Thursday, August 28, 2008

Exxon Mobil Per Second: $1,400 in Profits, But It Pays $4,000 in Taxes, $15,000 in Operating Costs

Obama thinks government is not getting a "reasonable share" of oil companies' profits, which in 2007 were, as a percentage of revenue (8.3%), below those of U.S. manufacturing generally (8.9 %). Exxon Mobil pays almost as much in corporate taxes to various governments as the bottom 50% of American earners pay in income taxes. Exxon Mobil does make $1,400 a second in profits -- hear the sharp intakes of breath from liberals with pursed lips -- but pays $4,000 a second in taxes and $15,000 a second in operating costs.

George Will in
today's Washington Post, partly based on this CD post (his office called to verify the data in that post)


At 8/28/2008 6:48 AM, Anonymous Anonymous said...

That still doesn't explain why they get taxed at 8.3 versus 8.9.

At 8/28/2008 7:36 AM, Anonymous QT said...

8.3% is net profit as a percentage of total revenue.

At 8/28/2008 7:52 AM, Anonymous Anonymous said...

The only reference in the Obama Tax Plan that refers to the oil and gas industry is this snippet:

Eliminating special tax breaks for oil and gas companies: including repealing special expensing rules, foreign tax credit benefits, and manufacturing deductions for oil and gas firms

Is that really a windfall profit tax?

At 8/28/2008 8:03 AM, Anonymous QT said...

People also listen to what Mr. Obama has been saying.

"I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills,"

At 8/28/2008 8:07 AM, Anonymous bob wright said...

Anonymous 7:52

It doesn't matter what you call it, Obama wants to punish U.S. oil companies - The companies that provide the life blood to our petroleum based economy.

He's raising taxes.

You are arguing semantics.

At 8/28/2008 8:23 AM, Anonymous QT said...

Will raising taxes on domestic producers while foreign oil producers remain exempt help to encourage domestic production?

If it costs $2.00 per barrel to produce oil in Saudia Arabia & $50.00 per barrel in North America, would introducing additional windfall profit taxes and eliminating legitimate deductions for expensing capital equipment, foreign taxes, etc. be likely to increase domestic production?

Oil companies are just the latest useful punchbag for politicians in search of grandstanding opportunities.

For someone who is going to change Washington, why does Obama sound like more of the usual crap.

At 8/28/2008 8:27 AM, Anonymous bob wright said...

This seems to be the typical reasoning in the modern day liberal's [as opposed to a classical liberal] philosophy.

Demonize and punish success.

Subsidize aberrance.

At 8/28/2008 8:55 AM, Anonymous QT said...


You're forgetting one:

Referring to deductions for legitimate business expenses (ie. capital cost allowances and foreign tax credits) as tax breaks.

Thank you Anon. 7:52 for posting the quotation from the Obama Tax Plan. It offers quite an insight into the DNC.

Better start reading the fine print.

At 8/28/2008 9:27 AM, Blogger Walt G. said...

How does Obama define "windfall"? His income and his wife's income combined was $991,296 in 2006 and $4.2 million in 2007. Would that be a windfall?

At 8/28/2008 10:49 AM, Anonymous bob wright said...

Walt g:


1. What is the definition of windfall?

2. Why does Obama, or any politician for that matter, assume that he is the arbiter of the definition windfall?

3. That the MSM lets him get away with this type of demagoguery is malpractice on their part.

At 8/28/2008 10:50 AM, Blogger Marko said...

The Democrats say they are about creating jobs. How does that fit in with attacking Big Oil, Big Pharma, etc?

I wonder how many people will be put out of work if we raises Exxon's taxes? How many people does Exxon employ? How many people in the U.S. are employed by the oil sector generally - is it 100s of thousands?

They are all congratulating the Obama for turning down a job on Wall Street and doing community activism. What is so bad about Wall Street? How many jobs does Wall Street create, versus how many jobs do community activists create (hint, community activists create 0 jobs).

How can they claim that they love American because you have such opportunity, and they want to increase those opportunities, and then when someone uses that opportunity to work hard and be successful, they are bashed for being "privileged"!

I really wish we could compare the contribution to society from your average "community organizer" versus the contribution from your average CEO. Certainly the CEO pays more in taxe dollars, which they claim credit for spreading around.

