Oil Companies. Tax Cheats or Boogieman?

by lewwaters

In this troubling economic times, the government, instead of admitting their own malfeasance and years of mismanagement by both parties, and continuing their assault on business, businesses that create millions of decent wage jobs, have began calling for an end to Oil Company Subsidies.

Right away, with the crafty and misleading use of the word “subsidy,” that conjures visions of cash payments from the government to the oil companies, a false impression is created. The oil companies receive no payment from the government, but like other companies, receive some tax breaks to recoup some expenses and in turn, create or maintain more jobs.

Replying to Obama’s calls to “eliminate unwarranted tax breaks for the oil and gas industry and use the dollars to invest in clean energy,” Republican Speaker of the House, John Boehner said that cutting the subsidies to oil companies is “certainly something we should be looking at,” adding, “We are in a time when the federal government’s short on revenues. We need to control spending, but we need to have revenues to get the government moving. They ought to be paying their fair share.”

“Paying their fair share?”

Oil giant ExxonMobil is often the target of government with claims of they paid no taxes in 2009, a claim even Politifact declares FALSE!

CNN Money clarifies the claim by telling us,

“Exxon doled out more than $15 billion in income tax payments to foreign countries last year. U.S. tax codes allow companies to take massive deductions in light of those international charges, which knocked Exxon’s federal income-tax bill down into negative territory.”

“That said, Uncle Sam gets his money in other ways. Including sales taxes and duties, Exxon recorded $7.7 billion in U.S. tax costs last year, and paid even more overseas.”

“Its grand total in global taxes for the year? A whopping $78.6 billion. The company’s effective income tax rate was a hefty 47%, its highest in three years.”

ExxonMobil clarifies it further with,

“During the first quarter of this year, our U.S. operating earnings were $2.6 billion. The rest of our earnings – more than $8 billion – came from operations in more than 100 countries worldwide.”

“Here’s a number you won’t hear in Washington: During the first quarter, on those U.S. earnings of $2.6 billion, we incurred tax expenses in the United States of $3.1 billion. That’s right – our U.S. tax bill was higher than our U.S. earnings.”

“That includes income taxes, sales-based taxes and others such as property taxes. But it doesn’t include royalties or lease payments we pay to the government to produce oil and gas on government-controlled lands, which would make the government’s take from our operations even bigger.”

“Another number you won’t hear in Washington, which also puts our earnings into context, is our earnings relative to our sales. During the quarter, we made about 9 cents for every dollar of sales, which is about average for U.S. industries. We earned $10.7 billion in worldwide earnings on worldwide sales of $114 billion. That’s about half (or less) of what companies in pharmaceuticals or computers make, just to name a few. But strangely, there’s not much talk about reducing their tax deductions.”

As can be seen, there is no “tax cheating” going on. They actually pay more than their “fair share” in taxes while enjoying the same tax breaks given to other multi-Billion Dollar companies like Boeing and Microsoft.

We also should not forget that the oil companies hold leases to federal lands for exploration and drilling and pay Millions of Dollars for those leases when at the same time, permits from the government to actually use those lands are scant.

The favorite boogieman claim now is to blame the oil companies for the high gas prices we see at the pumps, insinuating price gouging. Several times such claims have been made and investigations held to make the oil companies seem at fault. Politicians have staked their careers on such boogieman claims. The New York Times, in a May 2007 article even asked, Oil Price ‘Gouging’: A Phantom Menace?

As the canard of government subsidies to oil companies if costing the country to lose Billions of dollars in revenue is continued, ignored is that petroleum remains our most effective, efficient and economical source of energy.

Looking back to Obama’s call of, “use the dollars to invest in clean energy,” another New York Times article from December 2010, Federal Money for Alternative Energy Is Drying Up informs us,

“The renewable energy sectors — including companies that make technologies for wind, biofuels and solar energy — depend on government subsidies. The solar industry, for instance, relies almost entirely on government dollars. The Cape Wind project, which appears close to becoming the first offshore wind farm in the United States, will rely on government loans to make up at least some of the $2 billion it needs to get started.”

