Huzzah for ExxonMobil’s Ken Cohen, vice president of public and government affairs, for using the excellent “Perspectives” blog to lay out the details and context that rightfully belong with the company’s announcement of $10.7 billion in earnings for the first quarter of 2011.
ExxonMobil’s earnings are from operations in more than 100 countries around the world. During the first quarter, more than three-quarters of our operating earnings came from outside of the United States.
The part of ExxonMobil’s business that refines and sells gasoline, diesel and other products in the United States represents less than 6 percent – or 6 cents on the dollar – of our earnings.
Why so little? Because we actually buy more crude oil to refine into gasoline and diesel in the U.S. than we produce ourselves. And these purchases are made on the open market at the prevailing rates.
During the first three months of this year, for every gallon of gasoline and other products we refined and sold in the United States, we earned about 7 cents. Compare that to the 40 to 60 cents per gallon that went from gasoline consumers to the government (state and federal) in gasoline taxes.
Rising gas prices do indeed have an impact on consumers, families and businesses, Cohen writes before explaining the primary causes of the increase:
- Demand for crude oil is on the rise because of the growing global economy, particularly in countries like China, India and Brazil.
- Political instability in some oil-producing regions is contributing to uncertainty about future oil supplies.
- Oil, food and industrial commodities are invoiced in U.S. dollars, and the dollar is at a three-year low against other currencies. The means the price of crude oil rises.
Finally, Cohen closes by refuting the political attacks against oil companies, the demands for higher taxes, and the claims that oil companies escape paying their fair share of federal taxes.
Let me state it unequivocally. Last year, our total taxes and duties to the U.S. government were $9.8 billion, which includes an income tax expense of $1.6 billion. Over the past five years, we incurred a total U.S. tax expense of almost $59 billion, which is $18 billion more than we earned in the United States during the same period.
And during the first quarter of this year, we incurred tax expenses in the United States of more than $3.1 billion on U.S. earnings of $2.6 billion.
AP reported on Exxon’s earnings with the headline, “Somewhat sheepishly, Exxon makes $11 billion.” But there was nothing sheepish about Cohen’s blog post. His spirited defense of the oil industry and global economies had a positive PR impact — we heard Gary Harley and Eric McNamara discuss it on the Midnight Trucking Radio Network this morning — and more importantly, it serves as a useful antidote to the political toxins being poured into the public debate.