Same thing about the praise for Kennedy (I hope his cancer goes away and he gets better, by the way). They talk a great deal about what he has done with our tax dollars, but NO ONE THANKS ME FOR EARNING THOSE TAX DOLLARS they are spreading around! I think my taxes pay the salary for 3 or 4 federal employees ever year. Why don't they celebrate me, rather than calling me names?

Ok, sorry about that, watching the convention has me all riled up.

At 8/28/2008 11:41 AM, Anonymous QT said...

Riled? Are you kidding?

With the lineup of deadly, dull speakers each with a competing narrative about how "poor we was when I growed up", it is a wonder the audience still has a pulse. The Obama hagiography makes watching paint dry look like an interesting and mentally stimulating activity. Hillary Clinton was one of the few good speakers even, cracking a few jokes.

People who work for the Salvation Army don't live in a 1.65 million home, earn $4.2 million a year or wear custom tailored suits.

It's politics not altruism that is on display here.

At 8/28/2008 11:52 AM, Blogger OBloodyHell said...

> For someone who is going to change Washington, why does Obama sound like more of the usual crap.

And why did he pick a professional Washington slimeball like Biden as his running mate...?

Here's your "change" -- from Boortz on Tuesday:

There is a little boy in New Haven, Connecticut by the name of Jericho Scott. Jericho plays little league baseball where he is a pitcher. In fact, Jericho is such a good pitcher that that league officials demanded that he no longer pitch because his pitching is "so hard, fast and accurate that it might frighten or discourage other players."

In other words ... Jericho is just too good.

The coach of Jericho's team, Wilfred Vidro, refused to replace Jericho as the pitcher and so the league canceled their next game. The team is 8-0 and ready to go to the playoffs. Peter Noble, who represents the Spanish for Youth Baseball League of New Haven says "The spirit of the league was community, family, well being, nurturing. It's an extended family and it's been disrupted," because of Jericho's pitching. Noble said that they canceled the game because they were afraid that adults fighting about Jericho's pitching would create an "unhealthy environment."

So there you have it. The kid is better than his peers so the answer is to shut him down. Not encourage him to succeed but to make sure that he doesn't make the other children feel bad.

The new America ... where failure is rewarded and excellence is punished. Not just a trite slaying.

At 8/28/2008 12:22 PM, Anonymous Anonymous said...

"In fact, Jericho is such a good pitcher that that league officials demanded that he no longer pitch because his pitching is "so hard, fast and accurate that it might frighten or discourage other players."

Kids develop at different rates; some are phenoms. Normally this is dealt with by having a 'Select' league, or having him play with an older age group.

It really is ok to organize a sports league for community and fun, and make the competition secondary. Like in t-ball, its customary to not keep score. The objective is to get the kids into the game, let them have fun.

Sports are not all about competition. In some leagues, yes that is the primary or only concern. In others, it might be an after-thought.

Once I played against a team who's pitcher was a phenom; huge and powerful for his age. He hit one of our batters in the hand and broke his hand because he threw so hard, and his pitch broke my bat after solid contact. I think we were all 10. It wasn't very much fun, especially considering there was a 'Select' league for that pitcher to play in.

At 8/28/2008 12:55 PM, Blogger Walt G. said...

Would it be OK to have a 300lb football player in 8th grade tackle football?

At 8/28/2008 1:05 PM, Anonymous QT said...

Actually, the convention puts one in mind of "culture" and management models that periodically go through corporations like a dose of salts. Of course, the hooplah generally fades after a few months and business seems to goes on as usual.

It is really funny watching politicians saying words like "Change you can believe in" when you can tell it's just another slogan like "Families first" or "A thousand points of light".

If this convention were any more scripted, it would come with its own laugh track.

In all of this rhetoric, where is the policy? Where are the ideas? What do these people offer aside from heart tugging emotional stories of cancer patients, corporate bashing, & revisionist history? If this is it, the old guy looks like a shoe in.

At 8/28/2008 1:16 PM, Blogger Walt G. said...


You have to think of it like a toothpaste commercial where they are just trying to get you to buy something. Policy discussion takes time and does not work well for an audience who expects to be entertained. I thought the convention had a laugh track last night but then I realized it was just me.

At 8/28/2008 1:36 PM, Anonymous qt said...


Good one :)

At 8/28/2008 3:03 PM, Anonymous bob wright said...


You said:

Referring to deductions for legitimate business expenses (ie. capital cost allowances and foreign tax credits) as tax breaks.

This is a great example of the "Alice-In-Wonderland" world too many politicos live in.

