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Tax oil profits? Not so fast

money.cnn.com — With all the money Big Oil is making -- the top five pocketed more than $120 billion in 2007 -- and with an election on the horizon, it's easy to see why politicians are eyeing oil profits. But analysts tell Money.com that going after oil profits could backfire on consumers.

Who dugg this? Made popular May 11, 2008

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  • The_Wallbanger, on 05/11/2008, -4/+141At least take away the billions in subsidies already.
  • sgiffy, on 05/11/2008, -8/+54Raw profits are irrelevant, what is important is profit margin. Oil companies are only slightly above average in that regard. a 10% to the average of almost 9%.

    We have plenty of money to begin subsidizing and researching alternative fuels. We just need to do it.
  • swordedge, on 05/11/2008, -4/+46fine, stop taxing gas, also stop bitching about road conditions. Gas taxes is what pays for those roads.
  • mciampa1214, on 05/11/2008, -4/+42Evil != simply out there to make money. It's a business not a charity.
  • lucidguru, on 05/11/2008, -19/+57Yeah stop taxing gas and stop giving oil companies subsidies... had we let the free market function in the first place then we wouldn't have had this problem in the first place.
  • spyd3rweb, on 05/11/2008, -3/+31They'd just raise prices to offset the tax.
  • gquaglia, on 05/11/2008, -2/+27"Only solution - stop buying their product."

    Let us know how that works out.
  • slothlovechunk, on 05/11/2008, -3/+29Stop taxing gas? WTF? That's the dumbest thing I've ever heard.

    The gas tax is the perfect way of collecting money for roads. The people who drive pay for it, and they are the ones who use the roads. Also, if they drive inefficient vehicles or they drive more than others, they pay a larger portion of this tax. How is this not the perfect tax?
  • jamesmon01, on 05/11/2008, -4/+26EXACTLY!!! Thank you. I vomit a little every time i hear some dipsh** on the TV talk about excessive profits in terms of a dollar figure. 9.9 billion on sales of 100 billion is NOT EXCESSIVE. and its not a windfall. And for god's sake, everyone with a pension plan or 401K owns part of these oil companies, so quit equating Exxon/Mobil to one guy.
  • fusen, on 05/11/2008, -19/+47You are screwed either way to be fair, if you tax the oil companies they will simply raise the cost of oil so they can get more money as they'll see it as lost profit, if you don't tax them then they will get away with the billions they have earned and raise the cost of oil so they can get more money...

    At the end of the day, they will keep raising the cost of oil as people are still buying at the pumps even with today's prices. They will simply keep raising the cost till they run out of oil.

    When Britain talked about the idea of a windfall tax on BP, they simply said "if you tax our earnings we will move abroad". Oil companies are evil and are simply out their to get as much money as possible. Only solution - stop buying their product.
  • fotbr, on 05/11/2008, -3/+22You're arguing with people that think that any profit is bad. They don't care about how much worse it would be if things were government-run, they just don't want anyone making any profit.
  • Lionhart, on 05/11/2008, -3/+22"The price to consumers will not go up because the price is already as high as it can be."

    I lol'd hard. That has to be the dumbest thing I've heard in a very long time.
  • SillyRabbits, on 05/11/2008, -1/+19"$12 billion: Provides education for every kid on earth."

    Wow, the US much be getting ripped off then. Even in 2004, we spent $500 billion and still can't get more than %50 to graduate in some districts (and that's just here in the US).
  • mciampa1214, on 05/11/2008, -5/+22I bet you would care. What principle? And yes, I am glad you're not running things.
  • otrmn, on 05/11/2008, -3/+22I love people who complain about gas price as they walk around with a Starbucks or bottled water. Oil companies looting our wallets? Gas is cheaper in the US than any other country with a free market system. Where does this idea that we have some kind of 'right' to cheap gasoline come from? Are you 'owed' cheap bottled water? Cheap Starbucks? Laundry detergent costs more per gallon than gas. How about a coke at McDonalds that costs 1.50 for 20 oz.that's nothing but carbonated water and some flavored syrup? But hey, that's ok, right?

    Oil companies don't control oil price. It's a free market. Want to blame someone? You've got the idea right that speculatros have added $10-$20 per barrel. But also, you might want to blame people who have this crazy idea that we can have energy independence, but not allow more drilling, more refineries, etc. And blame the Fed for pumping billions of dollars into the market and deflating the dollar. Want to really get mad? Why not be mad about the government deciding that we, the taxpayers, have to bail out people who made irresponsible decisions about their home purchases and mortgages? And why add China and India to the list, too? We've been exporting the vision of the American dream for so long that those countries are ful of millions of people who want what we have. It takes energy to get it. Do they not have a 'right' to it, too?

    To say OPEC doesn't play a role in pricing oil is ignorant. To say that gasoline price shouldn't rise with oil price is stupid. And to say that oil companies can defeat OPEC is like saying your local high school baseball can beat the top five teams in MLB. Your team might be the best, they might win the state competition, but they can't compete in the big leagues. And why should OPEC lower prices? It's not like the member coutries like us a whole lot unless we're giving them handouts.

