Apple makes over 20% on their investments. Many companies make between 10 and 20% return. What school did you take economics in? Obama’s home study course in Marxist stupidity?
        I have no sympathy for you.

        • John Doherty says:

          Halfway through 2012 the Big Five have made over $62 Billion in profits. The idea that the industry needs any exemptions or tax breaks is ridiculous.

          Apple is trash. Americans shouldn’t be buying any of their products until they start manufacturing them here. They don’t make their products in China to stay competitive. They drive the market. They’re one of the few companies who could manufacture here and still be highly profitable.

    • Simon Gruber says:

      You’re misreading what was written. The author here, and the WSJ article, are being intentionally deceptive, and that’s why you believe something that neither of them technically said. You’ve substituted “tax burden” for “taxes and fees” or “money to the government”, which is not accurate. These companies take oil that is on public land that is owned by the American people, and they pay for it as they should. It is an absolutely arbitrary thing to compare these fees to profits. If I sell you something for $10, and you know you can sell it for $12, you would do it if it cost you less that $2 to sell it. Maybe you only make $1, but it is worth it when you do it for a bunch of times. You could look at this as me “taxing” you 10X your profits! But that would be dumb, just like this article.

  4. James Waite says:

    “The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders.”

    With so many things we read today, numbers are bent to the will of the writer and, I suspect, this is a good example since there is no explanation as to how the conclusion was derived. Shareholders mostly benefit from stock prices that rise. Company profits are a very squishy thing, considering how much companies can spend on good accountants. Some of the profits are returned to shareholders as dividends and, possibly this is what the quote is referring too. I wonder if it includes the millions of dollars paid to the corporate executives, though?

  5. Charles Polk says:

    Whoa! You left out a bunch of stuff! This article ignores the five hundred pound gorilla in the room which is the fact that a huge amount of money is spent by taxpayers every year to subsidize the oil industry indirectly. The primary reason we spend over 800 billion a year on defense spending is to protect our access to oil resources. The main reason for the US war against Iraq in 1990 had to do with preventing a petty dictator which we had installed and supported, from controlling a large portion of the worlds oil resources in the middle east. The reason we supported Saddam was as a counter weight to Iran’s hegemony in the region after their revolution against the Shah. The reason there was a revolution against the Shah had to do in part with the fact that we used the CIA to overthrow the legitimately elected government in Iran in the 1950′s and put the Shah in its place. The reason we wanted the Shah in place of a democratically elected government was because the elected government in Iran wanted to nationalize their oil fields that were being run by foreign European and US companies to extract profits that weren’t benefiting the Iranians! The total cost of the Iraq adventure could end up being over 3 trillion dollars. That is a large portion of the US deficit. 3 trillion would fix the social security system, provide universal health care for 10 years and the left over could have repaired all of our failing bridges and crumbling highways. Instead it was used to mortgage our future and provide a campaign war chest to the Republican party and their fossil fuel supporters. So, yes, the US taxpayer is subsidizing the private oil companies but the… read more »

    …indirect subsidies far out weigh the direct ones.

    • xxx yyy says:

      Charles Charles Charles…

      >> The main reason for the US war against Iraq in 1990 had to >> do with preventing a petty dictator which we had installed and
      >> supported

      Ridiculous!

      Why would the Greatest Nation That Ever Is, Was, and Will Be (we are the ONLY nation that has ever claimed that by the way; what does that tell you?) do such a thing?

      Lies!

      >> The reason we supported Saddam was as a counter weight >> to Iran’s hegemony in the region after their revolution
      >> against the Shah.

      Really, you have to stoop so low? You make it sound like all countries go around and start wars over the tiniest of things, and that no country has hands that are not covered in blood.

      I’m sorry, but that doesn’t fit my propaganda programming, so I refuse to believe it!

      >> The reason there was a revolution against the Shah had to >> do in part with the fact that we used the CIA to overthrow the >> legitimately elected government in Iran in the 1950′s and put >> the Shah in its place.

      Absurd! We are a democracy, and would NEVER do such a
      thing.

      The CIA is just a liberal myth. Can’t fool me!

      >> The reason we wanted the Shah in place of a democratically >> elected government was because the elected government in >> Iran wanted to nationalize their oil fields that were being run >> by foreign European and US companies to extract profits
      >> that weren’t benefiting the Iranians!

      Of course not!

      You and your “shades of grey” are just not credible.

      Let me enlighten you how things work:

      1) Things we do: good
      2) People who think truth matters: bad

      Why is that so hard to understand?

      You are just another one of the crazies next to the people who spread garbage that Mitt Romney keeps his money offshore, or Richard… read more »

      …Nixon had an “enemies list”, or JFK and MLK and AL were all assasinated, or President Clinton had an affair, or Ronald Reagan armed Iran.

      I’m just not buying it; some of us are EDUCATED and WE know the TRUTH!

      The pilgrims were all hard-working capitalists.

      After wooing investors (twirling the ponytail on your wig is a VERY persuasive offer),
      Mayflower Enterprises was incorporated and begin business in England.

      Religious tolerance was at an all-time high, and soon, business was BOOMING.

      When the stock peaked, GigantoCorp made them an offer they could refuse –
      but why would they?

      The founders KNEW what they valued, and they KNEW GigantoCorp had aided them
      every step of the way in their “democratic experiment” — cozying up to GigantoCorp was
      pretty much a no-brainer for all parties!

      Alas, finalizing the deal was not so easy.

