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jodywy

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http://www.taxfoundation.org/publications/printer/1139.html
October 26, 2005

State and Federal Treasuries "Profit" More from Gasoline Sales than U.S. Oil Industry

by Scott A. Hodge and Jonathan Williams


High gas prices and strong oil company earnings have generated a rash of new tax proposals in recent months. Some lawmakers have called for new “windfall profits” taxes—similar to the one signed into federal law in 1980 by President Jimmy Carter—that would tax the profits of major oil companies at a rate of 50 percent. Meanwhile, many commentators have voiced support for the idea of increasing gas taxes to keep the price of gasoline at post-Katrina highs, thereby reducing gas consumption.

However, often ignored in this debate is the fact that oil industry profits are highly cyclical, making them just as prone to “busts” as to “booms.” Additionally, tax collections on the production and import of gasoline by state and federal governments are already near historic highs. In fact, in recent decades governments have collected far more revenue from gasoline taxes than the largest U.S. oil companies have collectively earned in domestic profits.

According to data compiled by the U.S. Department of Energy’s Energy Information Administration, the domestic profits of the 25 largest oil companies in the U.S. have been highly volatile since the late 1970s.

As illustrated in Figure 1, between 1977 and 1985, the oil industry recorded relatively high profits—averaging nearly $33 billion per year, after adjusting for inflation. These good times were followed by ten years of relatively flat profits, averaging just $12.3 billion per year. In 1996, profits began to rise again but have been anything but stable, ranging from $9 billion to nearly $42 billion per year. Between 1977 and 2004, the industry’s domestic profits totaled $643 billion, after adjusting for inflation.

Figure 1. State and Federal Taxes on Gasoline Production and Imports Exceed Oil Industry Profits in Most Years


Source: Bureau of Economic Analysis, U.S. Energy Information Administration

In contrast, federal and state taxes on gasoline production and imports have been climbing steadily since the late 1970s and now total roughly $58.4 billion. Due in part to substantial hikes in the federal gasoline excise tax in 1983, 1990, and 1993, annual tax revenues have continued to grow. Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.

As illustrated in Table 1, since 1977, there have been only three years (1980, 1981, and 1982) in which domestic oil industry profits exceeded government gas tax collections. In the remaining years, gasoline tax collections consistently exceeded oil industry profits, reaching a peak in 1995 when gas tax collections outpaced industry profits by a factor of 7.3.

Table 1. State and Federal Gasoline Taxes Compared to Major U.S. Oil Companies’ Domestic Profits, 1977-2004 (figures in billions of 2004 dollars)
Year