    Want better, cheaper electricity? Want more investment in alternatives? Then they need to be profitable. Ethanol isn't--it takes more energy to produce it than you get out of it, but the environmentalists have everyone convinced it's a great deal. It's foolish--it drves up corn prices and creates water shortages. It also destroys your engine over time.

    Let's say oil goes back to $50? Where are you folks going to be when the big oils start laying off your friends and neighbors like they did in the 80's? You sure weren't complaining then when tens of thousands lost their jobs because it was convenient for you to have cheap gas.

    Recommendation: If you believe in a free market system, go back to economics and study supply and demand. If you don't, move to Venezuela or California.
    O-
  • jamesmon01, on 05/11/2008, -7/+23Do you have a 401K??? a pension??? ANY sort of mutual fund??? If so, (and you should for god's sake), if you want to blame someone, look in the mirror. A company looks out for its shareholders, that's the whole point of its existence. Friggin democrats are always harping on corporations, but then they bitch when "working class white americans" can't find a decent job. Do they want everyone to work for the government? Who in their right mind wishes they had a government job?

    For fairness, friggin republicans are spending how many billions a month in Iraq?? both parties are full of it.
  • bgolds99, on 05/11/2008, -6/+22I hope you all know that ExxonMobil payed $30 billion in taxes already last year. That's a tax rate of 41%. They payed more income tax than all the income taxed payed by the bottom half of the country!
  • Egoist, on 05/11/2008, -0/+15How is a gas tax not a "Pay-as-you-go" system? No gas, no go.
  • Sil369, on 05/11/2008, -1/+15So, either way, the consumer loses.
  • TJ11240, on 05/11/2008, -1/+15It wont let me digg you twice
  • wc3452, on 05/11/2008, -16/+35Had we let the free market function, we'd be screwed even more. Companies tend to form monopolies and collude in the free market, government regulation prevents that.
  • inactive, on 05/11/2008, -2/+19Yeah, so explain toll booths. I know that in my state the line we were fed was that they'd be taken down once they paid for the improvements to the highway. They're still up and making millions of profit for the state every year.
  • pintomp3, on 05/11/2008, -1/+14no need for windfall profits tax, just stop the tax breaks and subsides.
  • doctechnical, on 05/11/2008, -3/+17Because that's worked so well in the past, comrade.
  • doctechnical, on 05/11/2008, -2/+16Nuclear was a really nice option until the hippies decided it was going to China Syndrome the world away. Drilling in Alaska or off-shore would increase domestic supplies, but those damned hippies again! And no one wants a refinery in their back yard... well, enjoy your $10/gal gas, folks.
  • jamesmon01, on 05/11/2008, -9/+24Yes, because the government can solve the problem! Has the government EVER reduced inefficiency? Have you ever dealt with a government agency that didnt just piss you off with their incompetence?
  • doctechnical, on 05/11/2008, -2/+14Brilliant. "OK, we've maxed out our profit for this year, turn out the lights and everyone go home. See you next year! Enjoy your rationing!"
    Not a terribly good idea, that.
  • LooterMcBeer, on 05/11/2008, -0/+12I work in big oil i could go on for hours about it but in short if taxes are passed on companies that are only at a 5% profit margin in the first place then they are leaving the US oil is going well past $200/barrel and you'll see $8/gallon gas. Not to mention the millions of US jobs that will be lost over the whole thing.

    Some people refuse to look at the simple facts of it but thats what will happen. I wont mind moving to Australia when my company moves though thats a pretty damn nice country. Its not the hummers and Tahoe's feel it either do your research in the long run a prius does more environmental damage and uses more energy then an H2 but people fail to see that and think its the answer. We are jumping into this whole "green" revolution the wrong way and in 20 years from now we are going to be thinking Oh ***** why didn't we look at the facts instead of listening to the media.
  • inactive, on 05/11/2008, -2/+14remember folks a windfall tax is a RETROACTIVE tax that taxes past years AFTER the money is spent. This forces the oil companies with 2 choices, go out of business or raise prices to pay the tax. Which do you think they will choose? Which did they choose in the 1970s when windfall taxes were placed on oil companies?

    It didnt work 30 years ago its unlikely that it will work any different now.
  • noliberalbull, on 05/11/2008, -2/+15what you're neglecting in your stats there is that their $120 billion in profits at 10% means they took in a total of 1.2 trillion dollars and spent 1.08 trillion of it, putting it back in the economy.
  • Mahoney07, on 05/11/2008, -11/+26Making money is not a crime. They better not tax them
  • inactive, on 05/11/2008, -21/+44$120 billion profit for the one per centers in 2007?!

    Annual Cost of Improving the World
    • $19 billion: Eliminates starvation and malnutrition globally.
    • $12 billion: Provides education for every kid on earth.
    • $15 billion: Provides access to water and sanitation.
    • $23 billion: Reverses the spread of AIDS and Malaria


    • $522 billion: U.S. Military budget this year.
    • $484 billion: Cost of Iraq War thus far.

