Massive Profits, High Gas Prices and $33 billion in Taxpayer Giveaways to Big Oil
Over the next 5 years oil companies will receive $33 billion in taxpayer funded giveaways.
According to the report set to be released tomorrow morning by the Friends of the Earth, (pdf) the $33 billion in taxpayer dollars will come to Big Oil through tax loopholes, royalty rollbacks and research and development subsidies.
"This is a tremendous sum for taxpayers to be doling out to the oil and gas industry," said Friends of the Earth's Erich Pica, who authored the analysis. "The corporate fat cats at these big oil companies are already earning record profits-they don't need our tax dollars too. There are far smarter places to use this money, including bringing down energy costs by investing in the clean power sources of the future, such as wind and solar."
Friends of the Earth's analysis found that over the next five years oil companies stand to gain at least $23.2 billion from tax loopholes, $3.8 billion in royalty rollbacks, $1.6 billion in direct subsidies for research and development, and $4.3 billion through accounting gimmicks.
The analysis found that tax giveaways have increased dramatically since the passage of a Republican-drafted energy bill in 2005.
Who are the real crooks though, how much money will the government be making off the taxes placed on oil in the next 5 years.
The US government collects about $7 billion a year from the oil and gas sector - roughly 12%. To put it in perspective, the Alberta government in Canada collected $13 billion in royalties in 2005-06 at a royalty rate between 20 and 40% - that's a single province in Canada collecting more in royalties than all of the US.
Here's the US data on royalties for 2007:
http://www.api.org/aboutoilgas/sectors/explore/royalty.cfm
Here's the Canadian data (pdf):
http://tinyurl.com/5mycku
ExxonMobil's profits were $10.9 billion for the first three months of this year alone.
=ExxonMobil's profits were $10.9 billion for the first three months of this year alone.= Kevin Grandia
Is there a problem with that amount Kevin? As a percentage of revenues, Exxon's profits are average.
Their profits may be average, but the point is that there is no need to continue to subsidize their R&D. Let them fund it themselves like any other company.
John, I assume you would be willing to apply that policy to wind and solar too?
I hope not. Wind and solar are far more desirable forms of energy than oil, because they don't result in the emission of heat-trapping gases that cause global warming.
There's a public good served when we invest our tax dollars in clean technologies. It's just a waste of money to throw billions of tax dollars at Big Oil, especially when it's experiencing record profits.
Yes, if Wind and Solar were making a couple billion a quarter. Maybe even if they made only a single billion. :-)
Again, and not trying to pick on the "big oil" here but if they make that much, they don't need subsidies. Subsidies are encouraging the market to move in a direction when the market can't support itself. Anything more is a giveaway.