Last week, with the debt ceiling fight raging and conservatives in Congress asking for more spending cuts without closing tax loopholes, the five Big Oil companies posted massive second-quarter profits.
ExxonMobil, BP, ConocoPhillips, Chevron, and Shell raked it in thanks in no small part to billions in unnecessary subsidies and record-high gas prices paid by American taxpayers.
The Center for American Progress says that in addition to paying more than $4 billion in unnecessary tax subsidies for domestic oil drilling and production every year, Americans have been paying more than a third more at the pump than they were just a year ago.
All five companies sat squarely in the black with $35.1 billion in combined second-quarter profits, 9% higher than in 2010.
Exxon, at a whopping $10.7 billion, reported the largest profits by far. Shell saw an $8 billion profit for the quarter, a 77% increase from last year, putting the company on track to meet or exceed its 2008 record of $31.4 billion – the most a British company has ever earned in a single year.
Even BP clocked in at $5.3 billion little more than a year after the horrific Deepwater Horizon disaster rocked the U.S. Gulf Coast, forcing BP to put $20 billion in an escrow fund for people harmed by the blowout.
While high prices pad oil company coffers, they also make life even more difficult for families struggling to recover in the Great Recession’s wake. Bernard Baumohl, chief global economist at the Economic Outlook Group, notes that every penny increase in gas prices drains $1 billion out of the economy each year.
But high prices at the pump are only part of Americans’ Big Oil bill. They also pay more than $4 billion in unnecessary tax subsidies for domestic oil drilling and production every year. Oil companies produce oil regardless of whether they receive these wasteful and expensive tax breaks, and they would still realize enormous profits without federal handouts.
Yet Big Oil’s representatives in Congress stubbornly defend Big Oil giveaways even if it means cutting deep into popular, important programs to make up for the cost.
The House-passed fiscal year 2012 budget would cut Medicare spending by $30 billion over a decade, for example, while maintaining $40 billion in tax breaks to Big Oil over the same period.
Meanwhile, many of the Big Five oil companies are investing a big chunk of their quarterly profits into stock buybacks as well. Repurchasing stock can boost a company’s share prices, enriching stockholders, board members, and senior managers. The Big Oil companies spent a full quarter of their first-quarter profits buying back stock.
During the second quarter, ConocoPhillips spent an additional $3.1 billion on its own stock, equivalent to almost all of its second-quarter profits. Exxon spent $5.5 billion and Chevron spent $1 billion in stock buybacks.
The Center for American Progress’s Daniel J. Weiss and Valeri Vasquez note that "Big Oil companies get richer by the minute" with these purchases "while consumers and taxpayers get hit with bills for higher gasoline prices and tax loopholes."
"Most Americans," President Barack Obama said on Monday, "don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don’t get."
With $35.1 billion in total profits this quarter, it’s clear Big Oil should no longer come first-and should give up its tax breaks once and for all.
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