On Earnings, Profits and Taxes, ExxonMobil Lays It All Out

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.

From “ExxonMobil’s earnings: The real story you won’t hear in Washington“:

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.

Join the discussion 3 Comments

  • raehl says:

    That $10 billion of “taxes and duties” includes payments Exxon makes to the federal government for the right to remove oil Exxon doesn’t own from ground/ocean floor Exxon doesn’t own. Paying for the oil you’re taking isn’t a tax. That belongs in with the rest of the expenses; lumping it in with ‘taxes’ is a ridiculous attempt to obscure how little taxes oil companies are paying.

    Also, if we believe Exxon, they may only make 7 cents a gallon refining oil they buy from someone else. But they make a whole bunch more on oil they pump out of the ground themselves. 7 cents of refining profits and 60 cents of government taxes is a long, long way from $4 per gallon at the pump. Exxon is making a bunch of money from the other $3.33 per gallon too.

    No matter how you cut it, the oil companies are making a killing. Exxon paid well less than 20% income taxes on their profits. They don’t need a handout too.

  • vincent e jeter, dba Vinjet trucking says:

    i am an independent contractor, one truck company. i drive all 48 states. i understand the market price of crude and the factors that influence the price of a barrell of oil; but, i would like to know why, in the past few years particularly, does diesel cost more than gasoline. isn’t diesel a by-product of gasoline? is it taxes being passed on to trucking companies and the oil companies saw a way to sort of hide the cost to them by simply adding the taxes on the back end of the diesel prices, moving the cost above reular gasoline? angry, hardworking, father of 8, just wanting some clarity.

  • Benne says:

    Kudos. This should open the eyes of democrats and their supporters about what the real world is like. They are always eager to transfer assets from those who create it to those who create it it those who do not and merely parasitically want to latch on to who have generated their own blood or money

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