    Sources: World Bank, National Priorities Project
  • Lynxpro, on 05/11/2008, -1/+13...then they'll just buy gold plated toilet seats and other shenanigans so that on paper they aren't as profitable.
  • bigj480, on 05/11/2008, -0/+12 All taxes imposed on the oil companies are simply passed on to the consumer. Is it right? Yes, the only reason I say this is he consumer votes with their dollar. People have not cut down on consumption much and the whole supply/demand factor comes into play. Don't like "big oil"? Buy less of it! Every tax is simply passed on to the consumer, if you realized what percentage of your earnings went to the government I doubt you would be so pro-tax. Heres a better idea, end ALL elective programs and then you can cut the taxes that used to be needed to support those programs. The government is the biggest thieve of them all. One of may favorite politician had a plaque on his desk that read: "Don't steal, the government hates competition". Sad but true.
  • inactive, on 05/11/2008, -4/+16if they are proposing a windfall tax that will be as bad as when they did that in the 70s. Its been tried, it failed.

  • SilverBlade2k, on 05/11/2008, -2/+15Unfortunately, the 'only solution' (stop buying oil) is impossible. Try hauling 4 bags of groceries on a bike, try riding a bike in the winter when it is -35C outside, try hauling anything besides yourself on a bike. All impossible.
  • AngryFox, on 05/11/2008, -0/+11YES! YES! Oh God yes! If a company posts a profit *greater* than the size of the subsidy which they received to make said profit, why the hell are they allowed to keep the subsidy??!
  • gryphon50, on 05/11/2008, -1/+12you clearly are a teenager just hauling yourself around. Good for you. But a bicycle is not going to work for a woman with two kids and a ton of groceries. For you to act like a bicycle is the solution is completely ridiculous.
  • Seventus, on 05/11/2008, -0/+11I know I'll get buried for this, but the real problem doesn't lie with the oil companies. It's public policies that prevent us from extracting oil that we have domestically, and the lack of policies that force us to move off of oil
    When all of the oil runs out then oil companies won't make any more money. It is in their best interest to look for new energy sources, which many are doing. They don't make "windfall" profits either. Shell brought in 7.5% profit last year. By business standards, that is a very reasonable profit.
    I hate to say it, but most Americans are ignorant about all that really goes on with oil, from discovery, to drilling, and all the way to your gas tank. I could go on for a day about this, but everyone's caught up in their blind "anti-Big Oil" movements.
  • doctechnical, on 05/11/2008, -1/+11Do you know that the oil companies are making about the same profit per dollar sold that they did a couple years ago? The reason they've making so much money is because THEY'RE SELLING SO MUCH PRODUCT, not because they're gouging people. The big increases in consumption are coming from China and India, whose people are now close to getting a lifestyle like the kind you've enjoyed all your life, car, internet, video games and all.
    You blame the oil companies because China wants to have a good time?
    You've got bigger things to worry about than how much the oil companies are making: there's a projecting population increase of 3+billion people by 2050. And they're going to want oil, and internet, and beef, and Wii, too. We're in for interesting times.
  • SillyRabbits, on 05/11/2008, -0/+11I take it as a failing of the school systems. Companies are there to do one thing - make a profit. Taxing them is not free money. Any tax on them is passed straight through to the consumer. The company must have a minimum level of return on investment to make it worth their time, and oil companies are only making a standard rate of return. If they can't get that, they might as well liquidate and buy bonds and CD without the risk of a loss. It is a great trick the politicians have learned by calling it a "tax on greedy corporations". You can actually get people to fight for what ends up being a tax they pay for themselves. I guess the only bright spot is that everybody ends up paying for it, instead of just targeting it at higher income earners.
  • MtheoryX, on 05/11/2008, -0/+11And now, more and more, private corporations.

    Leasing toll roads to private industry FTL.
  • inactive, on 05/11/2008, -6/+16So you're a Democrat?
  • bjornski, on 05/11/2008, -0/+9It was because the deregulation and activist appointees that came later allowed them to merge again.

    Mergers are really only a good deal for the shareholders. Everyone else suffers because of lack of competition.
  • phort99, on 05/11/2008, -1/+13No, you fail at basic algebra. Money is the root of all evil, or stated differently, Money = √(All Evil), therefore Money² = All Evil.
  • johnpaul191, on 05/11/2008, -1/+10That seems SO MUCH EASIER than the legal wording of a "windfall tax" bill that would not punish a breakout company with some awesome new technology, and not leave loopholes for the old ones.
  • mciampa1214, on 05/11/2008, -1/+10Commie or /sarcasm?
  • marx2k, on 05/11/2008, -0/+9Trust me, Government does not need to get any bigger.
  • inactive, on 05/11/2008, -2/+12Are you retarded, or just so blinded by love for Obama you fail to see beyond "change" and "hope"

    http://afp.google.com/article/ALeqM5gqWhoBksx6mCNf ... Hint: Read the article title in bold.
  • inactive, on 05/11/2008, -4/+12Shhhhhhhh, dont point that out to the Democrats, let them destroy industries and then wonder why they cant afford to pay for the crack mom with 6 kids.
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