At 8/28/2008 3:11 PM, Anonymous Anonymous said...

Would it be OK to have a 300lb football player in 8th grade tackle football?

With some restriction on age, if the 300#er was in the 8th grade, of course it would be okay. He'd probably be too slow to do anything anyway.


At 8/28/2008 3:49 PM, Anonymous bob wright said...

So that means if the 300#er sat on you, you'd die a slow death....

At 8/28/2008 4:38 PM, Anonymous QT said...


My fav is the phrase "revenue neutral"...code words for hold onto your wallet reel tight.

At least, Mark Russell will have plenty of material.

At 8/28/2008 5:11 PM, Blogger juandos said...

"How does Obama define "windfall"?"

Someone who didn't contribute to his coffers...

At 8/28/2008 8:29 PM, Anonymous Anonymous said...

Exxon deosn't pay any taxes, thier customers do. One of these days you idiots will figure this out.

At 8/28/2008 11:12 PM, Anonymous QT said...

And one of these days, you will learn how to read a financial statement. Try income statement for last year for Exxon.

Clue to the clueless: It's the line
INCOME TAXES right after Income Before Income Taxes on pg. 38 of the 2007 pdf doc.

For 2007, the figures are as follows:

Income Before Income Taxes: 70,474
Income Taxes: 29,864
Net income: 40,610

Please note: Income taxes do not include gas taxes. Gas and sales taxes are not expensed but accounted as liabilities payable to the government and remitted accordingly.

This is first year accounting not rocket science.

At 8/29/2008 2:33 AM, Blogger juandos said...

"And one of these days, you will learn how to read a financial statement"...

Excellent qt!

The sound of that gentle backhand could be heard around the world...:-)

At 8/29/2008 7:46 AM, Anonymous QT said...


Unfortunately, Anon. will never get it unless I explain accounting and possibly not even then:

Balance Sheet Accounts:
Assets - Liabilities = Owner's Equity

Temporary Accounts (that appear on the Income Statement and are zeroed out at the end of the fiscal period and the balance (the net income/loss) transferred to retained earnings):
Revenue - Expenses = Net Income

Every transaction has a debit and a matching credit. Asset and Expense accounts are debit accounts (ie. a debit causes the balance to increase) while Liabilities, Equity & Revenue are all credit accounts (ie. a debit makes the balance go down while a credit makes the balance go up)

The entry for recording a sale is:

DR Cash
CR Revenue
CR Gas Tax Payl to Govt. (A/P)

At the end of the month the company remits the tax:

DR Gas Tax Payl to Govt
CR Cash

If the sale credited Income Tax Expense, a credit would LOWER the balance reducing the companies expenses thereby overstating net income so the company would effectively have to pay higher corporate taxes on a higher net.

The chances are that anyone who does not understand the difference between a tax loophole and legitimate business expenses like capital cost allowances (ie. depreciating equipment) or deductions for foreign taxes STILL won't get it.

Chances are that Obama's oil policies will be a historic re-enactment of the idiocies of the Carter Administration. This ain't the change we need unless you are considering a lobotomy as elective surgery.

Anyone with common sense would figure out that a business that has a record profit of only 8.3% realizes that its profits are usually LOWER (you can even look it up). Anyone with a clue realizes that when you tax the crap out of a very capital intensive industry, you get less investment, and existing operations become uneconomic resulting in the loss of thousands of jobs.

Anyone with a clue knows green energy like wind, solar, and ethanol are completely inefficient and uneconomic. If you wish to feel virtuous while paying 55 cents per KwH for electricity like Europeans do, great but be prepared for a stagnating economy and high unemployment.

At 8/29/2008 8:31 AM, Anonymous Anonymous said...

"Anyone with a clue knows green energy like wind, solar, and ethanol are completely inefficient and uneconomic."

As someone who works on originating these types of projects every day, I can tell you that they are not inefficient (provided you don't make ethanol from corn), and they are not uneconomic generally, often even if you remove the tax incentives.

At 8/29/2008 10:04 AM, Anonymous QT said...


You can always support your assertions regarding wind or solar with a cost-benefit analysis of a working installation. It should include cost of transmission infrastructure, % of electricity lost during transmission, capital costs, on going maintenance, & efficacy (ie. not installed capacity but the actual generated), and land mass required.

Wind and solar do not create base load power because they are intermittant and at present, there is no economically viable means of storing large amounts of electricity. You can't run a factory on intermittant power.

