Is Big Oil REALLY Sticking It To Us??
Yesterday, the Senate rejected a bill that would strip big oil of its tax breaks. This bill wouldn’t affect ALL oil companies, just the top 5 revenue earners. Democrats claim these “big oil” companies are stealing money from American tax payers and by golly that’s just not right. (Just a side note: this whole “big oil/Senate” showdown is a repeat of 2003. Same cast of characters, same plot, same claims, etc.. the facts haven’t changed.)
“There is no justification for giving these companies that are making so much money, and their own executives said these subsidies are unnecessary, there’s no justification for continuing that.” – Senator Harry Reid..
In article after article this morning I kept seeing the word (or variations of it) “subsidy”. They’re using that word kind of loosely, since it leads people to believe the government is actually giving big oil cash payments (like the government gives some farmers payments for growing, or not growing, certain crops). What they’re actually talking about are tax credits. There’s a big difference here. The government is NOT giving the oil companies a dime, they are allowing “big oil” to keep more of their profits (how generous of them) using the same tax credits as every other American corporation. The American Petroleum Institute released this (PDF) last month explaining why it is wrong to claim “big oil” receives subsidies from the U.S. Government. I can find nothing that counters any of their explanations.
Here’s a breakdown of the different tax breaks that Senators aimed to eliminate: (source)
- Domestic manufacturing tax deduction– $1.7 billion.
- Percentage depletion allowance — $1 billion.
- Foreign tax credit– $850 million.
- Intangible drilling costs — $780 million.
All of the above tax breaks are available to all manufacturing companies in the U.S. with the exception of “Intangible Drilling Costs”.
Did you realize you pay WAY more in gasoline taxes than you put into the big evil oil companies pockets?
A barrel of oil = 42 gallons of petroleum. For each barrel, you can get an average of 19 gallons of gasoline (source). It varies by barrel, depending on where the oil came from, what type of gasoline is being produced, etc.
According to Forbes (and many other sources I found this morning), the average profit per gallon for the major oil companies was .07cpg. Meanwhile, taxes per gallon averaged .48cpg across the country (Federal tax is .18cpg). Let’s run the numbers shall we?
“Big Oil” (avg .07 cpg) = $133.00 profit per barrel.
Fed/State Government (avg 48.1cpg) = $913.90 profit per barrel.
Texas is just one of several states who are also raking in big profits from the higher gas prices.
Sooooo, who’s sticking it to us at the pump again?
But, but, but, them “big oil” companies are making all that money.. they should be paying their fair share! According to this publication, they’re actually paying a higher percentage of taxes (41.1%) than other American non-energy producing corporations (26.5%).
This seems, to me at least, to be nothing more than a political move by Senate Democrats. Some are saying they’re doing this as a “money grab“, but seeing as how even if this bill passed it still would never pass the House (and bills like this are suppose to originate in the House anyway), it’s clear to me this whole dog and pony show is purely political and has one goal in mind.. to get people riled up over the Republicans protecting their “big oil” buddies (let’s remember, many of these Senators are up for reelection next year).
I personally don’t see why people want to go after the “big oil” companies every single time the price of gasoline goes up. You do realize you pay more for a cup of coffee than you do for the same amount of gas, right? I don’t like paying $3.70+ per gallon either, but we can’t allow those in Washington to use our anger over gas prices to their political advantage (those on the right OR the left, they both do it). Let’s stay focused on FACTS and not rhetoric coming from the blowhards on the Hill..
“This is not an energy strategy, this is a public relations strategy, this is a `how do I get re-elected’ strategy,” said Sen. John Cornyn, R-Texas. “It does not solve the problem or the pain that Americans are feeling at the pump.”
If I got any of my facts wrong, please feel free to correct me (with sources please.. I do not consider “cause I said it’s that way” as proof that something is true.) And please, post your thoughts!