      After months of arguing over “who has the prettiest horse?” and “who has the biggest signature?” the founders FINALLY agreed that “all the horses were unique and pretty in their own special ways” and “the size of the pen is what was important, not the words you write”

      Nowadays, we call this the “Compromise of 1796″ but it cannot be overstated how much blood was senselessly shed defending the good names of “Princess Athena” and “Sir Mortimus, Sexiest Stallion of All”.

      it helps to have a sense of perspective and realize that we really do take SO many things for granted in this day and age.

      After the war, the survivors took a hard-earned vacation at Plymouth Rock.

      They “gave peace a chance” and just fell in LOVE with the Native Americans!

      “Have you tried the corn?” — Ben Franklin
      “This stuff is great!” — James Madison
      “Those beads are SO pretty!” — Thomas Paine
      “Where’d you get those feathers? They’re just BEAUTIFUL!” — Abe Lincoln

      The Natives of course were not as naive as some might think, and they were sure to make the New Englanders sign prenuptial agreements, (which of course later turned out were unnecessary; there was more than enough land for all!)

      It truly was a momentous and historical occasion.

      Not many nations share our unique heritage and humble beginnings.

      The founders and natives returned to England to get married, and
      months later, the stork brought the children back to America, so that they could expand their
      parents’ mighty empire across the shore!

      The rest, as they say, is history.

      I’m sorry you can’t handle the truth, but that doesn’t give you the right to ruin things for everyone else!

      • mike dar says:

        We are a ‘Republic’, for which it stands, read the Constitution, even the ‘Letters’ before we had a constitution.
        Absurb as it may seem to the unitiated, the ‘Shah’ situation did happen… and breaking up the tendancy for certain Gulf States from creating their own ‘Union’ is what bringing down Saddam and Libya is about.
        Petrodollars. Should ‘dollars’ not be the medium of exchange for ‘Petro’, many trillions of U.S. fiat would be dumped,essentially bankrupting the U.S. led Banking Interchange System(currently 54 international banks… and all the Primary Dealers to the Federal Reserve).
        Might want to try to understand Bush Sr.s and his fathers role in “oil’ and the CIA. Believe, the ‘American Interests’ are commercially based in the mid east.

      • David McFereson says:

        Wow. WOW. I have never, EVER read some a complete nincompoop’s ramblings like xxx yyy before. He doesn’t seem to know anything about anything. Except he’s a capitalist. I wonder what he thinks that is? Obviously has no basis in reality: knows no history, believes things that exist don’t exist, the list goes on and on. How on earth do such people even exist? I fail to understand how even a semi-literate cow poke existing in a cave could possibly have such a misguided and dangerous belief system and still function in the modern world? Arizona? West Virginia? Tanzania? Seriously, the colossal refusal to face reality is utter is dumbfounding.

    • Tim Weiman says:

      Charles,

      I am always a bit skeptical when someone makes the familiar argument that U.S. military expenditures are a subsidy of the oil industry.

      For starters, there was a time when the U.S. didn’t depend on oil imports from the Middle East: remember the morning of December 7, 1941. Energy independence didn’t keep us out of a bloody and very expensive global war. So, I doubt if we suddenly discovered an alternative to petroleum that we could drastically cut U.S. military spending, certainly not enough to pay for big ticket items like Social Security or Health Care.

      But, leaving that aside, for the sake of discussion let’s assume military spending is an “indirect” subsidy. Is it a subsidy of private oil companies or a subsidy of American consumers?

    • Finley Miller says:

      responding to a very old post, but its an interesting topic…

      I think people (including Mr. Polk) confuse the US’s dependence on oil, and willingness to use force to ensure the stability of the middle east and the global financial system in general, with the idea that the US is using military force for the benefit of it’s oil industry. If Saddam had been allowed to control Kuwaiti and Iraqi oil, and threaten supplies from Saudi Arabia, and the other Arab countries, he could have used this power to cripple the US and world economy. It was in the interest of everyone in the USA not to allow this to happen, given his grand ambitions, and his proclivity for invading other countries. We had already seen the potential for damage to our economy from the oil embargo during the 1970s.

      If we had taken control of Iraqi oil and handed it over to the US oil companies then you could have said that the oil companies benefited and that the military effort had, in effect, been a subsidy. But this is not what happened at all. Iraqi oil remained in the hands of the government of Iraq, produced by their national oil company, and sold to the highest bidder. Saudi and Kuwaiti oil had already been nationalized by this time, so the protection offered to these countries from Sadam also is not a subsidy to US oil companies, who had formerly owned reserves there. (Iran is way more complex, with cold-war considerations. And btw there were no US companies there, reserves were controlled by BP.)

  6. Rich Robertson says:

    First of all, average citizens ARE provided with tax deductions for their daily expenses, though limited. It comes in the form of the Standard Deduction or Itemized Deduction in the income tax forms.

    When compared to all other industries, the Oil and Gas Industry is the most taxed and regulated industry in this country. How anyone can define a tax deduction for legitimate business expenses (e.g. exploration) and call it an unfair subsidy is beyond me. In regards to regulations, if you want fairness, then we should bring the EPA and OSHA to bear to all industries in the same manner the O & G Industry must suffer.

    The O & G Industry’s capital investment is much higher than other industries. One only needs to see the off shore drilling platforms or refinery complexes to realize that there is an incredible amount in capital and maintenance investment required. When you compare their income to assets employed, their profit margin is only approximately 8%, which is below the national average.

    Oil is the lifeblood of this country; until a truly viable alternative is developed, we should be encouraging the industry instead of stifling it in the form of punitive taxes and regulations.