Additionally, the article continues,

“the dependence on government has become more apparent as venture capitalists and private equity firms reduce the number of companies they are willing to back.”

That tells me that not only are these alternative sources unreliable, they are a bad investment that investors see will not give them adequate return on their investment.

And, Obama desires to send more of our tax dollars to them and cut the tax breaks to oil companies that do supply millions of jobs as well as dividends to our pensions, 401Ks, mutual funds and stock holders?

We cannot forget that recently, Barack Obama travelled to the country of Brazil, after they were given $2.5 Billion of our tax dollars to subsidize the exploration and drilling of their oil finds, and telling them that America desires to become one of their biggest customers for that oil.

About the same time he spoke to Brazil, he returns to America where he announces “the goal is to cut the 11 million barrels of oil the United States imports each day by one-third in the next decade or so

Every president since Richard Nixon, when we experienced the Arab Oil Embargo of 1973 has spoke of ending our dependence on foreign oil. At the same time, politicians have made it more difficult for the oil companies to supply us with our own natural resources.

Promises of “green jobs” from “green energy” remains a pure fallacy as alternative fuels remain overly expensive and unreliable.

Ending the tax breaks oil companies and many others receive will not only drive up the cost of gas and drive unemployment higher, it will leave us more and more dependent upon foreign oil.

That would send profitable oil companies into a spiral downward, much as we saw with the auto manufacturers. And then, government can step in just as they did with 2 auto giants and nationalize the oil companies, placing them under government control, which I believe just might be the real reason they need to portray the oil companies as the boogieman.

Of what benefit to America would that be?

Absolutely none!

30 Comments to “Oil Companies. Tax Cheats or Boogieman?”

  1. “Absolutely none!” Lew, that’s quite a claim. You cannot think of one thing that nationalizing an important, strategic, vital industry like energy would do?

    Of course there’s benefits to nationalizing energy! Most countries have nationalized their “utilities” so that their people can better control their destiny. The only question is whether the solution is worse than the problem.

    Basically, here’s the argument against public ownership (socialism): corporations are more trustworthy than governments because their greed is not subject to the whims of democracy.

  2. Martin, I see no advantage to any nationalizing of industry. Those that have and artifically keep prices low end up paying for it in the end. You cannot keep up selling anything below cost for long and survive.

    That being said, nothing I can think of ran by a government beauracracy operates efficiently. Some come back at me whan I say that and claim how well the Military functions, which tells me they never served in the Military. It succeeds in spite of the beaucratic red tape mostly due to the determination of the foot soldier.

    I just got off of the phone where I was involved in a blogger conference call with representatives of the American Petroleum Institute and executives from ExxonMobil. We hd quite a lively discussion over about an hour covering much of what I wrote about. The transcript and audio should be available tomorrow sometime and I’ll post a link.

    You might find it interesting.

  3. Lew, them there are pretty strident statements. I’m afraid I’m not as confident in my own (or others) opinions. If that’s the way you’re going to be on the issue, I have nothing more to say. (This is the irreducible division in America you’re always talking about.)

  4. Martin, I fail to see what I said as being so strident that ther can be no dicsussion. I just gave you my opinion and as you should know by now, I do not like the amount of control government is exerting today.

    Venezuela comes to mind and last I heard, Chavez is causing more harm over all by chasing the wealth out of his nation and artifically keeping prices on several items low. Of course, grocery stores weren’t stocking their shelves a couple years ago because of it and if their oil goes on the world market like others, they too won’t be able to long sell their gas to citizens for less than they pay for it.

    It is as Margaret Thatcher so fampusly said, “socialism is great, until you run out of other people’s money.”

    Cuba when Castro took over comes to mind as well. It was a viable little Island Nation even though they had several problems under Batista. From what I have seen, things are much worse under Castro.

  5. Okay, I’ll give it another shot…

    It’s not an either-or situation. Capitalism works pretty damn well (I’m certainly a Capitalist) but it has problems, which is why we have a Court System to work them out. (Anti-monopoly laws come immediately to mind.) For some things, a profit motive does not work (caring for the elderly), or are dangerous (a private military), and must be socialized. However, there are socialized problems aplenty (exploitation of power, government bureaucracy), so those things have to be carefully monitored. Unfortunately, we only have democratic methods of monitoring, and we all know the problems with Democracy. (It’s only redeeming value is that it’s better than all other forms of government.)

