A top executive at ConocoPhillips today accused backers of proposals to eliminate certain tax benefits for major U.S. oil companies as distorting the facts and unfairly penalizing a few companies that already are heavily taxed.
“We think there’s a real mischaracterization of the whole debate,” ConocoPhillips’ Chief Financial Officer Jeff Sheets told reporters this morning before the Houston oil company’s annual shareholder meeting.
The tax breaks and deductions the industry receives are not special subsidies for the oil industry, as critics say, but are widely available to other U.S. companies. Eliminating them would amount to putting “unique taxes” on the oil and gas industry, he said.
The comments come the day before ConocoPhillips’ Chairman and CEO Jim Mulva, Chevron CEO John Watson and ExxonMobil CEO Rex Tillerson are set to testify before a Senate Finance Committee hearing in Washington about the negative impacts of the tax proposals.
One of the proposals would eliminate the Section 199 domestic manufacturing deduction for the five largest oil companies – Exxon Mobil, Chevron Corp., Royal Dutch Shell, ConocoPhillips and BP. Another would do away with a tax credit that frees U.S. companies from paying U.S. taxes on foreign profits once those profits are already taxed by foreign governments.
Sheets could not estimate how much the proposals would cost ConocoPhillips, but said they would not do anything to reduce U.S. gasoline prices. Rather, they would have the effect of reducing investment in new oil and gas production and stifle job creation, he said.
Doncha love how environmentalist can drive the US major oils out of the USA and into the third world to find oil, and then want to tax their profits earned internationally ?
Note to Jeff Sheets (ahh the games I could play on his name..lol) Mr. Sheets, while getting rid of tax breaks for mega corporations like yours may not help gas prices for consumers, what it will do is stop the government from giving profitable companies just like yours, who don’t need the tax breaks in order to have obscene profit margins, it will stop giving companies just like yours my hard earned money. It’s wasteful and in poor taste, your company is doing just fine and should pay there fair share of taxes, you know the money your really owe this country for the opportunity it gives you to do business here and make the kind of obscene salaries guys like you make. So shut your mouth, pay your fair share, and quit ripping off the tax payers of this country who have been lining yours and your ilks pockets for years, it’s time for you guys to pay your fair share – you wasteful bastards can more than afford it!
Bottom line force the IOCs to pay more to the government and the motorists will feel the hurt, and the environmental lobby strategically will benefit.
I gaurantee you if other countries decided that all companies had to pay taxes on money made in the US to them, the same government clowns we have here running this re-election farce would not be so happy.
Just wait, if this passes it is only a matter of time before the Russians and everyone else start demanding US companies with offices there pay added taxes on money not made there.
Oh come on these are “special favors” just like farm subsidies or ethanol subsidies. I love Republicans who tell everyone to make it on your own, no help, and yet just love to give business after business tax credits and other benefits. How many of you who favor continuing these tax breaks for oil companies are also in favor of farm subsidies or ethanol tax breaks?
These oil company folks are the same ones that are so adamant and self righteous about social welfare; however, when their golden cow is threatened they immediately bemoan the need for welfare in order to stay in business. They play on the same old tactic of fear, “if the credits, subsidies, handouts, welfare” go away we will take our business overseas. Grow up you big bunch of whiney babies.
I don’t see why specific companies or even specific industries should be singled out to lose their domestic mfr’ng deduction. That’s transparantly a money grab, not an attempt at tax fairness. However, providing tax credits (rather than simply deductions) for foreign payments like (de facto) royalties isn’t fair either. As I’ve said before, Joe the Baker doesn’t get tax credits for the flour he buys.
Rat, what exactly are the special faviors the O&G industry receive?
Don’t worry. The democrats have a plan. All they need is to be put back in the “driver’s seat”. Here it is:
http://www.youtube.com/watch?v=PUaY3LhJ-IQ
Remember this in November, 2012.
This will play right into the hands of the environmental lobby and increase even more their $2.6 billion profit, up 43% from same time last year. (or was that…? Never mind) Those environmental lobbyist sure know how to turn a buck.
it’s called corporate welfare. big oil is in the habit of making obscene profits. this is about paying a fair amount of tax.
