The President rolled out his FY2013 budget recently, which includes eliminating $40 billion in tax breaks from Big Oil companies, such as BP, Chevron, ConocoPhillips, ExxonMobil, and Shell. Meanwhile, the American Petroleum Institute's response would have you believe that cutting the subsidies would be the equivalent of moving back into their parents' basement.
It's propaganda at its most repetitive, crying that they are “job creators” and that it's so “unfair” to raise taxes because they already contribute millions to the economy every day, and if you do they swear to god prices will rise and the inevitable dependency on foreign oil will bring about the apocalypse itself if you don't let them have their way.
That's like Donald Trump begging to not get kicked out of rent-stabilized, low-income housing even when raking in billions annually, and then threatening to trash the place once the landlord actually puts up an eviction notice.
It's true. The combined profit of the “big 5” oil companies listed above was $137 billion last year, with ExxonMobil, Chevron, and ConocoPhillips coming in first, fourth, and 15th, respectively, on the Fortune 100 list of most profitable companies.
As for being “job creators”, it's a bit of a far-fetched label when oil companies have cut more than 11,000 jobs over the past few years, despite record profits.
And while those record profits have increased their earnings 75%, production of oil and petroleum products decreased by 4% compared to the previous year. Fewer jobs, fewer products, more profits, and they are still claiming tax breaks are necessary to create jobs and increase production.
API also claims that the oil and gas industries “pay taxes at far higher effective rates than most other industries.”
Lower tax rates are supposed to be a trade-off to spur reinvestment, but big oil companies even fail at that. In 2011, $38 billion was spent on buying back stock (which lines the pockets of top executives, not workers) and had $58 billion in their corporate savings account.
If you throw all that together, Big Oil companies made $137 billion, spent $38 billion on buying their own stock, put $58 billion into savings, all the while getting rid of thousands of jobs and lowering their product output.
Yet they're complaining that taking away tax breaks will just be too hard and is an unfair punishment.
Perhaps instead of $40 billion in subsidies, the government should send them a $40 billion violin.