    To sum up: Those things that cannot be run as private enterprise should be run by Government. I have a short list of what those things are. Your list is even shorter, (maybe even libertarian). An example of intelligent political debate would be making a list of all the positive things socialization of energy (for example) would bring verses the positive things private enterprise of energy brings RATHER THAN an argument of the negative things each brings. (We can usually “fix” negative things – though often we don’t.)

  6. I agree with just about all of what you say, Martin. As I see it, the oil companies have become a target when they needn’t be. Of course they have problems as does every other business, especially ones that large.

    I was amazed to learn this morning that ExxonMobil accomodates 35 full-time IRS auditors in their offices and that they are audited every single year. I never realized that before. Of course, as they said, all super large corporations are heavily monitored by the IRS.

    To me, that negates the cry of them being tax cheats.

    No doubt our lists of what should run by government differs and socialization of oil companies would be one. I’d be curious as to what positive affects you feel socialization of oil companies would bring.

  7. Is there ANYTHING as important to a country as energy? (Even national defense is subject to energy requirements.) Energy is vital right down to the family level. Without energy, America would be nothing – people would be nothing. Energy rules. If I had to nuke Kuwait to get their energy – I would. Let’s not let it get to that. (Iraq was close enough.)

    Having said that, private enterprise of energy is working out okay so far – but I’ve got my eye on it. On-the-other-hand, socialized healthcare seems to be the only solution. Profit motive in medicine just ain’t cuttin’ it.

  8. Martin, of course our energy sources are tantamount to our national security. That is one of the main arguments we use for drilling more of our own.

    With the amounts of oil, natural gas and coal known to exist within the country, I foresee no reason we would ever have to go after another countries sources. One point brought out this morning in the conference call was when one of the execs made the comment, “we are the third largest energy producing nation, but we don’t act like it.” By that, I assume he means how much of our own resources are denied access to us by the government.

    With comments made back in 2008 by now Energy Secretary Steven Chu, Mr. Chu has called for gradually ramping up gasoline taxes over 15 years to coax consumers into buying more-efficient cars and living in neighborhoods closer to work. “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” I see a danger in government using energy to manipulate the populace, just as they do with transportation dollars towards the states.


    I also see government excessive regulation being used currently to accomplish that with private companies.

    I too don’t care for the profit in medicine, but much of what I read shows socializing that all too often has left it worse. Even in VA Health Care, an example of socialized medicine, costs have skyrocketed and cuts are being discussed, which means care will decrease. http://www.columbian.com/news/2011/may/08/health-care-weighs-on-pentagon/

    I really don’t have an answer for medicine that I’m comfortable with.

  9. Lew you should hear your self…..$4Billion a year we give them…not to mention years ago not sure if still going on now…But the oil used for the wars for our Military…we paid crazy amount per gallon…

  10. Clean energy Lew…the oil/gas/coal are who lobby congress most….you got Big oils back…CLEAN RENEWABLE NOW…before its to late.

  11. Poor Jess, I think you actually believe that.

    What was paid for over there had the added cost of extremely hazardous delivery.

    I may not approve the extra expense, but that was what drove it up.

  12. Allow me to help you with “clean energy,” Jess.

    For Cape Cod Wind Farm, New Hurdle Is Spiritual

    Senator Feinstein Seeks to Block Solar Panels In Mojave Desert

    An Ill Wind Off Cape Cod

    Ted Kennedy Blocks Cape Cod Wind Farm

    Environmentalists Fight Calico solar farm

    Animals Rights Activists Blocking Wind Farms

    Decision Promised Soon on Cape Cod Wind Farm

    Doesn’t it strike you a little peculiar that some of the biggest advocates block construction of it near their homes?

    Ask the British about that great “clean energy” that left them freezing cold this past winter when their “clean energy” sources froze and didn’t produce.

    Alternate sources remain overly expensive, inefficient and unreliable. Granted, they should continue to perfect them and hope one day they become reliable, but in the meantime, we need energy.

