At Least Someone Is Doing Well

More record profits:

Profits at oil companies this quarter continued to reflect oil prices that almost doubled in the second quarter from the year earlier.

Exxon Mobil on Thursday reported that second-quarter profit rose 14 percent, to $11.68 billion, the highest-ever profit by an American company. Exxon broke its own record.

The profit of $2.22 a share compared with $10.26 billion, or $1.83 a share, in the quarter a year ago.

And you know what? I still oppose windfall taxes. On the other hand, if I were a Republican running for office in 2008, I would be a little uncomfortable running around screaming “DRILL MORE! DILL MORE! DRILL MORE!” at the top of my lungs while everyone else is suffering the effects of the Bush recession and the oil companies are raking in BILLIONS.






42 replies
  1. 1
    Napoleon says:

    As a general proposition I would be against windfall taxes, but I had heard somewhere that the proposal (or maybe it was “a” proposal) was that the energy companies would have to invest some proportion of their income/profits in renewable/clean sources of energy and failing to hit the target number would trigger the tax. So in other words the government would hold them to their meme that they need the profits to invest in future energy sources. Conceptually I do not find something like that automatically objectionable, and depending on how it was structured could be a real good policy.

  2. 2
    Napoleon says:

    PS, I think the tax reciepts from the windfall tax would be designated for investment in energy, so it would be a bit of a “use it or loose it” tax.

  3. 3
    Zifnab says:

    And you know what? I still oppose windfall taxes. On the other hand, if I were a Republican running for office in 2008, I would be a little uncomfortable running around screaming “DRILL MORE! DILL MORE! DRILL MORE!” at the top of my lungs while everyone else is suffering the effects of the Bush recession and the oil companies are raking in BILLIONS.

    Why?

    Setting aside windfall taxes for a moment, screaming “DRILL MORE!” is just the right strategy for the GOP. It has the three-fold effect of giving people a “solution” they don’t entirely understand but think should probably work, winning them huge support among corporations flush with money that can be spent on political PACs and campaigns, and doesn’t actually fix a damn thing so they can run on the issue again in 4 years.

    This is classic GOP hackery. It is built in the mold of Nixon’s “secret plan to end the war” and Ford’s “whip inflation now” and Reagan’s “trickle down economics”. And it’s a classic because it works. Why on earth wouldn’t the GOP run on it? Americans are stupid enough to take the bait hook, line, and sinker, just like they always do.

  4. 4

    McCain’s indecent proposal is the final, disgusting stage of an addiction, isn’t it? Left with no other option, drug addicts will steal from family members and sell whatever private possessions they have to ensure another high. Just one more hit. And that’s all this is from McCain, just one more addictive oil hit. Christ, if T. Boone Pickens is running around like a Chicken Little, screaming that we’re fucked, then you know things are dire.

  5. 5
    The Other Steve says:

    http://www.caglecartoons.com/i.....827%7D.gif

    BTW, the windfall tax idea is pretty dumb and I think it might even be unconstitutional.

  6. 6
    Tim H. says:

    Well, patriotic corporations like Exxon who have getting tax breaks for decades should at least be asked to contribute to the GWOT. I’m sure they’d agree whole-heartedly.

  7. 7
    Scott H says:

    Considering the enormous, if not extravagant, public generosity from which the oil companies so benefit, I have no problem with a better arrangement for profit-sharing. Call it what you want.

    Last night, I had to run the DVR back after a lender commercial to affirm what my eyes must have misread. But, no. This group was adverting personal loans. The fine print in the commercial end disclaimer stated that the APR for a loan of $2600 would be 99.25%, 42 monthly payments of $216.55. With a $75 processing fee. To qualified applicants, of course.

    I should’ve recorded that thing to post to YouTube. If I see it again, I will. Scathing epistles to the WV Congressional delegation on the subject of ghoulish usury will ensue.

    I know there are people in prison for loan sharking, or used to be. Any remnant of my former laissez-faire that was left after this Administration just died last night.