  7. Billy James says:

    That’s an interesting perspective. But using the “Tax Foundation” makes me quite skeptical of the veracity of any of your claims. According to various sources the Tax Foundation have at times relied “on early projections without hard data.” I certainly wouldn’t trust their assertions without seeing their numbers (some sort of accounting balance sheet for example).
    Furthermore, I find it interesting that Exxon feels put upon after having a profit of $14.8 billion in one quarter(3Q 2008). That’s $164,444,444 per day for that quarter. I believe it was record setting at the time. But Exxon still deserves the subsidies from the US govt? Wow.

    • Daniel Hofford says:

      Could you specify the subsidies the oil companies get? Please.
      Not only what they are but the amounts? No? I thought not.
      More BS from Left Wingers who just ‘know’ without any data or facts that the oil companies are villains.
      Amazing how narrative substitutes for empirical evidence in the mind of the Progressive Left.

        • Terry Scott says:

          Yes the oil belongs to all of us. I want to use it so I can keep your local hospital’s cath lab working for when you need it. You want the ambulance to take you there. The oil company pays you for the privilege to drill a hole to find the oil. The hole they bought from you is dry and they want a refund just like the last POS computer you purchased and returned. You don’t need to free up the funds for a computer until you replace the one you have. They have to drill a new hole right away because your holes do not come with guarantees and you want the oil to be reliable so you can get to the hospital during your next fit of stupidity. Read a history of Chairman MAO and then the book ‘The Forgotten Man’ and you will find out where Obama and his minion get their talking points from and why the US Great Depression was worse than the rest of the world’s.

        • Mike Graham says:

          It is always impressive when the President of the United States makes a bold and empowered move like saving the American taxpayers $45 billion over ten years as his government adds $1 trillion annually to the federal debt. You got to be proud of the man saving each citizen $15 while charging them $3333. Remarkable!

    • Fred Schmurtz says:

      Total amounts of income are irrelevant. If I invested $10,000,000,000,000 into something and then generated an income for myself of $100,000,000 a year I guess you would say i was a greedy capitalist and have no right to making that much money — despite it being only a small fraction of 1% return on investment.

  8. Todd Crawford says:

    oh, it’s such a pity that that Exxon-Mobil isn’t making more money and that we’re not MORE DEPENDENT upon Exxon-Mobil. we should make sure corporation number ONE in the world makes more money and that our dependency upon Exxon-Mobil is even greater. makes sense.

    • Mike Boylan says:

      ExxonMobil is not #1 corporation in the world. In the oil business, they’re not even in the top 10. They’re #1 in the US. They are only responsible for 3% of global oil and gas production. Most of the oil in the world is owned by the respective governments. Ever hear of OPEC? Add in Brazil, Russia, China, etc., and that’s who owns the lion’s share of oil and gas resources.

      • Daniel Hofford says:

        Shhhh…..don’t disturb his thumb sucking narrative, supplied by Marxist ideologues, that are intended to lull him into a state of consciousness that can be easily manipulated by those same ideologues.
        Reality, empirical data should never be allowed to intrude on Marxist fantasies or Left Wing Progressive one’s either. When you prick one of these groups with the truth it leads to a wail heard round the world.
        The echo from that is proof to the Left that they are right.

  9. Mike Boylan says:

    The reason why XOM is sending more to governments than it earns for shareholders is simple. On each gallon of gas, the average collected at the pump to send to state, local and the federal government is 49 cents. XOM earns about 7 cents per gallon. Add in corporate income tax, plus tax on dividends, and governments receive far more than shareholders from their business. Of course, shareholders benefit from retained earnings which grow the company, but that’s no guarantee. XOM is correct in reporting it this way. In Vermont, we have a 9% rooms and meals tax, which get passed to guests on their bill. The hotel doesn’t need to be profitable for this cost. Same thing. Look at Valero, which lost money for several years due to refining margins evaporating and substantial retrofitting costs. Doesn’t mean they didn’t collect taxes on sales. They didn’t pay income tax, but they paid state, local and federal sales taxes.

  10. Patrick Black says:

    I always find it interesting when the government targets the oil and gas industry over their “outrageous” profits. Just a quick browsing of Google Finance provides a good example of what I mean.

    Here are some numbers based on the most recent 4 quarters of financial results. The taxes paid amount was calculated from subtracting after tax income from pre tax income, so should cover all state and local taxes as well as federal taxes.

    Company 1:
    Profit – $43 billion
    Gross income – $466 billion
    Profit margin – 9%
    Taxes paid – $31.6 billion

    Company 2:
    Profit – $37 billion
    Gross income – $141 billion
    Profit margin – 26%
    Taxes paid – $12.7 billion

    In looking at the numbers, you’d think that company 2 was the one making “outrageous” profits. They make nearly as much in profit as company 1, but at a much higher margin (i.e. according to those who have issues with the oil and gas industry, they are “gouging” the consumer) and they pay less in taxes.

    Funny thing is you won’t often, if ever, hear for the government calling for windfall profit taxes or removing tax exemptions from company 2, while it is all too common for company 1.

    Company 1 is of course the “evil oil company” Exxon-Mobil while company 2 is the “wonderful source of new gadgets” Apple.

  11. Daniel Hofford says:

    And yet, the oil companies have behaved collectively, like cowards.
    Where have these companies published rebukes to Obama and his Marxist minion in the pages of the NYT or the WSJ? Where have been the books by industry executives describing the oil business?
    Like rats on a sinking ship you all scurry around afraid of speaking out and challenging the common perception offered to the public by a Left Wing news media.
    To the degree that you have not defended economic liberty you all get what you deserve. The down side is that those of us who are advocates of freedom lose right along with you.

  12. W Thogmartin says:

    It is absurd to suggest that petroleum companies are ‘subsidizing’ government. Through their ‘rents, royalties, bonuses and corporate taxes’ they are privatizing a publicly owned resource. There are many businesses receiving NO federal government support – petroleum firms are among the most profitable firms in human history. Petroleum firms do not need nor should they receive publicly financed incentives to conduct their business.

