Like clockwork, the Center for American Progress (CAP) has issued its quarterly out-of-context characterization of the earnings of the largest investor-owned oil and natural gas firms. It does this to support the group’s efforts to impose special punitive tax increases on an industry that’s been one of the few bright spots in the U.S. economy in terms of job creation and new investment.
If CAP’s report looks familiar, that’s because the group has issued essentially the same report each quarter going back two years. Companies like ExxonMobil and Chevron release our earnings; CAP dusts off its tired and intellectually flawed arguments to push for higher energy taxes.
“Do you walk to work, or do you take a lunch?”
Most readers will recognize their strategy. CAP notes the combined profits of the so-called Big Oil companies to get a large number, and then declares outrage at so-called special tax breaks and subsidies. Regular readers know that what CAP calls Big Oil subsidies are simply deductions for the costs of doing business and other tax treatments that are available to businesses across all sectors of the economy.
CAP’s approach is misleading. It’s utterly meaningless to compare the total earnings of five large oil and gas companies – with massive global operations that result from the investment of hundreds of billions of dollars – to the income of the average American. CAP does this in an attempt to suggest we are getting rich off the backs of American consumers. It’s a non-sequitur, like asking someone, “Do you walk to work, or do you take a lunch?”
In ExxonMobil’s case, we report large numbers each quarter because we are involved in a global business that is enormous in its scope and scale.
Earnings of seven cents per dollar of revenue
But here’s the context CAP doesn’t want you to know about.
For all of our corporation’s activities – from searching for and producing millions of barrels of oil to refining it into products like gasoline and jet fuel to manufacturing petrochemical products every single day – we earned roughly 7 cents for every dollar of revenue during the third quarter of 2013.
That is far less than half of the earnings per dollar of sales made by companies selling smart phones and computers, pharmaceuticals, beverages and tobacco. Does CAP issue a quarterly propaganda piece calling for higher taxes on these industries? I think you know the answer: It doesn’t.
Tomorrow, I’ll look at the other half of their argument and explore why demonizing one particular industry shouldn’t be the basis for an unfair and potentially harmful tax policy.