  8. 8
    gbear says:

    And that record profit was AFTER they paid out a $290 million charge for the Exxon-Valdez spill in Alaska. It barely put a dent in their earnings. That’ll teach ’em.

  9. 9
    Chris Johnson says:

    Can you identify a way that corporate windfalls can exist on this scale that does NOT seriously harm society?

    Come on, loosen up- windfall taxes is just a point on the progressive taxation spectrum, and it makes sense to tax those who are using the society to really have shitloads of money coming in. Earmark the windfall taxes for energy independence if you want, that would make sense.

    Otherwise, what are you going to do? The ‘fairest tax’ imaginable, every man woman child and corporation coughs up a flat $1000 a year? When are you going to completely let go of the idea that you have to give people the maximum possible incentive to be greedy bastards? Street criminals manage it nicely without any tax incentives at all.

  10. 10
    Robert Johnston says:

    A windfall tax is one of those moronic ideas that makes it into mainstream political debate because:

    1) the eminently sensible idea of taxing dividends and capital gains like other income is politically impossible;

    2) the eminently sensible idea of creating a top marginal rate on income tax of, for example, 50% on income over $1,000,000 is politically impossible; and

    3) the eminently sensible idea of a progressive estate tax that reaches confiscatory levels on estates over, for example, $10,000,000 is politically impossible.

    In record oil profits we, as a nation, see the filthy rich getting even more filthily rich at the same time as everyone else is hurting mightily. People want to respond to that, but they can’t propose the kind of sensible progressive taxation schemes that dominate in the rest of the world’s industrialized democracies because the Norquists of our country have successfully turned reasonable tax policy into a political albatross, so, instead, we get ludicrous and counterproductive proposals for windfall corporate profit taxes.

  11. 11
    b. hussein canuckistani says:

    Goddamnit John, you *know* the Chinese need to buy that Alaskan oil. Why do you hate Exxon\b\b\b\b\bAmerica?

  12. 12
    jrg says:

    I’m not opposed to taxing the crap out of the oil companies. We use the U.S. military to secure foreign oil. Our taxes pay for the U.S. military.

    That means we pay for oil twice. An analogy would be if the government used tax dollars to build roads, then gave those roads to private companies, then the private companies charged us to use the roads, and kept the profits.

    We’re socializing the expense of accessing foreign oil, while we privatize the profits. The GOP “free market” at work, ladies and gents.

  13. 13
    RAM says:

    Drill more? Why would the oil companies want to drill more anyway? Looks to me like they’re doing pretty well as it is. If they wanted to drill more they could, on all that land they’ve already tied up in leases (which keeps any new start-up companies from drilling on it). And if they really wanted more refining capacity, they’d build refineries even though the process is slow and cumbersome. Why anyone thinks the oil companies really want more crude production or more refined product manufacture is beyond me, because they don’t; it’s not in their best economic interests, and all the right wingers know it.

  14. 14
    Punchy says:

    Sorry for the OT, but I find this stuff just amazing. Makes me smile, which I need after reading all the bad shit every day.

    OK, back to politics. McCain’s older than NATO. Older than the B-52. Probably older than most of the original members of the B-52s.

  15. 15
    Big E says:

    re: J.Cole

    “I still oppose windfall taxes”

    well, it would be soooo patriotic if those big bad boys supported America by giving back… I mean don’t they have any patriotism? Don’t they love America?

  16. 16
    cleek says:

    That means we pay for oil twice.

    Cato estimates we subsidized oil companies up to $60,000,000,000 per year in the 90s.

  17. 17
    cleek says:

    McCain’s older than NATO. Older than the B-52.

    he’s older than the B-25 and the B-17, too.

  18. 18
    JGabriel says:

    As I’ve said before, McCain was born a week before Buddy Holly, which makes him not only older than the day the music died, but older than the day it was born.

    .