    Pipe dreams do not fuel a nation, Jess.

    Oh, and we’ve been hearing that “CLEAN RENEWABLE NOW…before its to late” and “we’re running out of oil” for almost 40 years and still, we have some of the largest deposits of oil, natural gas and coal sitting under our land, untouched.

    Stop listening to Moveon.org and do some actual research, Jess. There is a wealth of knoweldge out there.

  13. Also OFF SHORE TAX HAVENS are the biggest problems…
    Do you enjoy paying taxes? Do you enjoy giving upwards of 25% of your hard-earned money to the IRS every year? ExxonMobil, like you, certainly doesn’t. That’s why, back in 2009, they didn’t pay a single cent in taxes in the United States.
    Exxon accomplished this by shifting the bulk of their operations overseas, meaning that the IRS can’t touch any profits the company brings in. Even if they take a loss here in the States, they can at least break even, if not do even better, in the long haul.
    Exxon, like many corporations, also muddies the waters of the tax pool by breaking themselves into multiple entities. In addition, that pesky ruling that allows multinational conglomerates to function like people means that when Exxon does pay taxes, it might end up paying far less, to the tune of 5-15%.
    This is in contrast to Big Oil’s usual tax-laden state of affairs. Most of the time, big oil companies actually pay upwards of 40 to 55% of their profits back to the tax man. Unlike companies that focus on software and http://www.google.com/url?sa=t&source=web&cd=17&ved=0CE8QFjAGOAo&url=http%3A%2F%2Fwww.businesspundit.com%2F25-corporations-that-pay-less-taxes-than-you-do%2F&ei=DtnITb7wCcTXiALi38ClBQ&usg=AFQjCNExVFSdtkFa10FHgkZ0IroNEnfYtQtechnology, overseas holdings in countries where most of our oil comes from (Saudi Arabia, Iraq, etc.) are burdened by even higher taxes than in the US.
    They tried to offset this by funneling profits from places like Abu Dhabi and Azerbaijan into accounts in the Caribbean including the Cayman Islands. For them, it’s legal, and no, Sammy can’t touch it.

  14. Its Less then 3% that we have….have you seen the fracking areas…fricken they can light tapwater on fire LEW…you want to drink that crap…

  15. We hold 3%Lew of the worlds oil…do your HOMEWORK…fight for the tax dodging rich…really…brainwashed.

  16. Your clean energy froze up story…hmmmm…wonder what crack pot you got that one from…I have friends/family all over the world…Grids…energy grid..is the best energy source IMO…to bad no lobbies for that…It would tap into oil/coal/gas pigs profit not to mention we could stop beating up our planet….but I think you care more about protecting the profits for oil/coal/gas then earth..IMO sorry if this comes off mean but really you should read about OFF SHORE TAX HAVENS>>>>all the cool companies are doing it!

  17. Jess, that “crackpot” was the UK Telegraph, a trusted newspaper there.

    Wind farms becalmed just when needed the most

    Do you have a 401K Jess? Or any sort of pension? If so, it should be you wanting to protect those profits you bemoan as that is where your pension plan or 401K is invested. You might think you scored a point with that crack, but inrelity, if I am protecting oil company profits, I’m also protecting your retirement.

    You might also appreciate, Promoters overstated the environmental benefit of wind farms and Study says green sector costs more jobs than it creates

    It’s a pipe dream, Jess. Stop letting yourself be manipulated.

  18. Jess, Jess, Jess, Top World Oil Producers, Exporters, Consumers, and Importers, 2006 We’re number 3 on the list, behind Saudi Arabia and Russia. And, that is not taking into account all of the untapped oil, natural gas and coal we have just sitting there. We’re nowhere near running out.

