Say Anything Blog

This will supply a couple of months of populist talking points from liberal media mouthpieces and populist politicians like John Edwards and *ahem* Mike Huckabee.

HOUSTON (AP) - Exxon Mobil Corp. posted the largest annual profit by a U.S. company—$40.6 billion—on Friday as the world’s biggest publicly traded oil company benefited from historic crude prices at the end of the year.

Exxon also set a U.S. record for the biggest quarterly profit, posting net income of $11.7 billion for the final three months of 2007, beating its own mark of $10.71 billion in the fourth quarter of 2005.

The previous record for annual profit was $39.5 billion, which Exxon Mobil had in 2006.

The eye-popping results weren’t a surprise given record prices for a barrel of oil at the end of 2007. For much of the fourth quarter, they hovered around $90 a barrel, more than 50 percent higher than a year ago.

Crude prices reached an all-time trading high of $100.09 on Jan. 3 but have fallen about 10 percent since then.

The record profit for the October-December period amounted to $2.13 a share versus $1.76 a share in 2006. Year-ago net income was $10.25 billion.

Also extraordinary was Exxon Mobil’s revenue, which rose 30 percent in the fourth quarter to $116.6 billion from $90 billion a year ago. For the year, sales rose to $404.5 billion—the most ever for the Irving, Texas-based company—from $377.64 billion in 2006.

I know everyone is supposed to hate the oil industry because the constant turmoil with gas prices is a real pain in the neck, but before the usual suspects start organizing a lynch mob to head on down to Exxon headquarters let’s stop a think about a few things.

First, why don’t these articles ever talk about how much corporations like Exxon pay in taxes?  I’m sure the politicians who will feign outrage over the company’s record profits (I’m looking at you, Senator Dorgan) will be looking at “windfall profits” taxes aimed at taking those profits away from the company.  But do they ever talk about the “windfall profits” Exxon’s success brings the government?

Taxation on the oil industry is so pervasive, and so heavy, that often oil companies end up paying more in taxes than they take in profits.  In the third quarter of 2006 Exxon Mobile paid over $26 billion in taxes and fees to the government.  Their profit that quarter after paying their overhead expenses and those billions in taxes?  Just over $10 billion.  Why is it news when Exxon makes record profits, but not news when the company pays about twice what it took in profits to the government in taxes?

Second, let’s remember that Exxon is an American company that has American investors and employs tens of thousands of American workers.  They the company does well, they do well.  What’s more, Exxon would love to do more business in America.  They’d like to drill more oil wells and build more refineries, which in turn would employ more workers, but politicians keep getting in their way.  The same politicians, usually, that complain about all the American jobs that go overseas.

Third, go back to those high taxes.  When you shell out over $3/gallon for gasoline at the pump ask yourself how much of that is actually going to Exxon and its “record profits” and how much is going to the government in taxes.  Also ask yourself how much less Exxon could charge if it didn’t have a mountain of government-created tax and regulatory burdens to carry - from payroll, corporate, sales and gas taxes to labor restrictions and absurd environmental restrictions.  Are those high gas prices you’re upset about the fault of Exxon or the government?

I know, for many people, the “oil companies = evil” feelings will never go away.  But the simple truth is that oil companies aren’t evil.  They provide us all with a product we need.  The problem is big government, which burdens the oil industry unnecessarily and thus, indirectly, burdens us.