Unless you live on an asteroid and never use gasoline for anything, you’re certain to have noticed that the price of this commodity has been steadily rising during the first quarter of 2012. And while it’s easy to blame the oil companies that take crude oil out of the ground, most of the blame truly lies elsewhere….such as with Wall Street’s psychotic overreacting to every mention of Iran…or with those self-same Wall Street market speculators and all the other “middlemen” who buy and sell off crude oil and its distillates, such as gasoline, long before you ever see a drop of it at the pump.
Nonetheless, the big oil companies (“Big Oil”) are still making huge profits of their own.
Take, for example, Exxon-Mobil, which recently reported a 2012 first quarter net profit (that’s after-taxes & expenses profit for the first three months of the year) of US$9.45 billion. And they were disappointed with that because it represented a profit drop of 11%!
To put that profit into context, it equals US$315 billion a month, or US$105 million a day! Nice work if you can get it. Exxon-Mobil is a global company, as is Shell Oil, also known as Royal Dutch Shell.
In that same first quarter of 2012, Shell reported net profits of US$7.3 billion. Unlike Exxon-Mobil, however, they were not disappointed at all, since their profits were up by 15.9%. And on and on it goes with other oil companies.
Regardless of anyone’s political or economic philosophies, it is clear that a net profit of US10.5 million a day, as in Exxon-Mobil’s case, or even a measly, paltry US$81 million a day, as in Shell’s case, is humongous bucks, regardless of how one tries to spin it. So it truly defies all reason and logic that on top of these facts, the taxpayers of the USA are also financing huge tax breaks for these self-same big oil companies.
Late last month, the Obama administration, along with senate democrats, attempted to pass legislation that would end the US$4 billion per year tax breaks that Big Oil enjoys. Simply put, if Exxon-Mobil makes US$32 billion net profit in one year (and they’ll probably make more than that,), then ending this insane US taxpayer-financed subsidy for Big Oil would reduce Exxon-Mobil’s net yearly profit to perhaps US$31 billion!
How could anyone survive on only US$31 billion when they were expecting US$32 billion???
But wait!!! There’s MORE!!!
In the first quarter of 2012 alone, Big Oil donated half a million dollars to congressional incumbents and candidates of office (but, significantly, not for president..yet). Take a look at this chart from publicampaign.org:
It’s important to note that fully 93% of that money went to republican congressional incumbents and candidates. Of the US$501,500 in donations as seen above, only US$33,000 went to non-republicans, (possibly to the four dems that voted against ending the oil subsidies).
Based upon these figures, Big Oil is using US$2 million a year to fund republican political congressional campaigns. These are just the first quarter figures, and they don’t include money to the Romney or Rove anti-Obama Super-Pacs, either How much more of the US$4 billion yearly subsidies will be divided between donations to Mitt Romney’s presidential campaign and various republican governors’ elections is anyone’s guess.
Oil industry subsidies have been around for a long time. The first federal subsidies for oil came into being in 1916, with another round introduced in 1926. They were necessary at the beginning of the oil industry’s development to allow for survival and growth, yet they’re both still in existence.
But it was in 2005 that some really big tax breaks were given to Big Oil by the GW Bush and his gang of Big-Oil-loving republicans. And while Big Oil gets those 4 billion bucks a year from the federal government, it really gets anywhere from US$133.8 billion to as much as US$280.8 billion a year if one includes all taxpayer-provided sources, including from state and local governments.
When one really looks carefully at this debacle, it defies logic how anyone justifies tax breaks for the most profitable industry on Earth. It’s like your neighbors putting together an emergency food basket at the Salvation Army Soup Kitchen and taking it to Mitt Romney’s house. These subsidies have long since outlived their initial need and have now become an unnecessary tax break for the very wealthiest of private enterprises at the expense of middle class taxpayers and possibly even deficit reduction. And the republicans, who claim to love deficit reduction, are the ones preserving the oil subsidies and thus preventing deficit reduction!
Meanwhile, they want to drastically reduce the food stamp program for the nation’s poor, as if that could possibly be justified in the face of the oil industry’s obscene hundreds of billions of dollars in yearly profit!
Isn’t this a little like telling people that if their house is on fire, they should pour gasoline on it (because buying gasoline is good for the economy)?
You did not mention that when a bill regulating commodity trading and speculation was signed into law by Bush, Bush issued an executive order that oil and gas were not commodities. A lot of typos today, Howie, but always good stuff.
John, thanks for the heads-up on the typos. I suck at proofreading. Anyone interested in that job?
And thanks for the compliment as well.
Howie another great read – BUT if I look at the table you included it looks like they spent half a Million in the first quarter not half a Billion – which makes their donations for the year two million not two billion.
I know that if I had to, I could get along on 3 billion as opposed to 4 billion but I would have to make some tough choices to get by.
Thanks for pointing that out, Bob. It’s corrected.
Wanted: Proofreader. Must be able to read.
Howie, good read. The campaign contributions are a half MILLION, not a half BILLION.
Thanks for the feedback. See above.
China and US are a wash on civil and political rights (both states commit to them but derogate them in a pinch). China is way beyond the US on economic and social (but not cultural) rights (and don’t confuse the increasingly tenuous and contingent advantages of a so-called standard of living with acknowledged rights of access to the means of life.) China (and Russia, for that matter) complies with humanitarian law, the USA does not. China beats hell out of the US in anticorruption, (corruption is worst at the provincial level but the central government puts their death penalty to productive use.) China hosted the drafting of Beijing Declaration, while women in the US beg for birth-control pills. A talented and educated woman is much better off in China.