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Money & Finance > Stocks & Bonds > Big Oil Raking in Billions at Our Expense

Big Oil Raking in Billions at Our Expense

It may surprise some to learn that Big Oil now controls gasoline prices rather than OPEC.   With control over the refineries, the five Big Oil companies in the U.S. manipulate prices through closing refineries such as the one in Bakersfield, controlling the Futures Market and operating with little or no Federal oversight.  The result is monstrous profits; yet we have the naysayers who would rather cut Medicare than put a small surcharge on big corporations.  It is insane.

– Kalen Pruss

View data comparing Big Oil profits to prices for oil and gasoline (.xls)

This week the five Big Oil companies—ExxonMobil, BP, ConocoPhillips, Chevron, and Shell—posted massive second-quarter profits thanks in no small part to record-high gas prices and billions in unnecessary subsidies paid by American taxpayers.

All five companies sat squarely in the black with $35.1 billion in combined second-quarter profits, 9 percent higher than in 2010. Exxon, at a whopping $10.7 billion, reported the largest profits by far. Shell saw an $8 billion profit for the quarter, a 77 percent increase from last year, putting the company on track to meet or exceed its 2008 record of $31.4 billion—the most a British company has ever earned in a single year. Even BP clocked in at $5.3 billion little more than a year after the fatal Deepwater Horizon disaster rocked the U.S. Gulf Coast, forcing BP to put $20 billion in an escrow fund for people harmed by the blow out.

Big Oil once again has American families to thank for these enormous gains: Oil profits grow when Americans pay more for gasoline. Because oil averaged $107.35 a barrel during the second quarter—a 39 percent increase over 2010—Americans are forking over more than a third more at the pump than they were just a year ago.

While high prices pad oil company coffers, they also make life even more difficult for families struggling to recover in the Great Recession’s wake. Bernard Baumohl, chief global economist at the Economic Outlook Group, notes that every penny increase in gas prices drains $1 billionout of the economy each year.

But high prices at the pump are only part of Americans’ Big Oil bill. They also pay more than $4 billion in unnecessary tax subsidies for domestic oil drilling and production every year. These subsidies are wasteful and expensive. Oil companies produce oil regardless of whether they receive these tax breaks, and they would still realize enormous profits without federal handouts.

Similarly, eliminating oil subsidies would not affect the price consumers pay for gas and oil in the near or long term, contrary to what oil companies and their congressional allies argue. And high prices and the new areas opened up to exploration have led to an oil and gas employment boom that has nothing to do with tax breaks for oil production.

Yet Big Oil’s representatives in Congress stubbornly defend Big Oil giveaways even if it means cutting deep into popular, important programs to make up for the cost. The House-passed fiscal year 2012 budget would cut Medicare spending by $30 billion over a decade, for example, whilemaintaining $40 billion in tax breaks to Big Oil over the same period. 

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posted on Oct 6, 2011 11:03 AM ()


Where would politicians live if they didn't get big oil money--not that I am saying anything!
comment by greatmartin on Oct 6, 2011 5:35 PM ()
Read my next post. It may just scare you to death.
reply by redimpala on Oct 7, 2011 9:25 AM ()
Big Oil is also blocking monies for public transportation. It's a criminal racket.
comment by marta on Oct 6, 2011 1:41 PM ()
Yes, it is, and I am about to present a horrifying scenario that may...just may be....playing out before our very eyes right now.
reply by redimpala on Oct 7, 2011 9:25 AM ()

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