F. Scott Fitzgerald: “The rich are different from you and me.”
Ernest Hemingway: “Yes, they have more money.”
– Legendary exchange between Fitzgerald and Hemingway that did not actually occur.
Even if this exchange didn’t occur, the sentiment is certainly true. The rich are different from the rest of us because they have more money. And when it comes to ExxonMobil, it has significantly more money than even the other four big oil companies—BP, Chevron, ConocoPhillips, and Shell.
ExxonMobil announced today that it earned a total profit of $41 billion in 2011. The 2011 profit equals $112 million per day or $78,000 per minute of 2011. This huge profit is similar to its earnings of $41 billion to $46 billion from 2005 to 2008 (in 2011 dollars). ExxonMobil made the four “largest annual profits” of all time during these four years, according to USA Today.
Its large profit is due to “high oil prices,” according to The Wall Street Journal. And in 2011 U.S. consumers faced the highest average annual oil price since 1864. But ExxonMobil made this huge profit even though its “oil production fell nine percent.” Big oil companies make more money as oil prices rise even though the cost of oil production remains relatively unchanged. The Energy Information Administration reports that:
These [oil production] costs can range from as little as $2 per barrel in the Middle East to more than $15 per barrel in some fields in the United States, including capital recovery…technological advances in finding and producing oil have made it possible to bring once-expensive deep water Gulf of Mexico oil into production for less than $10 per barrel.
The enormous 2011 profit solidifies ExxonMobil’s position as the most profitable public corporation in the United States, according to the latest Fortune 100. In fact, ExxonMobil was nearly 40 percent more profitable than its nearest rival.
So what has ExxonMobil done with its riches? The company spent nearly $22 billion, or 53 percent, of its profits buying back its own stock. This raises the value of the remaining shares, which primarily enriches its executives, board of directors, and largest shareholders.
Other ExxonMobil profits were held as cash reserves, which increased from $8 billion to $11 billion from June 30 to September 30, 2011. This is a 38 percent increase in three months.
A big chunk of ExxonMobil’s money also went to the Hill. In 2011 the company spent nearly $13 million on official lobbying expenditures, and gave nearly $900,000 to federal candidates. More than $9 out of $10 went to Republicans. Undoubtedly a large portion of these resources were designed to strongarm Congress into retaining $4 billion in annual tax breaks for Big Oil and other giveaways. For instance, on March 1, 2011 the @L&summ2=m&#major actions:">House voted 176-249 against a “Motion to Recommit [that] would repeal oil and tax production tax breaks for major integrated oil companies.” The House also voted 174-251 against elimination of up to $53 billion in taxpayer subsidies by recovering lost royalties from offshore oil production.
Speaking of subsidies, ExxonMobil’s employment decline debunks the notion that high profits or tax breaks are essential to job growth. Although ExxonMobil added nearly 3,000 employees via its purchase of XTO Energy in 2010, its U.S. workforce declined from 30,300 employees in 2006 to 29,859 workers in 2009. This decline of nearly 500 employees occurred while it made over $120 billion in total profits from 2005 to 2008.
As for Exxon’s CEO Rex Tillerson, we don’t yet know what he made in 2011. He pulled in $29 million in 2010, which included $2.2 million in salary, a $3.4 million bonus, and stock awards valued at $15.5 million. Stock buybacks boost the value of his stock awards. The average Exxon executive made over $14 million in 2010.
Exxon’s 2011 tax payments are not due until later this year. But a CAP analysis found that between 2008 and 2010, Exxon Mobil registered an average 17.6 percent federal effective corporate tax rate, while the average American paid a higher effective rate of 20.4 percent.
Even while awash in all of these profits, ExxonMobil has yet to pay for all of the damages from the Exxon Valdez oil spill in 1989. In 2006 the federal and Alaska governments determined there was lingering damage from the spill and that Exxon must provide additional funds to address the damage. Yet ExxonMobil hasn’t paid the required $92 million to mitigate the additional harm from its oil spill 23 years ago.
The big five oil companies are on a pace to earn $130 billion in 2011, based on the earnings of three of the big five companies, with nearly one-third of it from ExxonMobil. Last year ExxonMobil earned more than $40 billion for the fifth time in in seven years. It is a huge contributor to the more than $1 trillion in profits earned by the big five oil companies from 2001 to 2011.
These humongous profits come from the pockets of middle-class Americans when they pay high gasoline prices. Meanwhile, ExxonMobil spends its profits enriching itself rather than hiring more employees or investing in clean alternative fuels. And it still has the nerve to join other big oil companies to lobby Congress to retain $4 billion in annual tax breaks that are unnecessary given its enormous returns. Congress must finally end handouts to ExxonMobil and its big oil colleagues.
Daniel J. Weiss is a Senior Fellow and the Director of Climate Strategy and Rebecca Leber is a Research Assistant for Think Progress at the Center for American Progress.
Thanks to Jackie Weidman, Special Assistant for CAP’s Energy Opportunity Program
- Exxon Mobil Dodges the Tax Man by Valeri Vasquez