House Democrats: Don’t count on oil industry for jobs

The oil industry isn’t living up to its billing as a big job creator, congressional Democrats said today.

Led by Rep. Ed Markey, D-Mass., Democrats on the House Natural Resources Committee released a report today that concluded that the nation’s five biggest publicly traded oil companies have been paring their global workforce even as they rake in big profits.

Markey, the top Democrat on the panel, says the findings buck the argument that the oil and gas industry could generate new jobs in America if given greater access to U.S. lands and waters.

“Oil companies that make record profits and then cut American jobs strain their own credibility when they claim to be huge job creators,” Markey said. “Americans are seeing a huge cut of their paycheck go to pay for gas, a little more then goes to fund tax cuts for the same oil companies selling the gas, and then the oil companies take this money and cut American jobs.”

Ahead of President Barack Obama’s speech on the economy and jobs tonight, congressional Republicans and oil industry leaders have been advancing their plans for capitalizing on the energy sector to create new employment opportunities nationwide.

The Democrats’ report seizes on the major oil companies’ practice of giving dividends to shareholders and doing stock buybacks as evidence that they are not funneling enough cash into new energy production or new opportunities for American workers. According to the analysis, Exxon Mobil, Chevron, BP, Shell and Conoco Phillips recorded $36 billion in profits during the second quarter of 2011, but then repurchased nearly $10 billion of their own stock and gave shareholders more than $7 billion in dividend payments during that same time frame.

The report also hits the majors for paying executives an estimated $220 million in salaries and bonuses during 2010 — at the same time that the companies trimmed their global workforce by a combined 4,400 employees.

Markey is using the report to make the case that tax incentives reserved for the industry are unnecessary relics that should be repealed.

A 12-member congressional super committee tasked with cutting at least $1.2 trillion from the federal deficit over the next 10 years may consider axing some of the tax breaks, though Republicans in the House have signaled they would not support any tax hikes as part of a final debt-cutting deal.

Markey said the GOP position amounted to “continued tax breaks and special deals for the fossil fuel industries” and unwise investment in “19th century industries.”

“Basing a job strategy on further helping these industries is like throwing money down a hole,” Markey said this morning. “The money doesn’t go to filling the jobless hole. It goes to executive bonuses and . . . stock buybacks.”

Markey decried congressional policies that he said amount to “propping up 19th century industries while kneecapping 21st century” clean energy innovation.

Oil company executives previously have defended their stock repurchase and dividend programs as a standard way to reward shareholders.

Chevron CEO John Watson said Wednesday that critics miss the mark by alleging that oil company profits are going to share buybacks instead of new capital investment.

“I don’t think it speaks to the facts,” Watson said, noting that while Chevron made $19 billion last year, it also spent at least $26 billion worldwide and plans to spend more than $26 billion globally this year. “We do invest back in the business.”

Watson continued:

“Our shareholders require a return, and dividends and share repurchases are ways that some money is returned to shareholders. It is a normal part of the economic cycle in our country and shouldn’t be a surprise or unexpected. We can only invest where we have opportunities, and we have been investing at a very vigorous rate.”

A copy of the Democrats’ report is below.

House Natural Resources Democrats report on oil profits and jobs

19 Comments

  1. Bill in Hosuton

    I can tell you why they’re funneling their profits into stock buybacks and increased dividends: because they don’t know what the next set of regulations will cost them. Whether Obamacare or a new moratorium or some new EPA regulation the average company doesn’t know what the next set of rules will cost. So what do they do? Bolster their bottom line. I’d do the same thing.

    Democrats have no one to blame but THE ADMINISTRATION and its anti-business policies. This will NOT change until Obama and his merry band of clueless academics leave.

    #1
  2. Peeper

    Markey is a socialist. In 26 months in office Obama has imposed 75 new major regulations with cost to the private sector of $40 billion.
    Most jobs created in the energy industry are by smaller companies in oil & gas exploration or service. I saw Markey with Darryl Hannah at dinner the other night.

    #2
  3. Ryan in Houston

    Why is it that when politicians use numbers, they only use one, not all. The picture they paint in this is so narrow, that I my eyes hurt. Yea, they made huge profits and bought stock back. I suspect that if these reports showed revenues and expenses they will also see a track of increased spending. I know Shell was spending large amounts of money in Wyoming in 2007, up until the bottom fell out of the housing market, developing as much as they could in short order. Today they have decreased their spending there, but they continue elsewhere, developing new projects. Oil industry can’t sit still, and it can’t just throw money in a kettle because the democrats say to.
    Additionally, while Shell, BP, ExxonMobil, etc. may have cut 4000 people off, the oil service sector that works for them, has quite possibly added that many, and more. Baker Hughes can’t find enough people to satisfy it’s hunger to grow, but we don’t hear this from the administration. Taking a photo of the Grand Tetons and claiming that all the mountains in the Rocky Mountain region look this way is narrow and inaccurate to say the least.
    Green energy is the future, but as we have seen recently, just because the administration backs it, does not mean it will succeed.

    #3
  4. Mike H.

