What's That About Oil Industry "Profiteering?"
May 15, 2002
Capitol Hill politicians have been hauling out the repeatedly discredited accusations that the major oil companies have been manipulating petroleum markets in order to boost gasoline prices in order to enhance their profits.
But economists advise politicians to look themselves in the mirror when they throw around accusations of "profiteering." The fact is that the oil industry pays in taxes more than it makes in profits.
- According to Energy Information Administration data, oil industry income and excise taxes, combined with non-income taxes paid by the companies, dwarf the industry's net income by tens of billions of dollars every year.
- In 2000, the tax harvest from oil was around $85 billion -- while the industry earned about $53 billion, a record year for profits.
- In March, the national price for a gallon of gas was $1.25.
- Of that, 25 percent went to refining, distribution, marketing and profits, while 41 percent went to pay for crude oil -- and 34 percent, or 43 cents, went to taxes.
But, of course, oil companies really don't pay taxes. In the long run, it's consumers and investors who do.
Source: Editorial, "The Real Profiteers," Investor's Business Daily, May 15, 2002.
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