He tells the TRUTH! Whether the DEMS/LIBS want to acknowledge it or NOT it IS the TRUTH! ALL companies recieve the SAME tax breaks and/or subsidies! The ONLY reason they are being “picked” on is for 2012 “campaign” reasons. The Democrat Politicians know that they can WOO the nieve and/or less educated Democrat Voters by showing a “tough on oil companies” punishment but what they FAIL to tell their constituents is that EVERY COMPANY in the U.S. gets this SAME BREAK! LMAO! SAD thing is, the Democratic Voters will think this is a GOOD thing! Problem is they DON’T understand that THEY will pay for it at the PUMP! IF it COSTS the oil companies MORE then the END USER, the PEOPLE, will have to PAY MORE! I find it ABSOLUTELY AMAZING how ignorant the Democratic people truly ARE!
Anyone with accounting experience will tell you that Section 199 is applicable to all manufacturing companies in the US. This includes construction services, software development, engineering and architectural services, and selling, leasing, or licensing motion pictures. Essentially, it is a provision of the tax code generally applicable to a large number of industries and companies. By specifically targeting “Big Oil” the current adminsitration does so only to score political points and merely pays lip service to tackling the real reasons for high gas prices. For someone who continually considers himself as the smartest guy in the room, the President regularly fails to recognize the practical impacts from his proposed policies.
@Waves: Better rethink your analysis, sport. First it isn’t your money or anyone else’s being given away in the form of tax breaks. It is simply an incentive to keep businesses rolling and keep people employed. Doing away with the breaks will cost you, however.
First in increased costs because the major oils will increase the prices of their products to offset the taxes they would have to pay. Nobody is in business to give away their products for free or at a loss. It might interest you to know that the final profit per gallon of gasoline to the oil majors is measured in pennies; not dollars. The billions you read about and hold against Big Oil is a reflection of the number of gallons they produce and sell – not the profit per gallon.
Secondly, higher taxes act as a disincentive to explore and produce domestically, so it would cost you more in unemployment benefits when oil workers lose their jobs. And if dependance on foreign oil bothers you (as it should), it will cost you as more of your dollars go to foreign sources.
Finally, it may surprise you to know that one of those ‘Big Five’ targeted by these proposals – Shell – is not a U.S. Company. The idea that the government would tax them on the profits they make overseas is ludicrous. It could drive their operations completely overseas and cause them to sell their products anywhere but here in the United States. How does a 15% reduction in supply fit into your narrow mindset?
As a republican, I say no subsidies to any company. No ehtanol tax breaks,
no tax breaks for green energy. Windfarms have been around for decades and they still can’t make it on their own and they never will. Ethanol is a scam.
I am amazed at all the people talking about “obscene” profits. These profits are only large in the absolute sense because they companies are among the largest in the world, and they have to invest billions of dollars to make this money! In terms of percentage, they make a good profit, but certainly not one that is “obscene.”
If you are going to eliminate tax deductions, and start taxing companies twice on the same profit, then first, do it to everybody, not just 5 companies, and second, be honest about it. It WILL increase the cost of gas at the pump, and it WILL reduce investment by those companies, which WILL increase unemployment.
With the billions in profits of the big oil companies I don’t think this will make too much of an impact on their bottom line. And I don’t think this will force them to raise the price at the pump or lower their top executives pay.
America is really dumbed down to think there is anything called a tax break.
I hope the price of gas goes to $5 per gallon before the election. Let the liberals eat cake.
Obscene profit margins eh? Oil Giants make a margin of about 9 to 10%. How about Apple whose margins are more like 24%, now that’s obscene. Everyone thinks that the profit margins in the oil buisiness are high but they truly aren’t. The absolute dollar amounts may be high but there is a significant amount of investment, expenses, and risk that goes along with earning those dollars.
It is unfair…all my Republican friends who supported these tax breaks pay $1 cheaper per gallon then I do..I was against this tax break…
Totally different from farm subsidies. Farm subsidies are payments to farmers or farm corp (ADM) to grow certain types of crops. Oil “tax breaks” are modification of the tax code to allow oil companies to use the same types of tax structures given to other industries.
Before we gut programs like Medicare that help our nation’s elderly and Medicaid that help our nation’s poor, huge companies making these truly obscene profits should start paying their fair share of taxes.
I don’t think the government really cares about the drivers, they just want more money to spend. If they cared about us, they would do all they could to promote employment which would mean they would/should leave oil companies alone.
