Written by Daniel J. Weiss and Jackie Weidman
Beginning on Monday April 23, and continuing through May 1, the five biggest oil companies – BP, Chevron, ConocoPhillips, ExxonMobil, and Shell – will release their first quarter profits for 2011.
Given record gasoline prices for this time of year, these profit figures are likely to be quite large. How much money did they make from January through March, and how are they spending it?
In 2011, the Big Five made a combined record of $137 billion in profits. These companies made $32 billion in the first quarter of last year alone, a 38 percent increase over the first quarter of 2010. High gasoline prices yield large profits: A CAP analysis found that every one cent in gasoline prices produces $200 million more in profits (on a quarterly basis).
In general, the oil industry spends 50 times more on oil exploration than on alternative energy investments. So how are the largest five oil companies spending their enormous profits? Five easy questions could give us some big answers:
1. How much are the big five reinvesting in themselves?
In the first quarter of 2011, the big five companies spent $8 billion on stock buybacks. ExxonMobil and ConocoPhillips spent 53 percent of their profits on these purchases, which enriches their boards, senior executives, and largest shareholders.
2. How big are the cash reserves of the big five companies?
At the end of 2011 these companies had a combined $58 billion in cash reserves, nearly 30 times more than they received in special tax breaks that they are furiously lobbying to retain.
3. How much do these companies spend on pressuring Congress?
In 2011, the big five companies spent $66 million on lobbying. ConocoPhillips spent over $20 million, followed by Shell’s nearly $15 million. ExxonMobil spent $13 million, Chevron spent $9.5 million and BP spent $8.4 million.
The American Petroleum Institute, the lobbying arm of the oil industry, spent $8.6 million on lobbying. API has also spent $4.3 million on energy attack ads since January, according to The Washington Post. API uses member companies’ funds to strong arm legislators into maintaining their tax breaks. In 2010, API spent $63 million, a third of its total budget, on ad campaigns. How much money are these five companies giving to API to provide lobbying muscle? How does that compare to their profits?
As Jack Gerard, President and CEO of API said himself: “if we’re concerned about a particular member [of Congress] we will educate that constituency.” Gerard is paid to do Big Oil’s dirty work, convincing Congress to uphold $40 billion in unnecessary tax breaks while chastising clean energy efforts.
4. Did the Big Five companies pay a higher federal effective tax rate in 2011 compared to the average American family?
Fortune magazine ranks ExxonMobil, Chevron and ConocoPhillips as the first-, third-, and 16th-most profitable companies in the United States.
And yet, they don’t pay their fair share in taxes. According to a Reuters’ analysis, Exxon Mobil paid 13 percent of its U.S. income in taxes after deductions and benefits in 2011, while Chevron paid about 19 percent, and ConocoPhillips paid 18 percent. The Big Five hoard cash overseas in tax havens to cut their tax rates drastically. As Reuters put it, these tax rates “are a far cry from the 35 percent top corporate tax rate.”
To put things into perspective, the average American individual effect tax rate for 2007 was 20.4 percent.
5. How much money do oil companies invest in alternative fuels to reduce reliance on gasoline?
High gasoline prices devastate middle class budgets. The ultimate solution to pump price pain is to pump less. However, there are few easily affordable, accessible paths to promptly reduce gasoline use for many drivers.
The higher fuel economy standards set by the Obama administration has vehicles traveling further on a gallon of gas. “The average fuel economy of all new vehicles sold in the U.S. was 24.1 miles per gallon last month, a record high for the industry,” according to the Detroit Free Press on April 11. Many families, however, cannot afford to buy new cars when gasoline prices spike.
New models powered by electricity, such as the plug-in hybrid Chevrolet Volt and all electric Nissan Leaf, sold twice as many cars in their first year compared to the initial offering of Toyota Prius and Honda Insight hybrids, but only a limited number of families can buy these new models.
Many companies are developing bio and other advanced fuels that do not rely on petroleum as a key ingredient. Despite their ads that feature clean, renewable energy, Big Oil companies continue to heavily invest in more petroleum rather than alternatives – ensuring that we maintain our addiction to fossil fuels.
According to the Natural Resources Defense Council, the oil industry spends less than half a penny on renewable alternatives for every dollar it spends on producing more oil. Globally, the oil industry’s investments in finding and producing more oil amounted to $2.1 trillion, while companies spent just $4 billion on renewable fuels.
This post was originally published by Climate Progress.
Photo from millr via flickr
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