GOP Refuses Tax Hikes for Oil Companies – Exxon Makes $10 Billion in 3 Months

Thanks to the deadlock on the debt ceiling debate, one of the most profitable companies in the world is getting richer as the rest of us get poorer. It didn’t have to be this way.

If you’ve been following the debt ceiling battle (it’s been kind of hard to miss), you’re probably aware that our economy is teetering on the brink of a debt disaster largely because Republicans and Democrats can’t agree on raising taxes. The Democrats feel that any debt deal must at the minimum include closing a few lucrative tax loopholes for industries like oil. The Republicans counter they won’t go along with any deal that raises any taxes on any person or company at any time for any reason. This is apparently an ironclad promise made to the electorate by the Tea Party as well as other fiscal conservatives.

As fate would have it, one of the largest and most profitable companies the world has ever known announced it’s quarterly earnings Thursday afternoon. CNN/Money’s headline: Gas prices drive Exxon Mobil profit up 41 percent. From the article:

Exxon Mobil on Thursday reported a profit of $10.7 billion in the second quarter, up 41 percent from the prior year, driven in part by higher gas prices.

Peter Beutel of energy risk management firm Cameron Hanover said that retail gasoline prices surged in April and early May. He said prices were driven by a weaker dollar…

The Washington stalemate over raising the debt ceiling has caused the dollar to drop even further over the last couple of weeks. That’s because when things like a default become conceivable, investors dump dollars and move to currencies with less drama, like the Swiss franc. Why do you care? Because the more the dollar drops, the more we pay for oil. The more we pay for oil, the more money Exxon Mobil and other multinational oil companies make.

Bottom line? One could argue that the refusal of some in Congress to repeal tax breaks affecting a company whose net profit is more than $800 million a week is causing oil prices to rise, which in turn is making that company and others like it even more money. A win/win for Exxon: They don’t get a tax hike, and the argument over it increases their bottom line.

If you don’t understand the tax subsidies that the White House was proposing to remove, read about them in this CNN Money article. According to CNN, they would have cost the entire industry $4 billion a year: the amount just one company makes in about five weeks. In the meantime, as the stalemate continues, our retirement plans drop daily, we pay more for gas, our nation’s reputation is being tarnished, and the risk of a recession grows.

I respect what the fiscal conservatives are trying to do. Only an idiot wants to see bigger government and higher taxes. It’s obvious our government needs to reduce spending, and taxing “job creators” in a fragile economy is a bad idea. I get it. But Exxon wouldn’t have laid off workers if their taxes had gone up slightly. Like any business, when their product is profitable, they’re going to hire enough people to produce as much as possible. And as you’ve just seen, $100 oil is fabulously profitable.

Of course, it’s possible that agreeing to repeal tax breaks for companies like Exxon wouldn’t have been enough to bring about a compromise. But what if it had?

I see both sides in this debate. But there are at least two things here that aren’t debatable – the political stalemate is helping Exxon and hurting virtually every citizen of the United States.

Am I missing something here? Whether you agree or disagree, let’s hear from you on our Facebook page. And this post resonates with you, share it!

Stacy Johnson

It's not the usual blah, blah, blah

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  • Bob

    This “taxes kill jobs” thing is just plain wrong.  The only reason you hire/fire is to increase your profits.  If my business can’t get shipments out the door promptly and I am losing business because of it, I will hire another shipping person.  If I have three people in shipping and they spend half their time sitting around with nothing to do, I will let at least one of them go.

    Whats the tax rate is on those profits is immaterial, because if there are no profits there are no taxes.

    • I am sitting on my money because I have never seen this kind of discourse aka I am losing confidence in our Congress. I never saw the previous President reach across the aisle the way this one is doing. I currently have money to spend but with the future looking so bleak because a handful of people in the House are bleeding my retirement savings/investments that I may need to save more than ever and Business will suffer. The Founding Fathers offset elections to offset these kind of uprisings. Election decisions for myself in 2012 are being formed at this time when leadership in the House is poor. I just see a bunch of penguins following each other around chirping the same song. Don’t count on me to spend. I do support deficit reduction however we didn’t get here overnight and will not fix it in that time frame. I noticed that my congressman did not fund any of the spending he has voted for the last 10 years. He is hard to pick out on the house floor waddling around his buddies in their black and white world.

  • Just the way the tax codes work.  The Club in Washington will never change the tax code for the benefit of the people. 

  • The Congress will never change tax code for the benefit of the people.  The Club in Washington does not care as we see both parties use their “trigger threats” at each other’s pet:  Defense and Medicare.  So, they give “sugar” for the party members to swallow this deal pill.

  • Anonymous

    This is ridiculous, the ones who need to be taxed are the big companies especially the oil companies. I don’t see congress taking any pay cuts and they are the ones who should be fired for doing such a piss poor job at everything.
    I can do what they do and do it corectly and fairly for a third of what they make. We are going to hell in a hand basket but prayerfully if WE ALL work together for the betterment of EVERYONE then maybe WE ALL can survive.

  • Anonymous

    There is one problem with increasing taxes on oil companies (or any business) – they do not pay taxes, corporations simply pass the cost on to consumers.  Therefore, we the people would once again pay the tax hike through higher prices at the pump, or in the store, or for services rendered.  It is time to cut government spending and drop the current tax system.  Bring on the Fair Tax!

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