Every hour so far in 2012, the five largest oil corporations have recorded a$14,400,000 profit. And every hour, they received more than $270,000 in federal tax breaks. That adds up to $2.4 billion in subsidies every year for the five largest oil corporations — Royal Dutch Shell, ExxonMobil, Chevron, BP, and ConocoPhillips — all ranked as the top 9 companies in the world.
Big Oil profits more in one minute than what 96 percent of American households earn in one year. Even so, Mitt Romney and House Republicans want to double what the five companies receive in federal tax breaks to $12.8 million per day, even though the three publicly owned U.S. companies paid an average tax rate of under 17 percent.
During the "health care reform" debate insurance companies were demonized by stating their profits in huge numbers, but they are huge companies with huge costs and huge sales; their profits had better be huge numbers or they fail. Honest reporting would state that their profits were in the range of 6% to 7% and none were making as high as 10% profit.
ReplyDeleteOil companies are even bigger than those insurance companies, so they better be making huge profits or we are going to be going back to horse and buggy days.
They have boosted profits and in the first half of this year, and the three I checked are reporting very significant profits, better than past years certainly. Exxon is at 18%, Chevron at 20% and Conoco (which is actually a rather small producer) at 27%. Those are pretty high numbers, but not quite the usurious numbers implied by the Think Progress piece.
To say that oil companies "profits more in one minute than what 96 percent of American households earn in one year is sort of meaningless. They also have more expense in one minute than the average household has in several lifetimes. It's sort of like pointing out that a Boeing 787 burns more fuel than a lawnmower.
I'm not quite sure what you mean by bringing up expenses. The article is talking about profit, meaning what they have after all expenses have been accounted for. And personally, I think their profits are big enough with any government subsidies.
ReplyDeleteExpenses are relevant to profits in that they are what generate the profits. If I spend $1 million and it generates $100,000 profit, 10%, that's a decent return on my investment, which is what that expenditure is - a short term investment for the purpose of generating profit. If my expenditure goes up to $2 million and I'm still only making $100,000 than my return has dropped to 5% and I'm a lot less happy. If Saudi Arabia is charging me 10 times more for the oil I'm taking out of their ground and I'm now spendind $10 million and only making $100,000 that's only 1% return on what I'm spending, and that's when you better buy a horse.
ReplyDeleteFrom a media standpoint when my expenses were $1 million and I was making 10% my profits were $100,000 and nobody minded a profit of $100,000. Then inflation sets in, oil producing nations start getting rich, I'm spending $10 million and making 10% and the media is screaming about my "profits shooting up to a million dollars" as if I had suddenly started gouging my market.
At this point, yes, their profits could take the hit of eliminating the subsidies. As little as two years ago oil company profits were in the 6% range, where they had been for about 5-6 years, and that would not have been the case. What will their profits look like next year?
If you sell a product for $1 and 20 cents of that is profit, would you say that you are committing a crime? But when a corporation sells 100 billion products for $100 billion and $20 billion of that is profit, the media screams that the corporation is a pirate which is making a criminal $20 billion in profit.
But if all we had was a bunch of small oil companies, none of which was making more than a few million in profit, none of whom were big enough to have any power with Congress, none of whom were big enough to generate outrage about the size of their profits, gasoline would cost somewhere around $150/gallon.