  13. alexander adamick says:

    Ken,
    Come on buddy, your logic is soooo flawed here!!! Do you even believe what you just wrote? Can you really feel good about this article?

    Let me state that I love the oil industry because I live in Louisiana and it is super important here, however, the US government (and defacto the US people) own the land and the rights to the natural resources so of course you have to pay them. And it makes sense that you would pay them more than you profit from this. Seriously, I’d be happy to take your contracts off your hands for you if it meant that I would be close to making 100 percent profit on my investment and furthermore that I could complain about it in a public forum that I should make more than 100 percent profit on stuff that wasn’t even mine! So when you also get some tax breaks that no other industry or person gets in the country because of your ability to lobby with those wonderful profits you do get no one is sympathetic but your shareholders).

    Alec Adamick

  14. Mark Lorenz says:

    “…attempts to misrepresent the industry’s tax contributions are nothing more than an attempt to pick winners and losers in the marketplace.”

    It is ironic that ExxonMobil has long attempted to misrepresent its own tax contributions, for instance by including in its tax payments federal and state excise taxes on gasoline. These taxes are (obviously) paid by consumers and merely transferred to state and federal governments by the retailers. This ranges (by state) from $0.26 to $0.69 per gallon or, at present prices, about 8-20% of the price of a gallon of gas. To include this as a tax burden on the company is outright deceptive.

    Comparing corporate profit margins in a heavily competitive extractive industry and a fast moving innovation industry (Exxon vs. Apple) is, pun intended, like comparing apples and oranges. There’s no economic validity to them.

    In 2011, XOM paid $1.5 billion in federal income tax, or 2% of net earnings, and deferred another $1.6 billion. It paid nearly $29 billion in taxes to governments outside the U.S. Doesn’t seem like Uncle Sam is a huge burden to me.

  15. Algernon Blackwood says:

    I do not understand the pricing policy of the Oil companies. It seems as though they follow the political winds closely. This year the stakes for the oil people are really high and so are the prices. Does anyone not believe felt that the prices reflected the fact that the Oil people did not like Obama and they thought that he would take the blame for the high prices. Even though that tactic did not work very well (Can you picture Obama going around to gas stations and raising the price?), it still was a windfall for the Oil folks. The cruelty of the oil companies on indigenous populations in third world countries is well documented. The obscenely high prices that we pay in addition to the taxes for gasoline are part of the reason that this recession is so bad. If it costs too much to drive to a job because of gas prices, then people will not be able to find work. As for the BP and the Exxon Valdez horrors, we will be suffering for many years from their callous and greedy executives
    “Res Ipsa Loquiturr “.

    I say that we should nationalize the oil companies and regulate the prices because to not do so means that they will continue have an outsized and pernicious effect on the people of the world.

    Bye the Bye, I saw someone post in this forum a phrase “Stupid Marxists”. Marx may not be everyone’s cup of tea but he was anything but stupid. The person who made that remark sounds stupid to me.

  16. louis Nardozi says:

    Well, it doesn’t get more ridiculous than this. Including royalties and rents? Most American oil is pumped off public land. The royalties for pumping it are a negligible fraction of its resale price. Oil and gas companies paid more to government than to shareholders – HA! Why shouldn’t they? They’re getting the oil OFF PUBLIC LAND. Not to mention which, profits disbursed to shareholders is a completely different animal from NET profits.
    Funny thing is, I agree with your summation completely. Let’s not pick winners and losers. End ALL subsidies for ALL industries. Establish and enforce reasonable prices for ALL natural resources taken from public lands.

  17. Jeremy Henderson says:

    “This is the flip side of the coin that few realize – the oil and natural gas industry is an enormous source of revenue for the U.S. government. In fact, the industry pays the federal government approximately $86 million a day – or about $31 billion a year – in rents, royalties, bonuses and corporate taxes. That doesn’t even include the payments made at the local and state levels.”

    So your logic is…oil companies should pay less in taxes, because they make a lot of money for the government, in the form of taxes. Two questions:

    1. How much money do oil companies make thanks got government? You mention rents and royalties, in addition to taxes; those come from government owned lands that you are allowed to drill on. Wihout access to those lands, what would your bottom dollar look like? Couldn’t the government make the same argument that you make, that given the astronomical profits of your industry, you could stand to pay more for those land licenses and in taxes?

    2. How about your customers, like me, and the millions of people who buy gas from you? We contribute an awful lot to your profits, so it stands to reason that you should lower prices for us, doesn’t it? I mean, it seems only fair.

    • Fred Schmurtz says:

      Would you invest in a company that paid a 2% return on investment? I think not when you could invest in another company that pays much more. This is pretty basic economics. If the oil companies can’t make a reasonable PERCENTAGE of return on investment they will not be able to continue in business.

      If that is what you want you should be a little more direct about it instead of making a lot of spurious arguments.

  18. Ryan M says:

    It’d be nice if the sources other than the API report were cited in this editorial. Even if it is legit it feels like propaganda.

    I did briefly scan the references at the end of the API report and most appear to be fluff. Which is sad b/c I’m open to hearing the other side of the argument, I just don’t have time to be lied to.

  19. Paul Basken says:

    What a pile of self-serving garbage. When you take into account all the horrific damage caused to humanity by the rampant overuse of fossil fuels, Exxon-Mobil and its shareholders have paid nowhere close to the debt they owe the citizens of the United States and the rest of the world.