    Yes, I’ve heard that wild claim on drinking water bursting into flames, too bad no one hasever actually shown it, just claims of a study. The much vaunted Environmental Protection Agency, not even conservative in nature did a study on that a couple years ago. They found,

    • The agency concluded that the injection of hydraulic fracturing fluids poses little or no threat to USDWs.
    • EPA found no confirmed cases linked to fracturing fluid injection or subsequent underground movement
    of fracturing fluids.
    • EPA found that no hazardous constituents were used in fracturing fluids, and hydraulic fracturing did
    not result in creating a path for fluids to move between isolated formations.
    • Reported incidents of water quality the degradation were attributed to other, more plausible causes.
    • Although thousands of wells are fractured annually, EPA did not find a single incident of the contamination
    of drinking water wells by hydraulic fracturing fluid injection.

    However, at the insitence of Democrats in Congress, they have launched a new study in March 2010. I wouldn’t be surprised they fall in line too, in spite of what they first discovered. Quite often, truth takes a back seat to political motivations.

    And, don’t forget in all of this, Energy Secretary Steven Chu’s call for gradually ramping up gasoline taxes over 15 years to coax consumers into buying more-efficient cars and living in neighborhoods closer to work and saying, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” in December 2008.

    And, there is also Jay Hakes, Energy Information Administrator under President Clinton saying, “There’s no way we can create a better future without the price of [fossil-fuel-based] energy going up.”

    You’re supposed to be pleased and appreciative that you are paying $4.00 a gallon and sure to increase, Jess. Are you?

    Oh yes, and on that taxclaims, I just found out today, the IRS keep 35 auditors full time at ExxonMobil just to monitor their taxes.

    And, if profits on a gallon of gas really does disturb you, why do you give state and federal government a pass? After all, the make nearly 4 times off a gallon more than the oil companies do.

    Stop letting yourself be manipulated, Jess.

    And again, I’ll ask, why is there no outrage or protests outside of union Boeing who places higher up on the tax cheat list?

    And, since their holdings in other countries disturbs you, perhaps you should what they end up having to pay those countries in order to do business there and supply us with the energy we need. It can reach as high as 85%.

    Wake up, Jess.

  19. Sorry Lew..I dont want to tap into the earth anymore….Clean Energy…That is all…you will fight the good fight on the wrong side…Have a good day!(and I know you feel the same about me..Im sure there is not one issue you will agree with me on just because)

  20. If Boeing was closer would be there……You act as if they arnt on the list I hand out to people….they are…fully aware..

  21. Jess, “if Boeing were closer, you would be there?” As if Moveon.org is only here in Clark County? Ya’ll organized somewhat of a national protest against B of A, but can’t against a pro-union company like Boeing?

    As for your video clip, I’ll refer you right back to the EPA Report: • The agency concluded that the injection of hydraulic fracturing fluids poses little or no threat to USDWs.
    • EPA found no confirmed cases linked to fracturing fluid injection or subsequent underground movement
    of fracturing fluids.
    • EPA found that no hazardous constituents were used in fracturing fluids, and hydraulic fracturing did
    not result in creating a path for fluids to move between isolated formations.
    Reported incidents of water quality the degradation were attributed to other, more plausible causes.
    • Although thousands of wells are fractured annually, EPA did not find a single incident of the contamination
    of drinking water wells by hydraulic fracturing fluid injection.

    It’s fine and dandy that you don’t waqnt any more drilling of the earth. I hope too that you are not driving a car, turning on lights in your home, cooking your food, heating your home, washing your clothes or even using any form of public transportation.

    Why? Because all are dependent upon what is being drilled from the earth.

    As I said before, I have no problem with the research and working towards perfecting alternate fuels, but currently they remain innefficient, unreliable and economically unfeasible. We still have energy needs in the country and if you wish to go back to the 1800’s, that’s fine with me, but I don’t.

    One thing I forgot to ask last evening. Since you wish us off oil or any other natural resource for energy, can you explain why we sent Brazil $2.5 Billion for exploration and drilling of their oil and why Obama went there a couple months ago and told them that we wish to become one of their biggest customers?

    Obama Proposes Trading Batteries for Brazilian Oil Instead of Drilling Our Own

  22. Lew I know people who have been at Boeing protesting last year and this…so really…people are there…

  23. Seriously Lew…Grids…and I would love to plug my car in rather then gas up……

  24. Jess, I have no problem with you plugging in a car, hair dryer, heater, hot dog stand or whatever, that is what free choice is about.