In terms of economic viability, I offer the example of the Rancho Seco Nuclear Generating Station in California which opened in 1975 and was capable of generating 900 megawatts of electricity. The plant was converted to solar power and today generates 4 megawatts of electricity. Unlike such government boondoogles, businesses are required to create a return on capital investment or investors go elsewhere.

Would be glad to consider your numbers although you have not considered those that I have offered. I note that you don't comment on the basic accounting lesson so I guess you still don't get it. So we will try again.

We know that total taxes remitted by Exxon exceeded Exxon's net income so it's kinda obvious that the line income taxes on the 2007 income statement does not include gas taxes.

The present world oil supply is 85% controlled by governments. From econ 101, we know that government monopolies generate less than the socially optimum quantity of goods. Hey, that's theory you say. Ok

Anyone who reads the paper knows that governments routinely use their nationalized oil companies as piggy banks to support all manner of government largess rather than investing in exploration. Eventually, oil output drops ie. Venezuela &
Mexico. The present crisis is just another example of government mismanagement resulting in tightening of supply. If supply goes down, price goes up; it's basic supply & demand.

Whomping domestic companies that have higher costs to produce ($50.00 per barrel vs. $2.00 per barrel for Saudia Arabia) just gives foreign oil companies a greater competitive advantage. Oil companies are price takers so these costs cannot be recovered by passing them on to the customer. The taxes just come out of investment and jobs.

Does one have to drop a house on you?

At 8/29/2008 11:38 AM, Anonymous QT said...


Unfortunately, you are the product of a university education. You have been taught that corporations are greedy, motivated only by the "profit motive" and given the usual bilge about corporations paying no taxes and exploiting workers.

The reality is that a company must compete to attract investment, and must invest to develop new lines of business in response to a changing society with changing needs. A company that rests on its laurels and does not evolve to meet the needs of its customers is simply unable to compete. Unless they get it right, they lose marketshare, investment and jobs.

Profit is not a motive but an imperative. Investors assess companies on financial performance and rate them against their competitors...hence we compare Home Depot to Loews or Target to Wallmart.

I used to think just like you about 20 years ago.

At 8/29/2008 11:55 AM, Anonymous Anonymous said...

"Wind and solar do not create base load power because they are intermittant and at present, there is no economically viable means of storing large amounts of electricity."

Actually there are several viable existing storage technologies that need only be 20% nameplate of the renewable to provide 99% firm power. BTW, storage has been economical for years; its called on-peak to off-peak arbitrage and its already been DONE for years.

Right now a wind turbine in west TX is economical at negative $10/MWh with tax incentives. Think about that....

At 8/29/2008 12:31 PM, Anonymous QT said...

Where is the cost-benefit analysis?

Just telling me what I should think is not the same as proving your argument. Without any verifiable supporting documentation, you are blowing rhetorical smoke rings. "with tax incentives" means that it is not economically viable without government subsidy where I come from.

Regretfully, there goes another house :)

If you're in the industry, this should be easy. You should be able to vaporize me with your data on the economics of alternative energy...yet, you offer nothing but words.

You have still not been able to offer one credible scrap of supporting evidence to support your claim that Exxon pays NO taxes nor counter any of my arguments on this subject.

At 8/29/2008 12:41 PM, Anonymous QT said...

Present storage technology is promising but has a very high capital cost which at present is not economic. Batteries using nano technology may change this.

At 8/29/2008 2:10 PM, Blogger OBloodyHell said...

> This is first year accounting not rocket science.

He's a ready-made idiot from the Public Youth Indoctrination System.

He was never taught enough math to actually handle first year accounting.

He's almost-sorta got it right, of course, but not for the reason it sounds like he thinks -- the customers don't pay that tax directly, but the corps don't, either. The stockholders pay it, and the customers pay some of it in increased prices.

At 8/29/2008 2:37 PM, Blogger OBloodyHell said...

> As someone who works on originating these types of projects every day, I can tell you that they are not inefficient (provided you don't make ethanol from corn), and they are not uneconomic generally, often even if you remove the tax incentives.

Oh, give me a break.

1) If they didn't need the incentives, WHY ARE THEY STILL THERE AND WHY IS THE REAL PRICE STILL FAIL TO COMPARE EVEN WITH THEM? All the incentives do is bring the price down to where at least the green idiots will pay for them.