    • Fred Schmurtz says:

      If I have this right, it is the fault of Exxon and other oil companies that you choose to drive a car? They held a gun to your head and said you had to turn on your electric lights, heat your home in winter, cool it in summer, have food available at the local grocery store?

      They sure sound evil to me.

  20. Steve Nelson says:

    If the 5 big oil companies (BP, Chevron, ConocoPhillips, ExxonMobil and Shell) make a profit of $375 million per day in 2011 and paided only $86 million a day isn’t that a tax rate of, like, 23%? I know my Federal tax bill this year was about 31%. So if those oil companies paid my rate of taxes then the US government would be getting an extra $26,000,000 a day for a total of $9,500,000,000 more tax revenue annually.

    • ddd mmm says:

      Your overall tax rate was 31%? How much did you make?

      I just ran numbers with the IRS tax table and you had to be well over $400,000 to have an effective rate of 31%.

      Maybe you were in the 31% tax bracket, but you did not pay 31% of everything you made to Uncle Sam.

      BTW, there is no 31% bracket. Either you ‘splain your numbers or you are full of you-know-what.

  21. Stephen Bonser says:

    For lots of good reasons the pubic simply doesn’t trust the oil and gas industry. Many people believe it should have been nationalized decades ago. So while you have the right as spin doctors to push back, understand that you’ve got a gravy train that is quite remarkable and not possible in most other countries.

  22. Patrick Murray says:

    The above is proof that Exxon feels it is above the US government and above the will of the American people. If Exxon is subsidizing the US government that implies that Exxon is more powerful than the US government and that it’s will– it’s well-being– is more important than the will and well-being of the American people. The attitude of the company after the Exxon Valdez disaster hinted at this attitude, but now they explicitly state it in their :advertising” or whatever the above is supposed to be. Fo those who don’t remember, after the oil spill which fouled Prince William Sound in Alaska and after a court found them libel for damages resulting from that spill, Exxon stonewalled for years and has still not paid all the claims against it. Funny that it was a foreign company– BP– that teated Americans better than an American company. Now we know why that was: because Exxon executives see themselves as above American law, the American gonernment, and the American people.

  23. Patrick Murray says:

    The comments above prove that Exxon sees itself as a power beyond the control of the American government. If Exxon subsidizes the US Government, then who is the controlling party? Which party controls the other: the subsidizer or the one subsidized? The answer is obvious but should come as no surprise. In the Exxon Valdez affair the company revealed its contempt for the American people by stonewalling and litigating every effort to get the company to pay damages to the parties affected by the oil spill. Quite in contrast to the recent episode with BP. Isn’t it odd that a foreign company operating in the US should be more forthcoming than an American one? Not if the management of the company see itself as above and beyond the control of the American government, American law, and the will of the American people.

  24. Father Russell says:

    Let be perfectly clear about this statement – Our industry and the activities that support it accounted for more than $1 trillion of the U.S. economy in 2009…” is the added “value” from windfall profits of the industry – if and only if windfall profits are available will the oil industry participate in drilling activity. Remember the oil industry history – it is not one of social work!

    The best example of this is the current frenzy of fracking oil shale extraction. These pockets of oil were discovered in the 70′s and sat on until the cost of oil rose to the $85 – $100/barrel level where windfall was inevitable.

    Enough of this nonsense propaganda taken out of context to hoodwink the public into believing paying the huge fraud settlements without admission of guilt from the profits earned is the least bit noble…

  25. ddd mmm says:

    John Doherty says:
    November 20, 2012 at 8:59 am

    Halfway through 2012 the Big Five have made over $62 Billion in profits. The idea that the industry needs any exemptions or tax breaks is ridiculous. Apple is trash. Americans shouldn’t be buying any of their products until they start manufacturing them here. They don’t make their products in China to stay competitive. They drive the market. They’re one of the few companies who could manufacture here and still be highly profitable.

    John, I don’t know if you are ignorant or being deceitful. The Big Five surely have a market cap over a TRILLION dollars. $65 billion is only a 6.5% return on a trillion invested.

    You have listened too much to rich liberal politicians and billionaires who have made sure that their billions will never be taxed because they have put them in trusts and foundations. They don’t “own” the money or assets any more, but they DO still control them and they use them to pay for cars, travel, food, entertainment, etc.

    Mary Jo Kopechne could not be reached for comment. When Ted finally showed up, the real assets had been transferred out of the trust that eventually was given to the Kopechne family. By then it only had one wet car and a few hundred dollars in it.

  26. ddd mmm says:

    You know (maybe you don’t), corporate taxes are really just another way to make the consumer pay a tax they don’t realize they are paying. The 45-50 cents tax on a gallon of gas you pay at the pump is only part of the tax the government gets out of that gallon.

    The taxes that Exxon Mobile pays as a corporation have to come from some where. That some where is out of your pocket when you buy gas.

    And that is not all of it. Every supplier or contractor Exxon Mobile pays for anything has to pay taxes as well. Those taxes are well-hidden from the consumer.

    Who pays those taxes? Ultimately, YOU!

  27. Daniel Allison says:

    Democratic Customer
    The oil companies make about 3% ROI per year. The local grocery store makes more than that in a month. When you invest 100′s of billions you expect to make billions somewhere down the line. The term “record profits” is a straw man to start with, if I made a dollar last year and made $1.01 this year that would be record profits would it not? For your education, no corporation or company pays any taxes. All taxes are paid by the final user or consumer. I take it you failed in Economics 101. All taxes and that includes Social Security taxes are passed on in the price of the products or services as a cost of doing business. Any company that does not do this quickly goes out of business. I would suggest you keep your union job and leave the risk taking to the adults.

