Despite all this, I do think it is bullshit that oil companies are being called out for making a profit.

That's rich coming from Exxon, the only one of the majors which ISN'T investing in alternative fuels.

The only reason they pay record taxes is they're making record profits.

The things the 99.9 percent of America doesn't know about how they avoid paying their fair share of taxes on their obscene profits could fill a building - and, actually, do.

There's a lot of accounting and law firms doing their dirty work, weakening America.

Oil companies are being called out for making what are called "windfall" profits, and for making self-serving energy and tax policy for eight years now. It's not the end of capitalism.

Higher taxes on suppliers and explorers of crude oil will be factored into the amount of future oil exploration and extraction that occurs.

The entire concept of a windfall tax is ridiculous though.

Wait a minute. Didn't one of the bill's provisions exempt companies that made a certain level of investment in renewable energy research?

During a recent speech in Virginia a donor paraphrased McCain's energy platform as, "nuclear, and drill wherever we've got it," McCain responded: "You just gave my speech. Thank you, my friend."

This policy, of course, has nothing to do with finding a long-term solution to our oil dependence and everything to do with handing over even more sacks of money to the oil industry.

I still don't totally understand all this.

I thought the big driver for crude barrel prices is speculation (which I suppose includes markets PREDICTIONS, but not always market conditions), because it is traded as a commodity. One the other hand, when oil companies complain about investment costs - that is justified to about a $50 per barrel or so price we saw a few years ago.

Plus, what part of the crude price is driving the pump price? Exxon sells to a refinery, the refinery sells to a distributor, who in turns sells it to the gas stations. Isn't every part of the chain - with the sad exception of the actual gas station owner, who this is actually hurting - making a killing here?

Until I can figure out otherwise, I'll assume it's a touch of "all of the above", peppered with meaningless political grandstanding.

Because there's nothing big oil couldn't do if it just had a little cash.

Doug, political grandstanding and big shows of government power are more important to some people than analyzing the cost of government power used for political grandstanding.

You can chalk all our energy problems up to 2 general things;

Incentives for producers to limit how much the expand the supply (marginal revenue doesnt exceed marginal costs, especially for refiners. the margins on refineries is shit compared to many other fossil fuel ventures.) and the incentive of the government and voters to subsidize and enable the consumption of gasoline to an unsustainable level.

and really, instead of taxing "windfall" profits why not reduce subsidies to oil companies. This is what i don't understand; so many people want to add more complicated procedure to the oversight of oil companies that you're simply pushing tax dollars in (subsidies) and taking tax dollars out (taxing windfall profits) while having to pay people to oversee both sides of that system.

A windfall is when you get free profit from no investment. Oil companies invest their billions in making their product, so a windfall profits tax should be inapplicable.

Oil companies invest their billions in making their product...

No, they don't. But keep worshipping them if you must.

I don't disbelieve that oil companies have it sweet, but what subsidies do they get? Are they skirting taxes? Not paying environ settlements? It's probably just a few more years until all crude refinery is moved overseas (probably India for US distro), so I'd imagine Exxon's refinery gets some perks to be here in the Bay Area.

Is there something further? Are they given land for exploration? I'll not being argumentative, seriously, I don't know and I'm curious.

Wired had a great article about the exploration process a few months ago - it's insane. Something like $5 billion dollars per test drill in the gulf. I know that doesn't reflect the current price, but once the "windfall" is over, if oil companies don't hit some new reserves, they start hemoragging big time into non-existence. For better or worse.

75% of the people posting on this thread own stock in an oil company through their 401(k), IRA, pension fund, or a mutual fund.

The other 25% are unemployed.

There's no difference between taxing a company and taxing consumers. Either way, the consumers ultimately pay the tax.

It makes no difference how you place it.

Cayman Islands, anyone?

Kesh, the absolute dollar amounts of profits may be relatively large but their profit margins are only 10.85% (XOM that is). They spend a lot of money to make a lot of money.

as joykiller said too, 52% of XOM is owned by financial institutions and only .05% is by insiders.

doug, yes, they receive money and grants to explore within the boundries of the united states, they get breaks on enviro impact, etc etc.

The idea that the majority of refined petroleum for car consumption is going to be produced en masse in india is ridiculous. The logistics of such an enterprise are murky at best.

also considering that the largest ULCCs can carry 2 million barrles of oil, and that the U.S. consumes 9 million barrels of gasoline a day. you'd need 5 ulcc or v plus tankers arriving at the ports every day and unloading their cargo. each ship costs 120 million new 116 used.

assume that tankers individually has a round trip time from india to oakland/richmond of 16 days. you would need 80 tankers to have a non stop supply of gasoline for the united states. 80*120,000,000 is how much money $8.4 billion in just the purchase costs of the ships. (XOM only has 40 bil in cash reserves) nevermind the refinery costs, upkeep costs, etc etc. it's just inane to imagine that india would be the producer of the majority of refined petrol in a few years time.

Well, I GET that the closer you refine to the wellhead, the higher the profit margin - but exporting jobs to Indian refineries was something local news outlets were touting as an inevitable alternative during the city of Richmond's push back on Chevron's (I misspoke earlier when referring to Exxon) planned refinery expansion (they are investing in Indian refining, but probably for Asia now that I actually think about it. They got their expansion anyways.) I s'pose I wasn't exactly doing the math while I was listening.

Anyways, I've read even more conservative estimates on oil profits at around 9.7% (S&P 500 [energy sector], vs. market average of 8.5%). Like people mentioned, the numbers are bigger, but the profits aren't that much greater.

I'm still not really convinced this tax would serve a just purpose, or that an extraordinary windfall even exists. Then again, I could give fuck all if they pay dividends to shareholders, so either way...

Jesus, when I read my writing about this stuff, I looks like that weird (probably?) autistic kid PWFL PPL (sp?) or whatever the that Line Out guest was on about. My apologies all.

@13: "No, they don't. Bust keep worshipping [sic] them if you must."

Yep, that $23,000,000,000 XOM spent on research and exploration last year, they just raked it into a pile and burned it.

I'd just be happy if they had to pay their fair share and would fore go all the tax subsidies they receive.

My understanding is that it's already written to not tax any money spent on exploration. In that case we should just be talking about pure profits.

Besides, isn't exploration considered a business expense? Any money spent on that is already not "profit". For example, if burger king sells a burger for $5 and $2 goes towards the stuff that goes into the burger and $2 goes towards the labor to put it together then they have a profit of $1 and that's what they get taxed on.

Oil's the same way. When they talk about huge profits that's Revenue-costs=profit. Exploration is a cost. We're just taxing the profits, and they are unquestionably huge.

The idea that taxing them will make it harder for them to explore is ridiculous.

Oh man... I have no idea what's goin' on...