April Fools'! The Joke is on the Consumer

At hearing, Big Oil says its profits aren't extreme (USA Today)
Congress has big questions for Big Oil (Yahoo! News)

In order for the argument of Big Oil to make sense, you have to agree with the basic premise: Profits of $124 Billion is not extreme.

Are you kidding me? Not extreme? $124 Billion ranks 61st among the GDP of nations of the world. In other words, the profits made by the five major US oil producers is better than that of 170 other nations of the world. But this is just profits. Let's take a look at each of the Big 5's Revenues and some corresponding statistics I put together:

Remembering that GDP is the combined value of all goods and services produced in a given nation for a given year, the Big 5 Oil Companies account for 10.43% of the USA's GDP for 2007! In terms of production among nations of the world, according to the CIA World Factbook, the Big 5 would rank 13th in the world, behind Italy, but just ahead of Spain. Their production would make up just over half of Germany's GDP and is greater than Mexico and Canada.


Keep in mind that profit is the amount of revenue left over after all bills and expenses are paid, including salaries and dividends to shareholders, why should our government have a problem cutting the amount of subsidies given to these companies? It seems to me that they are earning enough to cover any investment into expanding fuel sources as well as into finding cleaner and alternative sources.


According to the articles above, oil supplies have been holding steady, so the argument of a "shortage" doesn't hold water. Where is all this money going? Remember, a subsidy is a government grant of money to a business or corporation to encourage a type of production, be it research or investment in production. Where does government get the money to pay these subsidies? Taxes, our taxes. So, not only are we getting gouged at the pump, our taxes are also going to the fuel companies instead of directly improving our life. That money goes to pay the investors of the Big 5, as well as the average $3.29 per gallon we pay at the pump.


In general, people do not like taxes. But, if taxes are collected, it is accepted that as citizens we should see a benefit from those taxes paid in the form of government programs or services that will directly impact our lives. When taxes go subsidize already profitable corporations, it becomes difficult to see the direct benefit. In this case, we can tack on the fact that both Bush and Cheney have ties to the energy industry. To me it looks like Bush's promise to veto any legislation that makes it to his desk that cuts subsidies to the Big 5 is nothing more than payback for years of support to the White House, both before and during this administration's term.