    • jerry flores says:

      Daniel,
      I am unsure which side of this you are on? In the first part of your pronouncement, you seem to be attacking the receiver’s point of view. In the second part, you seem to be giving it credence. True, if you made 1.00 last year, and 1.01 this year, it would be a record profit. so for the sake of your argument, lets try it from XXXon/Mobil’s side. If they only profited 4 billion last QUARTER, and profit 4 billion and one dollar this quarter, then this is a record profit.
      Then you do seem to be making the other fellow’s point of tax breaks, although I don’t think you realize it. Lets use XXXon/Mobil as an example again, as they should be made an example of. They receive monies in the form of tax breaks, and subsidies, then pass which taxes on to the consumer? Which of the taxes (that they aren’t paying by passing along to the consumer according to your analysis) are they passing on to their consumers? The cost of doing business, as you say, is greatly diminished in the case of XXXon/Mobil. That is how they manage billions of dollars in profit quarterly.
      As a side note…..before you start thinking of how good this is for your retirement, just remember it is you that is funding your retirement daily in the form of fuel costs, and everything that fuel costs affect. And that would be EVERYTHING.

  28. ole wakeuppeople says:

    well to think about it we are not the oil companies. and we spend millions of dollars every year paying gas taxes into the oil companies. while they make billions so even though you try and confuse the whole deal by making it look like the oil companies pay this they don’t pay much after they get the government welfare check back. so quit twisting the truth to make you selfs look good. have to love the p[ropaganda of the rich to confuse the stupid.

    • Gavin Cooke says:

      They don’t get a “check back” they get tax breaks so they have DEDUCTIONS on their taxes like you. You get your “welfare check” in the same fashion if you deduct the interest on your home loan.

  29. Gavin Cooke says:

    After reading the comments I have to wonder about the education level of WSJ commentators. I assumed they would be informed on issues and have decent reading comprehension but I am no longer sure. The “tax breaks” the oil companies recieve are not relavent when you consider the larger issue. Return on investment and total tax burdon. The oil companies make about 10 cents a gallon on oil. The government, taking NO risks makes a 50 cents a gallon. The RAW product is “worth” at $100.00 a barrel $2.50 a gallon. The Government gets 50 cents making it 3.00 a gallon. The gas station makes a dime or so, the refineries make a dime or so, and therefore gas costs about 3.50 a gallon depending on where it is shipped and additional expenses like the tree hugging Californians and rediculous “EPA seasonal formulas”. Any business, like Walmart for example, raises prices when expenses increase. Oil companies are different why? Banks borrow OUR money from the Fed at virtually NO interest and loan it back to us with ten fold plus profit but thats ok. McDonalds makes a 30% profit on a burger and a 90% profit on a soda. Thats ok too. Why are Oil companies the only industry that we complain about? As the Democratic Customer says “they earn enough”. Who decides enough? You or the market place? If you don’t like the price of oil then buy a prius or a scooter and sell the Mercedes. If the oil is “ours” and not “their’s” then get a rig and drill for it yourself. If you want solar and wind power than get an education on the laws of Physics and our current level of technology as NEITHER is currently economically worthwhile nor will they be anytime in the… read more »

    …next few decades. The only alternative fuel that WORKS is using less of the stuff period. Wouldn’t it be great if “Democratic Customers” didn’t stop the REAL alternative to oil known as Nuclear Power in the 1970′s? That backfired on you, didn’t it? And if we are in Iraq for the oil then how come we didn’t GET any? We were in Serbia for the oil as well? North Korea for the oil? Viet Nam for the oil? We are in the middle east protecting our so called national interest and the so called safety of Americans. And YES a stabil Middle east is GOOD for us. Even if we were oil independent CHINA is not. If the oil stops going to CHINA from Saudi Arabia who will buy our BONDS? It’s a bit more complicated than simple minds make it out to be but quite understandable if you give it a try at least.

  30. Mrs H says:

    I think what makes all of us upset is the fact that we do not have any alternatives to fossil fuels. I think that only a fool believes that a Corporation with the earnings as big as the big oil companies have, do not pay taxes, nor do they pay good money that is spent in everyway possible. Oil Corporate jobs are very well paying, but it comes with a price, as does most (not all) good paying jobs do. Either in safety, or free time, or Corporate runaround, or what have you. I think we all need to be glad that they are not the only oil company out there, because when we do get upset, we can go to the other oil companies with our business. That is really all we can do, however, we are weak and would run right back to the first company the second they lowered their prices by one darn penny. It is not logical, but it is just what it is, ludicrist maybe? I think that oil is one of the most important things that we spend money on in this economy, and I think we all know that we need to find real alternatives. But, whenever i hear that our Congress wants to review the Oil Companies’ profits and expenditures, I laugh. We all benefit from the numerous ways that money moves around in our economy. We all benefit from all the good that happens from the oil products we consume. Just like we are all hurting from some of the not so good stuff we are letting happen. But the Oil Companies are just being like the rest of the Corporations, exploiting the Public… read more »

    …for a product we can’t replace, at a price we can barely afford, and we should be glad there are some good jobs that come out of it. And alot of taxes too. Now, OPEC is very likely a different story as well as the Saudi Arabian Royal Family, but that is not truly about a business, that is something I don’t know as much about.

  31. p mcc says:

    Despite whatever rates oil companies pay… I find it really hard to feel sorry with a company making $ 10 billion in pure profit a quarter. … really hard.

