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Big oil, big taxes

The Senate debate on a bill to increase oil company taxes ended yesterday when supporters failed to get enough votes to continue. But the misinformation campaign rolls on.

By now it’s becoming all too familiar, especially since Politico and The New York Times published leaked talking points being used to counter critics who blame the administration’s energy policy for high gasoline prices.

The plan is to build support for increased oil company taxes by linking profits to consumers’ frustrations at the pumps over gasoline prices – which in reality have been driven higher by global oil prices.

The president even singled out ExxonMobil in a Rose Garden speech yesterday, saying that last year we “pocketed nearly $4.7 million every hour” in profits.

 

 

Set aside for a moment that our company is owned by millions of shareholders, the overwhelming majority of whom live in the United States and benefit from our success through their 401Ks or public service pension plans. And that includes members of Congress.

Set aside the fact that less than 6 percent of ExxonMobil’s earnings in 2011 were from refining and selling gasoline and other products in the United States.

The reality is that statistics such as by-the-hour profits only tell part of the story. Consider if the president had added the following statistics: ExxonMobil’s taxes were $12.3 million an hour, and it took more than $47 million an hour to run the global business. Those statistics are also accurate and they put the $4.7 million an hour in profits in context.

For every dollar in revenue last year, we kept about 8.5 cents in profit. That’s right – 8.5 cents profit for every dollar of sales. Compare that to the profits of other industries, such as pharmaceuticals, financials and computer and smart-phone makers on a per-dollar-of-sales basis, and you’ll see that they earn two or three times as much on every dollar of sales.

I haven’t heard anyone talking about increasing taxes or eliminating standard tax deductions for companies in more profitable industries. Singling out just one industry – or worse, just one or two companies in the entire U.S. – for punitive tax increases using spin and hyperbole is not good tax, energy or economic policy.

Despite the rhetoric, it’s a fact that U.S. oil and natural gas companies are among the highest taxpayers in the United States. In 2011, ExxonMobil’s federal and state taxes totaled more than $1 billion a month as a result of our activities in the United States. That’s $12.3 billion in taxes on operating earnings of $9.6 billion in this country. That’s a fact, not spin.


8 Comments

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  1. Richard Baty says:

    As an Exxoholdern/Mobil share holder and a consertive voter, I hope the oil companies are spending mega bucks to elect pro – energy company candidates running for public office — this does not include President Obama.

  2. Jeff Hannon says:

    This is a superlative visual representation of the issue in proper context. The sad fact is President Obama knows the numbers you’ve added. It seems pretty clear why he chooses not to mention those other numbers in his speeches.

    It might be interesting to compare Apple’s numbers in the same fashion. Nobody seems driven to raise taxes on Apple, simply because they have such huge profits.

    • Jeff Drake says:

      And isn’t it interesting that Exxon Mobil wants to show profits per dollar and not the $41 billion in profits last year- the highest profits of any company in the U.S.? With a 13% effective tax rate, I might add. The higher profits aren’t because they produce some great new product, which is what Apple has done. It’s simply because global oil prices are so high, which is to Exxon’s benefit but not under its control.

  3. Darrell Pitzer says:

    I think that it is worth showing ExxonMobil’s size relative to its true competitors, the private/nation state oil companies. ExxonMobil’s profits benefit many shareholders, as your article so elegantly states. Who profits from the earnings of the private/nation state companies?

    • Jeff Drake says:

      The entire country would ideally benefit from the earnings of the national/public oil companies. That ‘s not relevant in the U.S., but I believe that the public should benefit greatly from taxes placed on the U.S. oil companies, because the oil and gas under U.S. ground and coastal waters is what makes these businesses possible.

    • Jeff Drake says:

      The entire country would ideally benefit from the earnings of the national/public oil companies. That ‘s not relevant in the U.S., but I believe that the public should benefit greatly from taxes placed on the U.S. oil companies, because the oil and gas under U.S. ground and coastal waters is what makes these businesses possible.

  4. Jeff Drake says:

    Exxon Mobile had $41 billion in profits in 2011. Apple had profits of $26 billion. Pfizer, the largest U.S. pharmaceutical had net income of $10 billion in 2011. So, I would argue that oil is indeed the most profitable industry and to try to put in in a cents per dollar context is indeed spin. In addition, Exxon Mobile is dependent on national natural resources to produce this profit, and creates large expenses for road replacement and other infrastructure in the areas it drills, so it should pay back the country for those expenses and for the natural resources that make its profits possible.

  5. Jeff Drake says:

    Exxon Mobile had $41 billion in profits in 2011. Apple had profits of $26 billion. Pfizer, the largest U.S. pharmaceutical had net income of $10 billion in 2011. So, I would argue that oil is indeed the most profitable industry and to try to put in in a cents per dollar context is indeed spin. In addition, Exxon Mobile is dependent on national natural resources to produce this profit, and creates large expenses for road replacement and other infrastructure in the areas it drills, so it should pay back the country for those expenses and for the natural resources that make its profits possible.

  6. Richard Baty says:

    As an Exxoholdern/Mobil share holder and a consertive voter, I hope the oil companies are spending mega bucks to elect pro – energy company candidates running for public office — this does not include President Obama.

  7. Jeff Hannon says:

    This is a superlative visual representation of the issue in proper context. The sad fact is President Obama knows the numbers you’ve added. It seems pretty clear why he chooses not to mention those other numbers in his speeches.

    It might be interesting to compare Apple’s numbers in the same fashion. Nobody seems driven to raise taxes on Apple, simply because they have such huge profits.

    • Jeff Drake says:

      And isn’t it interesting that Exxon Mobil wants to show profits per dollar and not the $41 billion in profits last year- the highest profits of any company in the U.S.? With a 13% effective tax rate, I might add. The higher profits aren’t because they produce some great new product, which is what Apple has done. It’s simply because global oil prices are so high, which is to Exxon’s benefit but not under its control.

  8. Darrell Pitzer says:

    I think that it is worth showing ExxonMobil’s size relative to its true competitors, the private/nation state oil companies. ExxonMobil’s profits benefit many shareholders, as your article so elegantly states. Who profits from the earnings of the private/nation state companies?

    • Jeff Drake says:

      The entire country would ideally benefit from the earnings of the national/public oil companies. That ‘s not relevant in the U.S., but I believe that the public should benefit greatly from taxes placed on the U.S. oil companies, because the oil and gas under U.S. ground and coastal waters is what makes these businesses possible.

    • Jeff Drake says:

      The entire country would ideally benefit from the earnings of the national/public oil companies. That ‘s not relevant in the U.S., but I believe that the public should benefit greatly from taxes placed on the U.S. oil companies, because the oil and gas under U.S. ground and coastal waters is what makes these businesses possible.