Big Oil CEOs testify today before the Senate Committee on Finance to defend the trillion dollars in profits they have made in the past decade thanks to you, the American consumer. Some in Congress will defend the billions of dollars in tax breaks and royalty relief taxpayers give to these same companies each year.
Public Citizen recently crunched the numbers and found that Big Oil’s profits aren’t the only eye-popping statistic – what the industry is spending its money on is equally astonishing. Big Oil lavishes more on stock buybacks, dividend payments, lobbying and marketing than on U.S. oil investments. Our research shows that since 2005, the largest five oil companies operating in the U.S. spent nearly half a trillion dollars buying back their own stock and paying dividends to shareholders. That’s more money than they spent investing in their U.S. infrastructure.
This contradicts the industry’s insistence that its billions of dollars a year in tax breaks are needed to create jobs and keep gas prices affordable. In fact, Big Oil’s investment decisions are driven by market prices of crude oil, not U.S. tax policy.
It’s time our leaders stop bowing to corporate interests and put an end to the “take the money and run” tactics of Big Oil that are nothing short of highway robbery.
While the speculation-fueled price of oil per barrel has continued to escalate, the underlying costs to produce oil haven’t. Consider this: On average, it costs $20 to produce a barrel of oil. Big Oil sells it to us for more than $100. This generates the massive cash flow that fuels oil companies’ profits and spending.
For more than a century, we have regulated the profits of corporate electric utilities because we decided long ago that suppliers of energy serve a unique public service and therefore require special regulatory treatment. Big Oil should be no different. High energy prices and our continued addiction to oil present significant economic and national security challenges.
Just imagine if the mountain of money Big Oil spent on stock buybacks, dividend payments, lobbying and marketing had been put toward installing millions of rooftop solar panels, deploying electric cars, investing in mass transit or helping those of us in financial need.
With oil prices high but the cost of drilling unchanged, Big Oil is imposing a tax on us at the gas pump. We must implement a windfall profits tax to divert the revenue from high gas prices from Big Oil’s profiteering, spending it instead on investments in rooftop solar, energy efficiency, the electrification of our transportation sector and mass transit. We do not seek to punish oil companies, but we should not allow ourselves to be victimized by their windfall profits, especially when that revenue could be used to strengthen America’s economic competitiveness, reduce consumer energy costs and help avert catastrophic climate change.
Lawmakers in Congress must remember who they are elected to represent, repeal Big Oil’s subsidies, enact a windfall profits tax and challenge the Big Oil CEOs to make public their IRS income tax payments so we can settle once and for all whether Uncle Sam taxes Big Oil too much or too little.
Statement of Tyson Slocum, Director, Public Citizen’s Energy Program