  19. 19
    Gindy says:

    I say make them pay back all the tax breaks they have gotten for years. That should clean up some of the mess. Also invest it in clean energy options via a Manhattan Project type of thing.
    Oil companies don’t want to drill more, they just want the illusion and future option (which can be removed at any time as well as expanded at any time).

  20. 20
    Billy K says:

    I guess you didn’t hear, John, but the recession is on hold. Drudge told me so…

    UP! Economy grew at 1.9% pace in second quarter…
    RECESSION ON HOLD…

    and he rules my world.

  21. 21

    Their stock fell 15 on the profit news this morning. It might be interesting to know what their physical assets are and where they are.

  22. 22
    JGabriel says:

    Cole: “I still oppose windfall taxes.”

    As noted above, we’ve subsidized those same companies with enormous amounts of money. Windfall taxes seem like the most appropriate way of getting some pay back on those subsidies.

    Also, isn’t it a bit curious that Exxon manages to post record profits, even as American consumers buy less gas and oil? I guess those record prices aren’t solely due to production costs after all.

    .

  23. 23
    Scott H says:

    The government doesn’t need to invest in the future of energy sustainability. The oil companies can avoid hypothetical windfall profits taxes by actually reinvesting their extraordinary profits (profits being what one has left over after one has done all the research, exploration, and development one is going to do – also see, Big Pharm) in pure R&D – thereby, by the way, significantly enhancing shareholder value and future profitability.

  24. 24
    Zifnab says:

    That means we pay for oil twice. An analogy would be if the government used tax dollars to build roads, then gave those roads to private companies, then the private companies charged us to use the roads, and kept the profits.

    Yeah. They’re called Toll Roads. Come down to Texas and I’ll show them to you.

    I still oppose windfall taxes.

    Because… let’s get real.

  25. 25
    Brian says:

    What I find astonishing is that we are subsidizing these companies. Can someone explain to me why that is happening? I understand it’s only a few billion, which is a drop in the bucket on the federal budget, but when people like Hillary Clinton are mocked for the idea of Baby Bonds, I always like to point out the money these companies are getting when they are making record profits. I’d much rather see this money induce some people to save and plan for retirement.

  26. 26
    Zifnab says:

    What I find astonishing is that we are subsidizing these companies. Can someone explain to me why that is happening?

    Sure. Oil drilling and exploration is expensive work. Oil companies could just stop drilling new leases, or even leave leases they do possess fallow, while letting the price of oil climb higher and higher. They’ll pump less out, but they’ll be able to sell it at higher prices, so they’ve got less of an incentive to drill.

    If the US Government steps in and gives these companies billions of dollars in tax cuts along with thousands of acres of federally owned land to explore, oil companies will sink more wells because even at current prices they still get to make obscene profits.

    So, by giving away a few billion dollars today, we keep down the price of gas for tomorrow. It’s all about keeping our $1 / gallon rates that keep our economy moving from ballooning to $4 – $5 / gallon fill-ups. Prices like that would spur an economic recession and drag down the entire US GDP which would – in turn – impact tax revenue.

    By giving oil companies a small break now, the government actually makes money in the long run, see?

  27. 27
    binzinerator says:

    Totally off-topic, but after reading how the fucking conservatives are privatizing the record oil company profits and socializing the costs, I was pissed off. Again.

    Then I read this at the WSJ, “Treating the Pill as Abortion“.

    The Bush Administration has ignited a furor with a proposed definition of pregnancy that has the effect of classifying some of the most widely used methods of contraception as abortion.

    ….

    In a lengthy preamble entitled “The Problem,” the draft argues that state laws too often coerce health-care workers into providing services they find immoral.

    Among the laws considered coercive: Requirements that emergency rooms offer rape victims the morning-after pill, insurance plans cover contraception as part of prescription-drug benefits, and pharmacists fill prescriptions for birth control. The draft regulation would weaken these laws by expanding the right of conscientious objection.