    This sure runs counter to those API & ExxonMobil ads we see so often.

    #4
  5. JFH

    Don’t these politicians understand that this is how capitalism works? Assume risk, invest $$, reap rewards or not depending on many factors. This is what has made this country a great place to live. Send em all home in the next election!

    #5
  6. Houston

    Super-majors are one thing. Look at their choices: 1) Invest in tiny, oil-drenched areas with desparate governments who really need the money and will do anything to get it; 2) Invest in the off-shore US and risk torment by the US govenment (Gulf Coast moratorium, Shell’s 5 billion dollar lease in Alaska which still hasn’t been permitted); 3) Invest in the on-shore US and be tormented (risk free) by the federal and state govenments (Marcellus). I’d stay the hell away too.

    Independents are another thing. They produce far more domestic energy and provide far more US jobs than the super-majors. My employer has about 400 people since 2005 and we currently have more than 50 open positions. Eliminate the unnecessary regulations and the blatant obstructionism in this country and the energy industry could put alot more people to work.

    #6
  7. ProfesorC

    Seriously?? You are going to criticize oil companies for delivering dividends to their shareholders?

    #7
  8. JimH

    Well, if the Feds would approve drilling leases in the Gulf a little more quickly we would add jobs. Democrats and their Green lobby fight tooth and nail any attempt to produce domestic oil production. The one energy sector we know for a fact that does not produce jobs is the renewable energy sector, it’s not feasible unless it’s subsidized by the government.

    #8
  9. Jackalope

    I bet most of those job losses occurred while Dems controlled Congress. Rep. Malarky, or whatever his name is, led the effort by Dems to close off vast areas to drilling and now complains “Big Oil” isn’t doing enough. One of Obama’s first acts as POTUS in 2009 was to impose a moratorium on drilling in the eastern Gulf and Atlantic. Besides, Malarky is being deceptive: he uses GLOBAL profits as a contrast to US workforce. With Malarky’s obstructionism, oil companies have gone elsewhere. He may find it hard to believe, but I bet most “big oil” companies make their profit OUTSIDE the US.

    #9
  10. J. Michael

    The oil companies should create more jobs in this country doing what? When the government won’t let them drill in the possible places where the oil is what would new employees do? The libs are trying to bankrupt this country by sending all of the energy money overseas to people who will use it against us instead of creating jobs and profits in our own country. We need a complete change of leadership. Don’t re-elect anyone.

    #10
  11. orangemen78

    Those people who say no jobs have been created by the oil industry need to get out of there little hole and go to places like North DAkota, Arkansas, Oklahoma, and southwest Texas. This may be a small part of the jobs that could be created if the political regulators would stop the red tape in the Gulf. There more jobs would be created. The industry is keeping America from going into some serious economic problems.The oil industry uses trucking, skilled labor ( welders, electricians) If they would get off there ASSES (the politicians that is) and come together so that this country can get back to being as a GREAT country that is.

    #11
  12. nimust

    DUH did they leave out the most important piece of information. That the relate business’s create more jobs that the actual big boys. Got to have oil tools to produce, rigs to drill etc all of this associated business is what creates jobs. just like a Yankee.

    #12
  13. TexasRick

    Mr. Markey, if you look at your mutual fund you will see that it is most likely comprised of at least one of the big oil companies whose dividends contribute handsomely to your portfolio. Based on your twisted view of economics, you should return those dividends and close your account immediately so as not be further corrupted by the obscene 10% return on investment most majors are raking in. What a clown.

    #13
  14. jrobinson

    They’re kidding, right? They haven’t had increased access to anything – they’re being forced out of the Gulf of Mexico and fracking is being sued by green groups and regulated out of existence by Democrats. Of course, they’re not producing jobs, you’re trying to kill them! My God, talk about adding insult to injury.

    #14
  15. sudmuf

    How much more does Mr. Markey want the price of gas to go up? Taxing business, any business, is nothing more than a hidden tax on consumers. It is just part of the cost of doing business and is passed on. there should be no taxes on business.

    #15
  16. Billf3

    MR Markey,
    It is better to keep your mouth shut than to open it and let everyone realize how ignorant you really are.

    #16
  17. scott

    The jobs won’t come from the big five oil companies — they will come from the thousands of small businesses that are subcontractors of those firms or that compete with them.

    #17
  18. Innominate1

    House Democrats: Don’t count on oil industry for jobs

    Oh, we are more than aware that the B Zero lickspittles in the brothels of congress will do ANYTHING to subvert, impede and destroy any industry that might generate fossil fuel, because Solyndra fits their notion of good business much better than any O&G major. Better a bankrupt fraud that fits one’s notions of how the world out to work than a solvent and profitable hydrocarbon fuel producer!

    #18
  19. What Obama and his slew of clueless idiots need to do is to take a trip to a site and spend the day with a rig crew. I have yet to hear about obama going to one single rig to preach his policies or see how many jobs were created due to the fact that company decided to drill there, probably a lot more jobs than anything that came from his stimulus bill or failed solar company. I wonder how many ex employees of Solyndra have their resumes on Rigzone now.

    #19