1977
$26.8 Oil Profits
$13.7 Federal Taxes
$29.0 State Taxes
$42.7 Total Taxes


1978
$27.5 Oil Profits
$13.0 Federal Taxes
$28.1 State Taxes
$41.1 Total Taxes

1979
$34.9 Oil Profits
$11.4 Federal Taxes
$25.2 State Taxes
$36.7 Total Taxes

1980
$41.0 Oil Profits
$9.4 Federal Taxes
$22.0 State Taxes
$31.4 Total Taxes

1981
$41.4 Oil Profits
$8.5 Federal Taxes
$21.0 State Taxes
$29.5 Total Taxes

1982
$35.8 Oil Profits
$8.0 Federal Taxes
$20.6 State Taxes
$28.6 Total Taxes

1983
$30.2 Oil Profits
$15.0 Federal Taxes
$22.0 State Taxes
$37.0 Total Taxes

1984
$28.7 Oil Profits
$16.2 Federal Taxes
$23.5 State Taxes
$39.6 Total Taxes

1985
$29.3 Oil Profits
$15.6 Federal Taxes
$24.6 State Taxes
$40.2 Total Taxes

1986
$9.0 Oil Profits
$15.9 Federal Taxes
$25.7 State Taxes
$41.5 Total Taxes

1987
$14.0 Oil Profits
$15.0 Federal Taxes
$27.4 State Taxes
$42.4 Total Taxes

1988
$16.9 Oil Profits
$15.6 Federal Taxes
$28.1 State Taxes
$43.8 Total Taxes

1989
$14.5 Oil Profits
$14.5 Federal Taxes
$28.3 State Taxes
$42.8 Total Taxes

1990
$18.6 Oil Profits
$14.5 Federal Taxes
$29.1 State Taxes
$43.5 Total Taxes

1991
$11.0 Oil Profits
$21.1 Federal Taxes
$29.7 State Taxes
$50.8 Total Taxes

1992
$10.1 Oil Profits
$20.9 Federal Taxes
$30.8 State Taxes
$51.7 Total Taxes

1993
$10.6 Oil Profits
$20.9 Federal Taxes
$31.4 State Taxes
$52.3 Total Taxes

1994
$10.8 Oil Profits
$27.1 Federal Taxes
$32.1 State Taxes
$59.3 Total Taxes

1995
$7.9 Oil Profits
$26.3 Federal Taxes
$31.9 State Taxes
$58.1 Total Taxes

1996
$18.9 Oil Profits
$26.8 Federal Taxes
$32.0 State Taxes
$58.9 Total Taxes

1997
$18.8 Oil Profits
$26.0 Federal Taxes
$32.6 State Taxes
$58.6 Total Taxes

1998
$9.0 Oil Profits
$27.1 Federal Taxes
$33.1 State Taxes
$60.3 Total Taxes

1999
$16.8 Oil Profits
$26.5 Federal Taxes
$33.6 State Taxes
$60.1 Total Taxes

2000
$34.9 Oil Profits
$25.7 Federal Taxes
$33.3 State Taxes
$59.0 Total Taxes

2001
$35.1 Oil Profits
$24.9 Federal Taxes
$33.6 State Taxes
$58.5 Total Taxes

2002
$16.2 Oil Profits
$24.5 Federal Taxes
$33.9 State Taxes
$58.4 Total Taxes

2003
$31.7 Oil Profits
$24.6 Federal Taxes
$33.4 State Taxes
$58.0 Total Taxes

2004
$42.6 Oil Profits
$24.2 Federal Taxes
$34.2 State Taxes
$58.4 Total Taxes

Total
$643.0 Oil Profits
$533.0 Federal Taxes
$810.1 State Taxes
$1,343.1 Total Taxes



Source: Bureau of Economic Analysis, U.S. Energy Information Administration

Unlike the highly volatile path of industry profits, gasoline taxes exhibit steady growth with little regard for changes in the U.S. economy. As lawmakers respond to rising gas prices, they should keep in mind the importance of state and federal gasoline taxes in comparison with oil industry profits.
 

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That's spin, Jody - link below; my emphasis.

Even Republicans are questioning big oil company profits.

"As high fuel prices roil consumers and Congress considers a variety of measures to ease the impact, Exxon Mobil Corp. and Royal Dutch Shell PLC, the world's No. 1 and No. 3 oil companies, weighed in with record third-quarter earnings that totaled almost $19 billion.

Riding a wave of high prices for oil, gasoline and natural gas, Exxon reported third-quarter net income of $9.92 billion, up 75 percent from the year-ago period, on revenue of $100.72 billion. It was among the biggest quarterly profits of any company in history, and amounted to a per-minute profit of $74,879.23 during the quarter. A handful of other companies have posted higher quarterly earnings in the past, but only with the help of big accounting adjustments, while Exxon's results came mostly from operations.

Shell, the third largest oil company by market value behind Exxon and Britain's BP PLC, said its third-quarter net income rose 68 percent to $9.03 billion, on $76.44 billion in revenue. Like Exxon, its profit came mostly from operations.

The companies' combined quarterly revenue of $177.16 billion exceeded Denmark's economic output last year."


http://www.post-gazette.com/pg/05301/596812.stm
 

jodywy

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yes but still
Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.
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Disagreeable

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jodywy said:
yes but still
Since 1977, governments collected more than $1.34 trillion, after adjusting for inflation, in gasoline tax revenues—more than twice the amount of domestic profits earned by major U.S. oil companies during the same period.
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I don't really see what you're upset about? We can vote for people that will cut taxes (or not), but we can't affect the price of oil or gasoline at all. The tax money is at least spent on our roads, highways, etc.. The oil companies spend it however they want. Plus, let's not forget, that the Republicans gave them a big tax break in the latest Energy Bill. How much tax do you pay on a gallon of gasoline? What is gas costing you today?
 

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