An Unpopular Opinion
Thursday, June 12, 2008

The Republicans blocked a bill that would tax "windfall" profits on oil companies.

Thank goodness.

I know it's fun to make the corporations into bad guys, and blame them for our oil price woes. However, oil company profits are good for America.

  • The oil companies create jobs.
  • The oil companies pay dividends to their shareholders.
  • Government taxes should be proportional to any profits made.
How is that going to make prices go down? Does anyone really think the oil companies are going to say "Whoa, Nellie, we better make sure we are unprofitable?" No, they'll just raise prices to cover the new tax. We'll pay more at the pump.

Facts: Oil companies profit margin is relatively small; they do have a lot of volume.

Exxon Mobile reported $40 BILLION dollars in profits last year. That must be obscene, right?

Let's look at Exxon Mobile's first quarterly statement for 2008:
Revenue - $116.8 billion dollars. Costs: $96.6 billion dollars. Net: $10.89 Billion dollars.
Paid in sales tax: $8.4 Billion dollars.
Profit margin: 9.3% *

A company with a profit margin of less than 10% doesn't seem so obscene any more, does it? Not to mention all of the jobs they are creating and all of the retirement portfolios they are enriching. In the first quarter, 2008 Exxon paid out .35 per share in dividends. Exxon has 5.3 billion shares of stock. So Exxon paid out to Americans $1.8 billion dollars. That's not counting capital gains from stocks going up, that's just a handout of profits they gave to stockholders.

So. Exxon made 10.89 billion dollars, but also handed $10.2 billion back to the American people in taxes and dividends. I say let them make more money!

Our real problem is supply and OPEC. Also, we are printing a lot of money willy-nilly so our dollar is less valuable. Since oil pegged to the US Dollar, the price keeps rising as dollars are worth less and less.

Perhaps we should concentrate on making sure China doesn't siphon all of our oil out from under us, instead of turning CEOs into boogeymen.

(And the fact that this week, husband dear is making well heads for deep sea oil rigs in a Gulf Coast warehouse does not have anything to do with this opinion! But I felt the need to disclose that the oil companies are good for my family, too.)

* I did not use any Enron-like mathematecal convulutions. I just straight up divided how much they pocketed (profit) by how much they took in (revenue).

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posted by Milehimama @ Mama Says at 6/12/2008 08:56:00 AM | Permalink | |