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using the report to make the case that tax incentives reserved for the industry are unnecessary relics that should be repealed.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