Americans spent 28 percent more for gasoline during the first three months of 2011 than the same period in 2010. Meanwhile, the big five oil companies—BP, Chevron, Conoco Phillips, ExxonMobil, and Shell—made 38 percent more profit. The companies then used a major portion of these additional profits to enrich their board of directors, senior managers, and shareholders by purchasing shares of their stock.
A Citizens for Tax Justice report explains that this action:
…drive[s] up the companies’ share prices, which also benefits managers, whose compensation depends in part on rising stock values.
ExxonMobil nearly doubled its profits from 2010, reaping close to $11 billion dollars. It spent $5.7 billion—more than half of its first-quarter profit—to buy 69 million shares of stock in order to “reduce shares outstanding.”
Conoco Phillips devoted $1.6 billion of its $3 billion first-quarter earnings to stock buybacks—more than 50 percent of its profits. Chevron spent 12 percent, while Shell and BP each spent less than 1 percent on repurchasing their own company shares. BP continues to have expenditures linked to its Deepwater Horizon oil blowout in the Gulf of Mexico last year.
Adding injury to insult, these same companies are battling to retain $40 billion of tax loopholes that will be paid for by taxpayers who are already providing their additional profits due to high oil and gasoline prices.
While consumers and taxpayers get hit with bills for higher gasoline prices and tax loopholes, Big Oil companies get richer by the minute. Congress must heed President Barack Obama’s call to end this unfairness by eliminating these unnecessary handouts.
Daniel J. Weiss is a Senior Fellow and Director of Climate Strategy at the Center for American Progress. Valeri Vasquez is a Special Assistant on the Center’s Energy Opportunity policy team.