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A Very Slippery Slope: Big Oil’s Tax Breaks

By Bill Spetrino   |   Friday, 13 May 2011 12:00 PM

Don’t let the facts interfere with a good story.

Yesterday, the Senate, led by Harry Reid, called in the major oil company CEOs for a special meeting to discuss ending oil subsidies.

What is ironic is that I don’t think anything is going to come out of this and I think Reid knows this. It is just grandstanding and a way for Congress to distract the American people about who has run up the enormous U.S. debts.

Reid took over as the leader of the Senate in 2007 and since then, almost $6 trillion of deficits have been incurred.

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While Reid loves to blame this on President George W. Bush, the fact is that Bush didn’t write the budget in that timeframe or pass laws. Reid and House Majority Leader Nancy Pelosi did.

In fact, in 2009, the Democratic Party had a filibuster-proof majority in the Senate, and still didn’t end oil subsidies.

Why? Is it because leaders in both parties receive huge campaign donations from them?

I will let you decide that.

My anger is that the Senate is blaming the oil companies for the high price of gasoline at the pump.

The oil companies make about 7 cents per gallon and the state and federal government make about 50 cents per gallon.

Let me get this straight: Oil companies invest $1 and get about 7 cents per gallon in profit — and the federal and state governments invest nothing and get 50 cents per gallon and the federal government says the oil companies are unfair?

Am I the only person who thinks something is wrong with that?

Between 2007 and 2010, the largest oil companies averaged a profit margin of around 6.75 percent. This pales in comparison to profit margins in just about every other industry. Technology has a profit margin of about 30 percent.

Plus, the oil industry is only about 1.5 percent owned by upper management, smaller than any other industry. Who owns these big companies — Wall Street fat cats? No. In fact, almost every major pension fund for firemen, teachers and policemen owns oil-company stock.

As you know, I’m not a partisan person. But take the word of Sen. Mary Landrieu, D-La., who attacked her own party’s latest plan to tax oil companies as “laughable” while complaining that the proposal had come from states that produce no energy.

Sen. Mark Begich, D-Alaska, said the following on the House floor: "It is a gimmick, a gimmick to get the next week of activity, and get some press out there,” he said.

“Picking on one industry because it sounds good, rates good in the polls, gets you a couple of headlines is not what the American people want us to do here. If anything, they're getting fed up with that. … Let’s stop the headline-grabbing and get serious about the energy security."

America wasn’t built on demonizing the successful businesses and high-earnings people. With almost half of the Americans presently paying no income tax, the top 50 percent of individuals and all the corporations pay over $2 trillion in taxes, they can’t help the tone-deaf Congress, which spends $3.5 trillion.

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About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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Don t let the facts interfere with a good story. Yesterday, the Senate, led by Harry Reid, called in the major oilcompany CEOs for a special meeting to discuss ending oil subsidies. What is ironic is that I don t think anything is going to come out ofthis and I think Reid...

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