Evil Evil Exxon

Full disclosure: I will never ever buy gas at an Exxon station as I still harbor bad feelings about the Exxon Valdez.  Also, my father-in-law is a Conoco employee so I am a little bit biased in my assessment of which is the better company.

However, I am so sick of hearing about how greedy and evil oil companies are!  Most of the arguments are pure poppy cock and nonsensical.  Profits are up.  However, the true measure of anything rests in profit margins and the profit margins of these companies are flat and very low as compared to other businesses. 

Nevertheless, did you know that last year (2007) Exxon paid $30BILLION dollars in corporate taxes!  Exxon pays taxes at a 41% rate on taxable income.  From a study at findingalpha.com (http://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion?source=side_bar_editors_picks):

just one corporation (Exxon Mobil) pays as much in taxes ($27 billion) annually as the entire bottom 50% of individual taxpayers, which is 65,000,000 people! Further, the tax rate for the bottom 50% is only 3% of adjusted gross income ($27.4 billion / $922 billion), and the tax rate for Exxon was 41% in 2006 ($67.4 billion in taxable income, $27.9 billion in taxes).

However, the “bottom” 50% of Americans do not pay any income taxes.  Do you think that Google or Microsoft pay as much in taxes as Exxon?  These taxes that are paid by Exxon are in fact passed on to shareholders as a matter of fact.  Just think about how many pensions, retirements, savings, and protection are affected by this?  Try to find a high performing fund out there that does not include Exxon.

On the other side, I understand that Exxon Mobil and other oil and gas companies benefit from amazingly generous tax breaks, credits and discounted federal mineral rights that no other industry even approaches.  In addition, the accounting details are a bit out of my league but I understand that the way they book things is as a “deferred income tax” that allows them to purchase capital assets and offset these deferred taxes ongoingly for basically forever.  I also understand that Exxon tends to get most of its crude from the Gulf whereas Conoco and others do not and thus they add social costs by requiring protection from the Navy, the threat of oil spills on public lands, and other subsidized capital and infrastructue expenses.

That being said, I cannot stand hearing politicians talk about “taking profits” as if they belong to someone other than private individuals and investors.  The oil companies add a HUGE benefit to the world.  Petroleum can be found in one way shape or form in just about every product that we use and it is in great thanks to the refiners that this is possible.  Not to mention all of the jobs that these companies provide, the benefit to our savings, the benefit to communities, the addition of health care to people who need it, and the wealth that they help to create by basically powering the rest of industry thus adding more jobs, products, etc.

Thank goodness God blessed us with such a wealth of natural goodness and thank goodness that He blessed his children with the intellect to harvest that product and help make our lives great and comfortable and free! 

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One Response to “Evil Evil Exxon”

  1. I am also sick of people complaining about evil companies. They are simply a product of market demand. Simply put, if we didn’t want/need them, they wouldn’t exist.

    That said, I think we should explore our own natural resources, especially in ANWR.

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