I wonder if in the afterlife the money they have stolen from us, will be cooled down enough for them to sit around and count to pass the time away… or does it ever get cool down there?
All the lefties start to drool when they think about redistributing oil company profits. Get on the bandwagon, buy some stock. It is available.
The numbers are big on the profits, but as a percentage of investment, not at all “obscene”. Compare the banks and techs who routinely post double-digit profits. Heck, I don’t even begrudge them their profits. I could buy their stock if I wnated to.
Oil profits go toward future investment and shareholders. What’s the big deal?
The speculators have way more to do with the gasoline price than the oil companies do. Don’t believe it? Compare the price of crude versus gasoline pre 90s (when oil came to be traded in the futures markets) to now.
@ ChemE – does the government subsidize Apple?
I find it hard to respond to the posters who think that 9% gross profit is obscene. Profit margin is larger for some businesses and smaller for some, it all depends on your volume of sales and cost of doing business. If the Dems and liberals want to eliminate the deductions and provisions in the tax code for oil companies only, that is a clear path to the supreme court as a violation of the constitution. We fought a war in 1776 to free us from taxation without representation, now we have a group of people in our government that are proposing something similar in their desire to tax the oil companies. If you eliminate these provisions in the tax code for oil companies you have to eliminate them for all companies.
Push gas prices on up Big Oil!! Do it!! You’ll price yourself right into forcing people to find alternative means of transportation. If the general public can’t readily afford to buy it, it won’t sell, regardless of how you promote or package it… and Big Oil knows that, and is scared to death of the thought of it. Push it up to $5/gal once, just once… and you’ll see consumption in the US go from 3.7 million gallons/day down to 2.5 at best… and quickly.
Energy price manipulators are the lowest form of scum… so I fully expect to see them give it a test run.
Perhaps Obama wants to use the money to bring the Mexican truckers up to par in the safety field so they will comply with American regulations for truckers. Obama said AMERICA would pay for the charges to the trucks of Mexicans who get to run our roads under …. is it NAFTA? Unbelievable, isn’t it? just google it
Ending tax breaks might not help the consumre but it will help the government get more money.
Getting rid of certain tax breaks won’t help consumers, BUT GETTING RID OF GUYS LIKE JEFF SHEETS CERTAINLY WILL!!!!
I just hope you raise your prices of GAZZ if they take away your tax breaks as that would hurt rich people. See president Obama campaigned on higher energy prices and us poor folks elected him.
Obama promised us energy prices would soar because of his cap and trade but he has had to switch gears and use regulation and hence he appointed our well renowned communist Harvard law professor regulation CZAR Cass Sunstein.
Here he is in his own words on energy soaring prices.
http://www.youtube.com/watch?v=CNSZ62xiD4M
sheets is full of SHEETS.
Wow 42, are you trying to tell me that the big 5 don’t pay taxes? The more they make, the more they pay…
It amazes me how much ignorance there is in the comments. Go and do your research and you will find that the rate of return on invested capital is miniscule compared to numerous other companies here in the US. I am not sure if you went to the Obama School of Mines or the Obama A&M or if you went to school at all.
Alexander….I think Oblabla does know what he’s doing. He’s trying to fundamentally change America. By taking away standard deductions with a focus on the oil companies. His plan is clear…to raise prices of oil and gasoline to push his agenda of clean energy. He will sacrifice everything to get this done, even if it means the economic distruction of the US. I’m sure he and Soros are betting the US economy will fail and they will benefit for it.
It is truly amazing that the supporters of Oblabla’s economic policies are willing to go to the slaughter for him. Talk about failed policies, this guy has them all over the place and we the people are paying for his mistakes and getting poorer for it.
Chem-E and OilPatch…
The problem is that Google, Apple, and Microsoft are not make 30% off a market guiding necessity. The cost of phones and computers are not doubling and tripling and causing global depressions. The cost of computers is gradually shifting down in relative money. You can buy a budget laptop for ~$300 thanks to Intel, Google, Microsoft, and by association… Apple. As much as those companies hated netbooks and cheap laptops they embraced it and built platforms for it to sustain because in the long run people buying those laptops and netbooks meant people buying accessories and software which IMPROVES the market around them.
