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May 12, 2011

Today, on the Associated Press, an article by Jonathan Fahey titled, "How the oil industry saves $4.4B a year on taxes", reports that as we face gas prices of almost $4 per gallon,

the oil industry is reaping pretax profits that could reach $200 billion just this year.  He further points out that this translates to a total saving for the oil industry of $4.4 billion.  As President Obama works to eliminate the tax breaks, some in Congress argue that the money saved goes into reinvesting toward exploration and production.

A Blog entry on April 4th addressed the bonuses and raises top officials at Transocean received even after the explosion in the Gulf of Mexico.  Now we are learning that even with billions in profits, the oil industry further benefits with tax cuts.

A report dated February 3, 2011, titled, “$1 Trillion in Profits and Still at the Trough: Oil and Gas in the 21st Century,” issued by the Committee on Natural Resources Democratic Staff Report, United States House of Representatives, stated:

Meanwhile, high oil prices gave a huge boost to the Big Five oil companies: ExxonMobil, Chevron, ConocoPhillips, BP, and Shell. A Natural Resources Democratic staff reviews of recent earnings announcements by the five largest oil companies operating in the United States shows that this industry has generated outsized profits that undermine the necessity for continued tax subsidies and royalty-free drilling access. This week, these companies reported $29 billion in profits for the fourth quarter of 2010, $77 billion in profits for the full year and $952 billion in total profits over the last decade. . . While American businesses and consumers are tightening their belts, hugely profitable multi-national oil and gas companies are set to enjoy $53 billion in royalty-free drilling over the next 25 years and $36.5 billion in taxpayer subsidies over the next decade. In his State of the Union speech, President Obama called for an end to these tax subsidies.

Politics aside, this report is a “must read.” http://democrats.naturalresources.house.gov/sites/democrats.resourcescommittee.house.gov/files/Oil%20Profits%20and%20Tax%20Breaks%20%282-1-11%293JD_JP_DW_FINV5.pdf