  32. jerry flores says:

    Wow! XXXon/Mobile IS and amazing company. They manage to be out all this expenditure, and still manage to turn profits every quarter to the tune of billions. Poor, misunderstood XXXon/Mobile

  33. William Inglis says:

    Tax breaks that are unique to the petroleum industry should be repealed if there is no compelling reason to keep them. The rest of their tax breaks should be left alone. Their tax increase will be added to the cost of the product; we’ll all pay more at the pump, including new taxes on top of oil company taxes, and everyone will be happy now that we will have “dealt with the oil companies”! Then we can get on with the business of the country without constantly hearing about “unfair” tax breaks for BIG OIL

    • Democratic Customer says:

      Why should that be? Why should a company that makes record profits in the billions PER YEAR be allowed to protect profits by passing the cost of the tax break loss to us through their product costs? There should be laws against that.

      Its pure greed. If a company can have over $40 BILLION in profits (profits, meaning that they earn more than they spend), then they can stand to absorb the rise in cost from their lost tax “breaks” and STILL earn a considerable profit for their shareholders.

      To be clear, the rise in their costs due to the loss of the tax breaks would be felt much less by ExxonMobil, than the rise in gas prices will be felt by their customers.

      • Ted Moore says:

        Using a strawman shows either ignorance or falsehood. You can decide which you resemble the most. The rate of return for most of the oil industry is lower than if you were selling pop at that gas station where you got your gas. If you need to invest trillions you would need to expect billions. If not, you would not invest the money. If the money had not been invested you would be paying much more for your fuel.

        Thats right, much more for your fuel. If you want to make something more expensive then you just penalize the success of those doing the work.

        Why so much difference in gas costs? The main difference between, say California and Wyoming is the size of the slice taken by state taxes. The next biggest reason is the amount of hoops you force the producers to jump through.

        Greed, you say? The desire to do well, so you can make a profit, is the main driver in lowering costs for the customer. Competition is good for the consumer. It is less so for the business involved. Competition costs drive many companies out of business. Only in a monopoly or a closed market can greed set the price.

      • ddd mmm says:

        Democratic Customer,

        You probably have some investments, if you have any sense. You want those investments to pay you a reasonable return. Most people would like to see something around 8-10%, so they can comfortably stay ahead of inflation. Furthermore, if a company can’t earn a profit of 10% or so most years, they can’t make it through lean times.

        Exxon Mobile is a 400+ billion dollar company. That means that stockholders have paid more than 400 billion dollars to own a part of the company. So the 40 billion dollars that you are complaining about is actually a reasonable profit for a company as BIG as Exxon Mobile.

        I have heard that about ten cents out of the $4 you pay for a gallon of gas is profit for the oil company. Have you paid any attention to the stickers on gas pumps that tell you that 45-50 cents a gallon is state and fed tax?

        The govt gets FIVE times as much as the oil company gets to keep. And the company doesn’t even keep it all. They pay DIVIDENDS to owners. If you have a pension plan or a mutual fund, YOU are one of those owners.

        You better hope Exxon Mobile makes decent profits so your pension will be enough to keep you fed when you can’t work anymore.

      • Neel Patel says:

        I never heard anybody saying Apple should pay more for being greedy, there was barely any blow back from the articles showing all the steps they take to exempt out of US taxes. Oh wait, they just make a expensive product that everybody wants, so they are exempt from ridicule.

      • Gary Graves says:

        Pure greed. Nice, especially considering that the government takes far more in taxes. Is that pure greed too? I’d rather have the money in the hands of job-creating industrialists than greedy, corrupt bureaucrats.

  34. Jeff Drake says:

    Oil companies should send significant revenue to the states and federal government. Why? Because the oil, and gas that the oil companies make their profits on come largely from underneath U.S. soil and coastal waters, and because the states where drilling takes place incur huge costs in building infrastructure (roads, bridges, etc) robust enough to accommodate oil drilling and shipping equipment.

    The U.S.’s natural resources are a national resource, not simply a private resource. The oil industry contributes greatly to the country’s economy… but only because of the oil and gas under U.S. territory which therefore should benefit the entire country.

    Furthermore, it is in the country’s best interests to not only produce oil and gas, but to also reduce our use of oil dramatically and increase solar and wind energy. This has huge military and economic advantages over sending hundreds of billions of dollars annually to Saudi Arabia and other countries because we use so much oil.

    • Fred Schmurtz says:

      It is hard to even know where to begin. You seem to think that drilling for oil and gas is like going down to the corner grocery store and just picking up whatever you want. There is enormous expense and risk involved. My father was a wildcatter for many years, spent millions, and never recovered a dime. Those underground resources would just be sitting there doing nobody any good unless someone took the risk to develop them.

      “Significant revenue to the state . . .” No one says oil and gas companies shouldn’t support the state and the infrastructure needed in development. That is a straw man. What is said is that what is touted as “subsidies” is anything but.

      Your comments about solar and wind also indicate you haven’t been reading the newspapers for the last few years. We have many hundreds of years of oil and gas reserves (let alone coal) right here in the USA. We have no need to send any money to Saudi Arabia if those were developed.

      As for solar and wind. I live near a wind farm that is so fragile and expensive to maintain that even on the windiest days only about half of the windmills are generating anything. As for solar, can you say Solyndra?

      Beyond Solyndra, a battery company touted and subsidized by the current administration, A123, was just bought by the Chinese at bankruptcy pricing.

      Another great alternative energy investment.

    • Daniel Allison says:

      Actually the oil and gas are not national resources, they are private property that belongs to the landowner or some one that owns the mineral rights under the land. They are national resources only in socialist countries, like Venezuela for instance and Federally owned property. The oil companies pay me for the privilege to drill on my property, that is called surface rights, then if I own the mineral rights they pay me for the product they remove from my property, this is known as royalties. If they need to put in a pipeline, then they pay for an easement for that. If you make oil and gas a national resource be prepared to pay more than twenty dollars a gallon based on the efficiency of the government in other areas. Unfortunately there are many ignorant fools like you and they vote. That is why the country is failing. They don’t teach much in public schools any more, do they?