Exxon and Oil companies are selling a necessary commodity for EVERYONE to function and live decently. Record profits, regardless of margin, is unacceptable in this situation.
Is that clearer? This is not communism, it’s not allowing a group of private companies to bring the world to its knees for a group of shareholders and CEO’s (also sheiks and royal families).
Liberals and those in government love to spend YOUR money…don’t they?
If I asked a liberal for money and required that liberal to give me 5% of his earnings I’m sure they would say no. Require a tax increase and say the government needs it for the chill-der-en or for the poor they will give it up with no questions asked.
ConocoPhillips 2010 Numbers:
Total Revenues = $198,655 million
Total Taxes = $25,126 million (12.6%)
Profit = $11,358 million (5.7%)
Consolidated Statement of operations ConocoPhillips
http://www.conocophillips.com/EN/about/company_reports/annual_report/Documents/2010_SummaryAnnualReport.pdf
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Johnathan,
Those big 5 are making normal profits – far less than Apple and the like – but they aren’t making it because of some “obscene” jacking up of prices. The price of oil and the price of gas are both set by the marketplace, not those companies. This is not some “obscene” effort to jack up prices and make “obscene” profits, it’s companies trying the best they an to churn out a product that we need while their cost of doing business skyrockets.
This is merely an effort by a few liberal leaders to demonize a few companies that have no control over the price in order to distract you from the real problems in the economy and government.
Duh… this isn’t about rational behavior on the part of Congress, this is about Chavez-style emotional pandering to people who react to big numbers with strong visceral responses. When you say that ‘big oil’ has ‘tens of billions of dollars in profits’ you get the unsophisticated agitated. When you say, they made 6% profit (about average), they are less likely to run to the polls and vote for your Chavez-style policies.
Big Oil has no real need to drill for oil in the US, there are other places to go. Make it unattractive and the efforts will go to Brazil or even Cuba. It enriches them, makes us poorer and less secure and gas prices will remain the same. Whatever. I’m becoming apathetic these days… as elected officials pander to a dumber and dumberer electorate, we get dumber and dumberer tax policies and there is nothing we can do about it.
Jonathan:
It’s truly laughable that Stevo has to explain to you the basics of business and oil price. It’s no wonder Obama got so many votes in 2008.
We have to stop and think someone has to be able to stop these lies. The American People can’t tell what is true anymore. Democrats and Republicans play a part in this deception. Oil companies will go elsware and we will pay more per gallon(period) However the democrats will not be re-elected in 2012 mark my words take a little note. We need to return this country to its roots. By the people, for the people and in GOD we trust. Until that happens we may need to learn Chinese.
“Fair Taxation”! Ha ha ha ha ha ha ha
It would be funny if not such a sad comment on the ignorance of so many US citizens that they do not realize that they themselves are those big ol’ nasty oil companies. The biggest investors in Exxon and other international oil companies are the retirement funds, especially like the California teachers and New York government workers. If you have a retirement fund to which you contribute through your company, chances are it has investments in Exxon, Chevron, Conoco, and BP stock, plus others. Want to gut the oil companies? Do so, but then kiss a major portion of your retirement fund goodbye when the value of their stock drops. And that is in addition to the extra money you’ll be paying at the pump as supplies tighten and you’re still waiting for a cheap electric car and an outlet to plug it into. (What do you think those electric power generators run on? Oil and natural gas.
Stevo just like a republican making up stuff as you go along, blaming all this on the liberals. Well ExxonMobil’s own investor relations vice president disagrees with you:
“Higher crude oil prices were the overriding reason for the increase in profits. Exxon Mobil produces 2.4 million barrels a day of crude oil and natural gas liquids, and the average price Exxon received for every barrel was $25 higher than the year before, David Rosenthal, vice president of investor relations, said in a conference call with analysts.”
See Stevo what you do not realize is the oil being sold currently is oil that was drilled for decades back and lies in reserve wells. This oil currently only cost about $20 a barrel to pull out of the ground and refine. Now back in the 90s when oil cost $20 a barrel the oil industry did need help from the taxpayer to subsidize the continual looking for oil because the oil companies had very little profit. With hardly no profit per barrel it did not benefit the oil companies to look for more oil. The taxpayer flipped the bill for the oil companies to look for oil and now that oil has skyrocketed in price what does the taxpayer get in return. Record profits by the oil companies.