    The Pill is abortion. IUDs are abortion. Norplant is abortion. Preventing a rapist from impregnating his victim is abortion. Having to offer those choices will now be called religious discrimination and the fundie doctors, nurses, pharmacists who refuse to offer them — even secretaries who refuse to book appointments to get contraception — will now be called “conscience objectors”.

    Now I’m shaking angry. Almost every major safe effective contraception method magically redefined as an abortion. So naturally it will all become illegal when they finally strike down Roe v. Wade.

    These fucking shitsuckers. I’m just shaking with anger. Goddam, I just want to kick these fucking smug little shitstains fundie goopers right in their greedy hypocrite jesusfreek balls.

    I’m gonna have to go away from this for a long time. With the rightwing terrorist shooting those people at church because they were liberals, and the greed of Exxon and their conservative cronies, and now these rightwing fundies legislating birth control as abortion … I just gotta go away from this. Too goddamned angry at this dirtbag sacks of shit. God I wish I could kick ever last one of them. Right in the junk. God damn.

  28. 28
    The Moar You Know says:

    The Pill is abortion. IUDs are abortion. Norplant is abortion. Preventing a rapist from impregnating his victim is abortion

    The Next Logical Step: Refusal to consent to intercourse with a willing male is abortion, and therefore a crime.

    Looks like Margaret Atwood was a lot more prescient than I first thought.

  29. 29
    lutton says:

    This offshore and ANWR drilling crap is nothing but corporate wellfare wrapped in a pseudo-jingoistic mantle. And even worse, it’s corporate welfare for one of the only segments of our economy doing well:

    via Barry Ritholtz – http://bigpicture.typepad.com/.....verst.html

    As Bloomberg noted earlier this quarter, “Take away Exxon Mobil Corp., Chevron Corp. and ConocoPhillips and profits at U.S. companies are the worst in at least a decade.”

  30. 30
    SpotWeld says:

    By giving oil companies a small break now, the government actually makes money in the long run, see?

    Except we have been giving the oil companies a break (i.e. THe Bush Energy Plan) and we still ended up with high gas prices and a recession economy.

    So I guess that’s not working anymore.

  31. 31
    jrg says:

    Yeah. They’re called Toll Roads. Come down to Texas and I’ll show them to you.

    Nice try. Tolls from toll roads make the payments on the municipal (government-issued) bonds that were used to build the road. Even if the collection of tolls is contracted out to a private company, the “profits” go towards paying off the Muni bonds.

  32. 32
    rawshark says:

    Also, isn’t it a bit curious that Exxon manages to post record profits, even as American consumers buy less gas and oil? I guess those record prices aren’t solely due to production costs after all.

    Why is the price of gas rising when the companies that make the product are flush?

    And you know what? I still oppose windfall taxes.

    Of course you do. But why? Why is it better for the economy and the country that they are allowed to sit on these big piles of cash? We’re at war right? Their profits are a direct result of that war right? They don’t kick in something for the effort?
    Tax policy isn’t for punishments sake. We live in a consumer based economy that abhors hoarding of cash.

    I really can’t believe we are arguing about taxes while at war. Especially this war. Before the war american oil companies had no shot to work these fields, now we own them but they can’t help pay for the effort to aquire these fields?

    Stop calling yourself a democrat. You’re a Bush hater, that’s all.

  33. 33
    The Moar You Know says:

    Even if the collection of tolls is contracted out to a private company, the “profits” go towards paying off the Muni bonds.

    And the private company collecting those tolls does it as a public service, not charging taxpayers a thing. Riggghhht.

    Answer me this; why should my tax money go to subsidize even one cent of private profit? That, to me, sounds perilously close to Communism, my friend.

  34. 34
    TenguPhule says:

    If the US Government steps in and gives these companies billions of dollars in tax cuts along with thousands of acres of federally owned land to explore, oil companies will sink more wells because even at current prices they still get to make obscene profits.

    And yet they are not doing that.