2) Total energy cycle costs for solar-electric are still negative after 30+ years of heavily subsidized development. And likely always will be -- with a maximum possible energy recovery of 1kw/sq.meter, even without the transmission-line losses of being "on-site" might provide, the average home would have to cover in excess of 10 sq meters with the filthy things just to get close to minimum average household usage. In an apartment I average between 10 and 25 kwh per day. Add in energy storage expenses and conversion losses and your required areal coverage just for my needs alone (and I'm moderately frugal) isn't small. Not to mention that they are filthy -- the production of square MILES of solar cells would result in a huge mass of highly toxic waste which requires disposal. So much for "clean" energy.

3) Wind is highly unreliable, as has been noted more than once, but which was amply shown last winter in Texas, when, on one of the coldest days of the year, with power demands at their highest, the wind just died. And the best possible estimates of wind generation are not more than 20% of total generation, which requires all sorts of expensive switching and load balancing if you try and put it into the grid. Let's also add the requirement that there be some major extensions of existing transmission capacity to get the energy the hundreds, if not thousands, of miles from the natural-criteria-located windfarms to the places where people actually live -- lines which the greens openly reject the construction of by fighting them legally at every turn. And while we're at it, let's ignore not just the birds, but the serious threat that windmills represent to bats, who happen to be highly sensitive to the overpressures that wind turbines produce. Bird deaths, apparently, are dwarfed by bat deaths, recently released studies show.

4) Biowaste ethanol is the only rational form of ethanol possibly feasible. Not necessarily feasible. Just possibly.

"alternative energy sources", as that term is used right now, are one of the biggest, most idiotic boondoggles in human history.

Anyone who doeesn't consider them a specialty niche market and likely to stay that way is almost certainly defacto too stupid to have an opinion.

I allow that someone who is really, truly an expert MIGHT find some way to resolve enough of the issues to make the whole notion not abysmally stupid, but it is impossible to make them A Real Good Idea, especially without multiple substantial breakthroughs in physics, chemistry, and/or biology.

Vastly new techniques for design, fabrication, disposal of the devices themselves, classically labor-intensive maintenance issues, as well as a truly original breakthrough in energy storage technology ALL need to happen to have any chance of making "alternative energy sources" a viable, rational option.



At 8/29/2008 3:45 PM, Anonymous QT said...


Actually, I even tossed him a clue hoping that he might work it out for himself.

It wouldn't matter if the company used either an expense account or a liability account to record the gas tax collected on a sale. When they pay the government, the transaction credits cash and debits...the other account. ie. it reverses the original debit and zeroes the account out. No net effect on the balance sheet or the income statement.

Was hoping our anon. friend might connect the dots. Unfortunately, there are a great many foolish ideas that one gets from a university. At least, he is here and his ideas are actually being subjected to scrutiny rather than morality or ideology. He might just ask himself a question that he can't answer and that would be progress.

This discussion isn't about dissing an anon. poster or converting him to my opinions. It is really about moving to a point where we can discuss ideas objectively and he can learn how to support an argument with proofs/evidence, how to counter an argument by deconstructing it and systematically refuting each point, and learning how to evaluate different evidence critically.

I am open to whatever he presents. If I cannot find a flaw in the reasoning or bias in the evidence, it therefore follows that I should accept it. I note that he does try to find weaknesses in my position rather than tackling the strongest arguments which shows a certain level of intelligence.

With regard to the taxes, I would offer the following distinctions. The customer directly pays gas taxes which are part of the price at the pump which are subsequently remitted by an oil company to the government. The monies are held in trust for the government. With regard to corporate income taxes, these are levied on the net income (revenue less expenses). Shareholders will receive a lower return if windfall taxes are introduced or deductions for capital cost expensing are changed but in the case of oil companies, this higher cost cannot be passed on to the customer by raising prices. Exxon does not set the world price of oil and the bulk of U.S. oil is imported.

On the subject of alternative fuels, it would likely have been better to define economic viability. In this instance, commercial economic viability is the ability of an energy technology to be cost competitive compared to substitutions (ie. other forms of energy) in terms of generating cost and return on capital investment.

I must also complement our anon. poster on his persistence and tenacity. It is not easy having a house dropped on you. He has tried to chip away at my arguments and has not resorted to name calling and in return I have asked for more evidence to support his claims.

If I merely wanted agreement, I would buy a dog. I want to be challenged by a good debater.


Post a Comment

<< Home