Wednesday’s sharp words weren’t the first time President Obama has targeted ExxonMobil. What was different was the way he opened his criticism.
Despite the fact that ExxonMobil receives no special tax treatment, the president claimed that it “would actually help the economy“ if the government were to end the “corporate welfare” he says ExxonMobil, in particular, receives. I want to address both parts of the president’s comment.
With the U.S. economy continuing to struggle, it is more important than ever for our country to come together to discuss the best ways to boost the economy and help the more than 23 million Americans who are unemployed or under-employed.
Punishing the U.S. energy industry is not the way to do it.
As I wrote a few months ago, our economic contributions are significant and far-reaching – and they’ve been vital to keeping the economy moving during challenging times:
In 2011 alone, ExxonMobil contributed $72 billion to the U.S. economy through activities including taxes, salaries, returns to our investors and payments to other businesses and industries to keep our U.S. operations running. That’s an average of almost $200 million per day pumped into the U.S. economy, and it doesn’t even include the indirect effect of such spending. The cumulative effect of U.S. oil and natural gas activities accounted for more than $1 trillion of value added to the U.S. economy a year, and about 7.7 percent of U.S. GDP, according to latest data available.
Some may feel there are political reasons for singling out the oil and gas industry for punishment, but there aren’t good economic ones. By seeking to remove standard tax provisions available to all other manufacturers and producers, the policy being suggested by the president and some others would undermine one of the few sectors of our economy that has been investing in America and creating jobs.
The second part of what the president said also deserves attention because it is repeated so frequently despite being incorrect. The president continues to call for the elimination of what he (mistakenly) terms industry “subsidies.”
The simple fact is that these are legitimate tax provisions covering a variety of industries. In fact, integrated oil and gas companies like ExxonMobil receive less favorable tax treatment than others within our own industry and as compared to other industries.
So you can see why we find it surprising – and disappointing – when politicians continue to make this inaccurate claim that “Big Oil” is receiving special tax subsidies that no one else gets. To make them available to everyone except oil and gas producers is tantamount to levying special, punitive taxes on companies like ours.
Having government try to pick winners and losers never helps the economy. Instead, eliminating these provisions will raise energy costs, reduce investments in new technologies and make it more difficult to produce the energy supplies critical to America’s economic future.
It’s hard to fathom how punishing that activity could help the U.S. economy.
Ken, I have a AB in geology from Harvard. I was the last Sprague to work for Sprague Energy.
I want to put it to you that this country has had a very bad energy policy since the 1970’s. Shell Geophysicist M King Hubbert predicted the bell curve for oil supplies and then in 1973 after the Arab Oil Embargo the Academy of Sciences “declared’ his theory “proven”. In 1975 the DOE was created to establish a unified national energy policy.
Nuclear Power was destroyed in short order and the political situation kept us from exploiting domestic oil reserves as an alternative to importing crude from hostile places a very long way away.
In fact the plan is such a logistical and political nightmare and exhibits such volatility that the DOE itself came to the conclusion that it needed a strategic reserve.
So here you sit as an oil company, the ineffective energy plan has a bad result and the politicians point at you. The result of a bad plan is called a correlation. I read a piece that attempted to explain where the cost of a gallon of gasoline was attributed. It STARTED at something like $2.64. By starting at… read more »
…this number you began at the present unacceptable condition, which is precisely what every one is upset about. They want a different answer, not an explanation of the manifestation of the bad plan. They would like to blame you because they don’t understand the difference between a correlation and cause.
The only way to get to a different result is to address the cause of the unacceptable result.
I offer a theory for the quantification of the unacceptable result that you are being blamed for. It is called the “Piss poor plan commodity price penalty”.
The differential between the normal price and cost curve of a commodity is a function of the efficiency of the supply and the perceived weakness of the plan and elasticity of price.
A good plan has a small and steady price differential. A poor plan exhibits volatility and a very quantifiable price penalty for uncertainty, which is created by the consumers’ willingness to trade higher cost for guaranteed supply. This variance is introduced as a result of higher prices to originators and traders who play upon the volatility inherent in a bad plan.
Sharks are opportunistic feeders. If you are attracting sharks then look to what you are doing. They are not bad just the result of the opportunity afforded by a plan that is unable to offer supply stability. The feeding frenzy is a direct function of the potential volatility.
Napoleon would have a heart attack if he saw the length and vulnerability of our supply line. It does not take a rocket scientist to see places where the volatility can be gamed. If the politicians have opened a door large enough to drive a truck through and some on does who is the one with the low IQ? It makes absolutely no sense to blame the truck driver. It is a similar situation here.
So the politicians complain about the sharks and the results of their poor plan. As long as they get away with this approach the plan wont change and the results either.
George Washington and Thomas Jefferson both wrote in regards to government messing with the economy. government Subsidized business does not need to be. The government does occasionally need to step in to regulate unfair parts- mostly banks that get out of control.
Ideally- the energy companies are the ones with enough fiduciary muscle to get the USfree from outside oil influences in the first place. Most are multinational- and the lack of payment of taxes (extraterritorial or not) is still a sticking issue with the lower and lower middle class- irregardless of what the upper and upper middle class may be capable of. My moneys on the passive/active solar that gets rid of the pollution in the first place. Germanies recent biogas efforts are causing porblems because they are dumping the effluents rather than abating them for animal feed and more fuel-ie- aerobic digestion after anerobic digestion, rather than just dumping….money,money,money always gets in the way of good ideas…
This administration has an anti free market, anti business agenda. They believe in taking from the “haves” and giving to the “have nots”. This is extortion.
Government does not create jobs (or anything else). They can only take.
Businesses are the ones that create jobs. When private corporations are free of restrictive regulations and high tax rates, the economy grows. People have money to spend, businesses grow.
I’m hoping we have a change in leadership in Nov. It just can’t come soon enough.
Year: 2012
Total for Oil & Gas: $139,753,996
Total Number of Clients Reported: 200
Total Number of Lobbyists Reported: 783
Total Number of Revolvers: 459 (58.6%)
Almost $13 mil dollars spent on lobbying in 2012 by Exxon and you want to call it “free market” capitalism……. the truth is and has been known for a very long time by anyone that cares to listen. He who pays the piper calls the tune.