  35. 35
    Notorious P.A.T. says:

    We’re socializing the expense of accessing foreign oil, while we privatize the profits.

    That’s how it is with all big industries. Which is why the “free market” is a sham, and always has been.

  36. 36
    jrg says:

    Answer me this; why should my tax money go to subsidize even one cent of private profit? That, to me, sounds perilously close to Communism, my friend.

    Give me a break. Sometimes it’s cheaper for the government to contract out work: do you think that stamps would be cheaper if the USPS had to manufacture it’s own trucks?

  37. 37
    Cam says:

    Is it really a “windfall tax” when we’re talking about the oil companies? IIRC, part of the reason they have record profits right now is due to the enormous financial breaks they’ve been given over the past 7-8 years. I see it more as a correction of the Bush administration’s policies.

  38. 38
    rawshark says:

    Cam Says:

    Is it really a “windfall tax” when we’re talking about the oil companies? IIRC, part of the reason they have record profits right now is due to the enormous financial breaks they’ve been given over the past 7-8 years.

    I think you might be right. They invested millions to get Bush and other republican politicians elected. These record profits are just that investment bearing fruit.

  39. 39
    Red says:

    I agree that there should be no windfall tax for the oil companies.

    I think we should nationalize them and use their profits to build an infrastucture that supports all-electric vehicles, but no windfall taxes.

  40. 40
    Brachiator says:

    JGabriel Says:

    Cole: “I still oppose windfall taxes.”

    As noted above, we’ve subsidized those same companies with enormous amounts of money. Windfall taxes seem like the most appropriate way of getting some pay back on those subsidies.

    The thing is, a windfall profits tax does not produce the results people expect. The belief in a windfall profits tax is for liberals what the belief in a gas tax holiday is to John McCain — a bad policy easily refuted by the facts.

    The 1980 Windfall Profits Tax

    As is also illustrated by Figure 1, during the 1980s the federal government experimented with a new tax intended to limit the “windfall profits” of domestic oil companies. In reaction to the rise of energy prices during the late 1970s and the removal of price controls on the energy industry, President Jimmy Carter signed the Crude Oil Windfall Profits Tax Act into effect on April 2, 1980.

    The tax was technically misnamed because it was in fact an excise tax, not a “profits” tax. The tax was imposed on the difference between the market price of oil and a government-determined base price. For example, a 70 percent tax was levied on the difference between the market price received by oil companies and the average base price of $12.81 per barrel. Independent producers, stripper wells and heavy oils were taxed at different rates.

    As shown in Figure 2, the windfall profits tax was forecasted to raise more than $320 billion between 1980 and 1989. However, according to the CRS, the government collected only $80 billion in gross tax revenue ($146 billion in 2004 dollars). The net amount was actually less than this—roughly $40 billion—because the tax was deductible against corporate income.

    Meanwhile, as the Republicans offer the false promise of more drilling and tax cuts, the steady erosion of the middle class continues (A Hidden Toll on Employment: Cut to Part Time):

    The number of Americans who have seen their full-time jobs chopped to part time because of weak business has swelled to more than 3.7 million — the largest figure since the government began tracking such data more than half a century ago….

    All told, people the government classifies as working part time involuntarily — predominantly those who have lost hours or cannot find full-time work — swelled to 5.3 million last month, a jump of greater than 1 million over the last year.

    These workers now amount to 3.7 percent of all those employed, up from 3 percent a year ago, and the highest level since 1995.

    “This increase is startling,” said Steve Hipple, an economist at the Labor Department.

  41. 41

    Re: “Drill more”, I didn’t know the Republicans were in favor of a command economy. How, precisely, are they intending to force the oil companies to drill more?

    (It certainly won’t be the market forces that get them to drill; as long as supply exceeds demand by just a bit, they maximize their profits by keeping it tight.)

  42. 42
    Herb says:

    So when we have more offshore drilling and ANWR is opened and Colorado oil shale is being mined…what excuse will they use to justify their highly profitable inability to match supply with demand?

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