      • Finley Miller says:

        I don’t think they are national resources only in socialist countries. Are there any countries at all, other than the USA, where the individual landowners own the mineral rights under the ground? I’m not saying there aren’t, I just seriously don’t know of any.

        That said, I agree that the word subsidy is used in a very misleading way by people in the press. In the USA we have a peculiar system of corporate taxation where we have a high nominal rate (35%), but then we have all sorts of tax breaks that bring the effective rate down significantly, and into line with the international average. All industries have their tax breaks, including oil. But a subsidy and a tax break are certainly two different things.

      • p mcc says:

        “Unfortunately there are many ignorant fools like you and they vote”

        Yes and you appear to be one of them…. offshore oil rigs… who owns the land? No one except the people… they are U.S. territorial waters. National parks… also happen to belong to the people.

  35. Phineas Worthington says:

    The idea that a tax break is a subsidy is just plain economic ignorance. As is the idea that government spending is an investment.

    That the tax burden of companies can exceed their profits is simply unjust.

    Great articles! Keep up the good work!

    • John Brown says:

      Your comment doesn’t make much sense to me. The scenario of tax burden outpacing profits applies to consumers as well but you make no mention of them. The average citizen doesn’t get to deduct things such as rent (lease), gas (travel expense), groceries (entertainment) and subcontract employees (maintenance).

      I’m not arguing that the oil and gas industry isn’t paying their taxes. At least they do pay some. But as a whole, the industry does reap a lot of profits. Shareholders get the short end of the stick because that profit usually needs to reinvested in new exploration and technologies. That is the nature of the beast.

      Besides, shareholders aren’t innocent bystanders either, if they didn’t like how things were being ran, they can take their money and run.

      … now that that’s all been set aside. I think the argument over oil and gas subsidies is mute when you have companies such as General Electric paying nothing.

      In a perfect world, every company would pay. We could then lower the tax burden across the board and everyone would be happy… everyone except those screwing the system now.

      I have no sympathy for them.

      • xxx yyy says:

        >> Your comment doesn’t make much sense to me. The
        >> scenario of tax burden outpacing profits applies to
        >> consumers as well but you make no mention of them.
        >> The average citizen doesn’t get to deduct things such as >> rent (lease), gas (travel expense), groceries
        >> (entertainment) and subcontract employees
        >> (maintenance).

        You make an excellent point, but you are forgetting the 36th Amendment (C) and the 37th amendment (TM):

        XXXVI: The profits of corporations should always be upheld and favored over individuals and their lives, happiness, dreams, desires, wants, goals, welfare, and well-being; the right for a corporation to have double-standards when money is involved shall not be disturbed; the role of the Governnment is to serve corporations, not individuals.

        >> Besides, shareholders aren’t innocent bystanders either, if >> they didn’t like how things were being ran, they can take
        >> their money and run.

        And you call yourself a citizen! You really need to be informed before you start spouting such nonsense. It is embarrasing.

        REAL citizens know the principles our country was founded on:

        XXXVII: The business world is allowed to tell people “you can always work somewhere else” and “if you don’t like it then leave” and “noone owes you a living” but reserves the right to be hypocrites when the same “standards” are applied to their existence; The Government shall not infringe on this right, for lying and selectively spinning information by omission of important details is an imperative aspect of commerce

        Who has been feeding you this propaganda that people matter?

        Seriously, George Washington, Inc. (R), The Thomas Jefferson Co. (TM), and Abraham Lincoln and Associates (All rights reserved) would be spinning in their graves if they saw your rhetoric.

        If you did any research at all, you would find they all LOVED to have their face plastered on currency,
        because it made them appear more… read more »

        …like the royalty that they knew they were.

        Ben Franklin was a DirecTV executive for 30 years for crying out loud!

        You should REALLY get your facts straight before you go around criticizing others!

        • Michele Thrash says:

          I can’t tell if you’re trying to be sarcastic or if you really believe what you’re writing here. To what constitution are you referring? Because there are only 27 amendments to the United States Constitution.

          Perhaps it is you who needs to be informed before you start spouting such nonsense.

      • Daniel Hofford says:

        Are you brain dead? The oil companies have historically and continue to this day to make between 8 & 10 percent profit on their investments. In what world is that too much? Apple makes over 20% on their investments. Many companies make between 10 and 20% return. What school did you take economics in? Obama’s home study course in Marxist stupidity?
        I have no sympathy for you.

        • John Doherty says:

          Halfway through 2012 the Big Five have made over $62 Billion in profits. The idea that the industry needs any exemptions or tax breaks is ridiculous.

          Apple is trash. Americans shouldn’t be buying any of their products until they start manufacturing them here. They don’t make their products in China to stay competitive. They drive the market. They’re one of the few companies who could manufacture here and still be highly profitable.

    • Simon Gruber says:

      You’re misreading what was written. The author here, and the WSJ article, are being intentionally deceptive, and that’s why you believe something that neither of them technically said. You’ve substituted “tax burden” for “taxes and fees” or “money to the government”, which is not accurate. These companies take oil that is on public land that is owned by the American people, and they pay for it as they should. It is an absolutely arbitrary thing to compare these fees to profits. If I sell you something for $10, and you know you can sell it for $12, you would do it if it cost you less that $2 to sell it. Maybe you only make $1, but it is worth it when you do it for a bunch of times. You could look at this as me “taxing” you 10X your profits! But that would be dumb, just like this article.