Wednesday, April 4, 2012

Big Oil Profits Aren’t Excessive — The Left's Rhetoric Is

IBD ^ | 04/04/2012
One of the most effective arguments used against the oil industry is that it earns "excessive" profits that must be taxed away. But as with the rest of the left's failed energy agenda, it's based on pure falsehoods.
 
With prices for crude above $100 a barrel, it's no surprise the news media are fixated on oil companies' "record profits."
Predictably, Democrats and others on the left use rising profits to bludgeon "Big Oil" and push more subsidies for money-losing "green energy" schemes while working to raise taxes and kill subsidies for oil.
"When the price of oil goes up, prices at the pump go up, and so do these companies' profits," President Obama explained last week, calling for higher taxes on oil companies.
"Meanwhile," he added, "these companies pay a lower tax rate than most other companies on their investments — partly because we're giving them billions in tax giveaways every year."
A new attack ad for an Obama-linked political group excoriates the oil industry for its "record profits and ... billions in special tax breaks."
On closer inspection, those profits turn out to be nothing special. Government policies have driven up the price of oil, which has boosted oil companies' total profits. But their profit margins — the best measure of industry profitability — remain modest.
As of the third quarter of last year, the oil industry earned just 6.7 cents per dollar of revenue, less than the average for all manufacturing of 9.2 cents (see chart).
(Excerpt) Read more at news.investors.com ...

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