Read the full column here.
Washington, D.C. – This month, President Barack Obama announced his plan to reduce the deficit by $4 trillion over the next 12 years, to include the elimination of $41 billion in tax loopholes for the oil and gas industry over the next decade—a plan vociferously opposed by the oil industry lobby, the American Petroleum Institute. Today, the Center for American Progress released the column, “Big Oil’s Mountain of Cash: Oil Companies Cling to Tax Breaks While Hoarding Tens of Billions,” which shows that the top five oil companies have combined cash resources that total $59 billion – 30 times more than the estimated $2 billion in annual tax breaks that these companies receive.
The big five oil companies—BP, Chevron, ConocoPhilips, ExxonMobil, and Shell—have ample financial resources that dwarf the value of their tax breaks and can readily afford to contribute its fair share to reduce America’s debt. They enjoy billions in cash reserves, made nearly $1 trillion in profits over the past decade, and at least one company, ExxonMobil, pays a lower effective tax rate than the average American family.
A Federal Reserve report released this month documented the massive cash reserves held by American corporations. The Wall Street Journal reported that “corporations have a higher share of cash on their balance sheets than at any time in nearly half a century, as businesses build up buffers rather than invest in new plants or hiring.” In fact, a CAP analysis of company Security and Exchange Commission filings determined that the three largest American oil companies—Chevron, ConocoPhillips, and ExxonMobil—had $27 billion in cash or equivalent assets as of midyear 2011.
BP and Shell, the two largest foreign oil companies that operate in the United States, had combined cash reserves of nearly $32 billion at the end of last year (the latest data available). Added together, these five companies are sitting on cash resources of $59 billion, which is 30 times more than the estimated $2 billion in annual tax breaks that these companies receive.
API claims that Big Oil needs the tax loopholes to create jobs and make investments, however in “Profits and Pink Slips: How Big Oil and Gas Companies Are Not Creating U.S. Jobs or Paying Their Fair Share,” the House Natural Resources Committee Democrats found that “despite generating $546 billion in profits between 2005 and 2010, ExxonMobil, Chevron, Shell, and BP combined to reduce their U.S. workforce by 11,200 employees over that time. Just in 2010 alone, the big 5 oil companies reduced their global workforce by a combined 4,400 employees, while making a combined $73 billion in profits.”
Read the full column here.