    However, why should I and many others be forced to because it is what you want?

    Add to that, where do you think the power comes from for you to plug in your car? It must be generated elsewhere by some source and currently, these “Green” sources aren’t living up to par or expectations.

    And, don’t forget, once you are able to plug your car in, Aunt Chrissy intends to charge you $100 more a year for registration to make up for the gas tax you won’t be paying.

    I have to wonder too, why protests at Boeing don’t make news?

    And again, I refer you right back to the EPA study. Doesn’t it strike you as odd that the EPA, hardly the most business friendly agency of government says, • EPA found no confirmed cases linked to fracturing fluid injection or subsequent underground movement
    of fracturing fluids.
    • EPA found that no hazardous constituents were used in fracturing fluids, and hydraulic fracturing did
    not result in creating a path for fluids to move between isolated formations.
    • Reported incidents of water quality the degradation were attributed to other, more plausible causes.
    • Although thousands of wells are fractured annually, EPA did not find a single incident of the contamination
    of drinking water wells by hydraulic fracturing fluid injection.

    Stop letting yourself be manipulated and led around by the nose, Jess.

    Don’t you think many of us older folk bought into some of these same cries years ago too?

    We did and over the years, found the alarmist cries just keep on increasing no matter what sacrifices we made to soothe the conscience of the left.

  25. Plugging in a car isnt available and wont be easily available while congress is still controlled by BIG OIL lobbiest…But thanks for letting me want to move in that direction…

  26. nothing makes the news…I remember when Portland streets had been shut down by tens of thousands of protesters….NO NEWS!But I did hear about the cat stuck in a tree in Florida…

  27. Poor example, Jess. I have several copies of articles on that, including the video of the group that broke off to burn a soldier in effigy and the photo of the protester defecating on the burning American Flag.

    I do get your point, though. But what I was saying, I’m sure you understood, is that there has been no large protests of Boeing and even the small protest here of B of A and outside of the princesses office were reported. Hell, I even gave the Columbian the photo they used of that one.

  28. Do you mean plugging in a car you wish to buy isn’t available until the government supplies you a place to plug it in, Jess? What are people who own those electric golf carts doing to recharge now?

    It isn’t a matter of me letting you move in that direction, it was acknowledgement by me that you have the free choice to buy an electric vehicle if you choose. Although I feel such a purchase is a poor choice in vehicle, based off of my 44 plus years in the mechanical repair trade, I would never think of doing anything to prevent you from buying one. I just don’t want to buy one for you or help provide you the down payment for one.

    Along with acknowledging your free choice in what to drive, I have the free choice in what to drive and do not ask for you to help me purchase what I want or pay me an incentive to buy one.

    Something else for you to consider before you run out and buy that “pollution free” car. They operate on batteries and batteries are constructed of toxic materials. While lead isn’t used as much, lithium and nickel are and they too are mined from the earth.

    The U.S. doesn’t have a lot of either and buys it from foreign markets. Mining of both materials creates a lot of pollution.

    Production of those electric cars also requires massive amounts of energy, more than a conventional car. It is thought that the trade-off is in emitting less pollution from the cars powerplant over the life of the vehicle.

    Pollution Caused By Building a Hybrid Car See the other articles linked, this one is about as balanced an article as I’ve run across.

    So ulitmately, we trade an addiction for foriegn oil for an addiction to foreign lithium, mostly from Bolivia, who currently is very upset with Obama over attacking Libya.

    The strange connection between plug-ins, Libya and Bolivia

    The other major source appears to be China, who is undercutting other markets by ignoring environmental concerns, as they so often do in other manufacturing areas.

    Did I neglect to let you know that before retiring, I was also a State of Washington Certified Auto Emmissions Specialist? Your “pollution free” car isn’t as “pollution free” as imagined.

    Just for a little fun, here is another British article that ought to amuse you, London to Edinburgh by electric car: it was quicker by stagecoach

    Stop letting people manipulate you, Jess. You deserve better.

  29. Oh, and on that “congress controlled by Big Oil?” If that is so, why has congress denied them access to our largest known oil fields for so long?

    Think for yourself, Jess.

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