President Barack Obama said in a campaign speech Thursday that the reason you are paying a lot more at the gas pump is due not to supply or demand issues, or geopolitics, but because of tax breaks.
“Oil companies are making more money right now than they've ever made,” the President said. “On top of the money they're getting from you at the gas station, they want some of your tax dollars as well. That doesn’t make any sense. Does it make sense? It's inexcusable. It's time for this oil industry giveaway to end."
But for an industry getting tax breaks, the companies are sure paying a lot of taxes.
They paid $1 trillion in sales and excise taxes out of their revenues between 1981 and 2008, a total that exceeded their after-tax profits by 40%, according to data from the International Energy and the Energy Information Administration. That doesn’t count federal or state income taxes.
On top of that, you are paying a lot in federal and state taxes at the pump, anywhere from 10% to 20% of your cost per $3.83 gallon of gas, now the nationwide average. People in New York, California, Connecticut and Hawaii pay the most in taxes at the pump.
Meanwhile, the oil and gas industry gets less tax breaks than clean energy, says the Tax Foundation. And annual subsidies for renewables are more than four times larger than those for fossil fuels, says Tax Foundation President Scott Hodge.
So, oil and gas companies, and you, are paying to subsidize green energy that is still failing to help lower your family’s energy costs.
And although the president talks about flattening and reforming the U.S. tax code to make it more fair, the White House is making the code even more unfair by taking away from the oil and gas industry tax breaks for all manufacturers, breaks that were put in place to help U.S. manufacturing and boost American companies' competitiveness overseas.
Why is the president campaigning to use the tax code to punish or reward certain industries based on their political popularity, when profitable companies already are subsidizing their less successful green rivals?
At the same time, the President’s fiscal 2013 budget proposal would slap another massive $85 billion tax hike on energy, while it clamps down on the Keystone pipeline and offshore drilling and seeks a cap and trade system that has caused Europe’s energy bills to soar.
Is this an energy policy the U.S. taxpayer wants?
A report from the World Economic Forum, in conjunction with IHS-CERA, shows the oil and gas industry drives U.S. job creation. According to the report, oil and natural gas production accounted for 9% of new U.S. jobs last year.
“Our industry and the activities that support it accounted for more than $1 trillion of the U.S. economy in 2009, or about 7.7% of U.S. gross domestic product,” according to a recent study by PricewaterhouseCoopers, says Ken Cohen, vice president of public and government affairs at ExxonMobil (XOM).
Meanwhile, the biggest oil and gas players in the world are owned and operated by foreign governments. More than three quarters, 78%, of global oil reserves are owned and operated by foreign governments, versus privately operated oil companies like those here in the U.S.
But the size of the tax bills for U.S. oil and gas companies are significant.
For example, ExxonMobil paid $108.1 billion in total worldwide taxes in 2011, up from $89.2 billion in 2010, according to its filings, confirmed by a company spokesman. Exxon’s total worldwide income tax portion of its 2011 bill was $30.5 billion. Exxon pays taxes to foreign governments where it operates.
Back here at home, Exxon paid $12.3 billion total in U.S. taxes, all in, for federal, state, sales, property, and excise taxes. That’s up from $9.8 billion the year prior. Overall, that makes Exxon the biggest payer of U.S. corporate taxes.
When you think about it, Exxon paid more than a billion dollars a month in U.S. taxes, all in, last year. But Exxon earned $9.6 billion in after-tax profits in 2011.
“So the U.S. government gets a bigger slice from us than our shareholders do,” says Alan Jeffers, spokesman for ExxonMobil. “How can you possibly say we’re not paying our fair share when our tax bill is bigger than our profits?”
Overall, the oil and gas industry actually forks over more money to local, state and federal governments in taxes and fees than what it earns after taxes in the United States.
And what do you, consumer, pay in taxes at the gas pump? The federal government takes 18.4 cents per gallon for gasoline sold. State and local governments then tack on their own taxes, an average 30.4 cents nationwide, says the Energy Information Administration.
New Yorkers pay the most in state taxes, it’s 49.5 cents a gallon. That means nearly 68 cents a gallon of gas pumped in the Empire State is actually taxes on the consumer.
It’s the nickel and diming that really stings consumers; companies tend to pass along their tax bills in the form of higher prices at the pump.
But this doesn’t count other U.S. taxes oil and gas companies pay, too. In severance, property and so-called windfall profit taxes, the industry paid more than $472 billion between 1981 and 2008. Nor does it count what the oil and gas industry pay to foreign governments.
Between 1981 and 2008, the oil industry paid more than $388 billion to the federal and state governments in corporate income taxes, but they paid almost twice that amount, $683 billion, to foreign governments, says the Tax Foundation.
Elizabeth MacDonald joined FOX Business Network (FBN) as stocks editor in September 2007 and is the author of Skirting Heresy: The Life and Times of Margery Kempe (Franciscan Media, June 2014).
Follow Elizabeth MacDonald on Twitter @LizMacDonaldFOX.