On the heels of reporting (more) record breaking profits, and just as gas prices hit $4 a gallon nationwide, Big Oil has been called to Washington to defend billions in tax subsidies that some politicians to strip away.
The five largest oil producers in the U.S.; Exxon-Mobil, Chevron, ConocoPhillips, BP America, and Shellby took in a combined profit of $36 billion in the first quarter of 2011. In comparision, the tax subsidies Democrats are talking about ending would add between $1.5 and $2 billion a year to government coffers. The tax subsidies run the gamut from allowing Big Oil to deduct taxes paid to other countries to a domestic manufacturing tax credit that was originally created in 2004 to keep jobs in America.
Depending on who you ask and the time of day, Big Oil either pays “no taxes” or they pay upwards of 45% in taxes to the government.” The fact of the matter is, companies like Exxon Mobil have to hand over 85% of their profits in countries like Nigeria, where they extra a good amount of crude. In 2009, Exxon-Mobil shelled out over $15 billion in taxes to other countries, though Uncle Sam still managed to rake in almost $8 billion in tax revenue.
Honestly though, this is just a show for the peons to make us feel like the government is trying to do something about $4 a gallon gas. But even if the subsidies ended today, gas prices would not go up or down. Nothing will change. Maybe it is time to do something different?
I wish there were a way to convince Big Oil to jump ship and, instead of hindering green energy, promote it. After all, these executive types really only care about profit margins and the bottom line. What if we ended the income tax and manufacturing deductions, but replaced them with green energy deductions that give Big Oil a way to keep their huge profits, but force them to invest into green energy to get those sweet tax breaks. We already sort of do it with the ethanol-blending credit (another $6 billion tax subsidy to Big Oil) so why can’t that success be replicated with natural gas or propane, which Big Oil already controls?
The fact is, Big Oil employs millions of Americans and pumps hundreds of billions of dollars into the global economy. And they are taxed, very heavily. But they know better than anybody that oil is not going to last forever. So, is Big Oil going to ride this ship right over the waterfall, or are they going to start paddling in the other direction before its too late? Let’s give them some incentive to start paddling, say I.
Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMIs. You can read about his slow descent into madness at Sublime Burnout or follow his non-nonsensical ramblings on Twitter @harshcougar.