Profits...what profits?
The next time that someone mentions that we need an "excess profits" tax to be applied to big oil, please refer them to this Washington Times story.
"The top 20 U.S. and Canadian oil companies actually invested 50 percent more than they earned in the past 10 years in efforts to produce more oil, but adverse geopolitical developments conspired to give them fewer opportunities to expand production while fading oil fields in the U.S. and elsewhere forced them to spend substantially more just to maintain current production, according to the study by the Ernst & Young accounting firm."
The top 20 invested 50% more than they earned...what does that mean? It means that for every dollar earned in profit, the top 20 oil companies SPENT $1.50 to expand production! So every dollar they earned, actually lost them $.50!
Now let's take that beyond textbook economics to the real world numbers.
"The study found that the top companies -- including Exxon Mobil, ConocoPhillips and Chevron, among others -- took in a mind-numbing $5 trillion in revenue from sales of oil and related products between 1995 and 2005. After subtracting the cost of equipment, leases, labor and other operating expenses, the companies posted whopping profits of $336 billion. Over the same time span, however, the companies spent even more than they earned -- $550 billion -- on oil exploration and development. Some of them went deeply into debt to finance new ventures, especially during times of lean profits. "
So in a ten year period the oil companies spent $550 billion on exploration and earned on $336 billion in "profits". Does a $ 210 billion loss (over 10 years) sound like "excess profits" to you?
"The top 20 U.S. and Canadian oil companies actually invested 50 percent more than they earned in the past 10 years in efforts to produce more oil, but adverse geopolitical developments conspired to give them fewer opportunities to expand production while fading oil fields in the U.S. and elsewhere forced them to spend substantially more just to maintain current production, according to the study by the Ernst & Young accounting firm."
The top 20 invested 50% more than they earned...what does that mean? It means that for every dollar earned in profit, the top 20 oil companies SPENT $1.50 to expand production! So every dollar they earned, actually lost them $.50!
Now let's take that beyond textbook economics to the real world numbers.
"The study found that the top companies -- including Exxon Mobil, ConocoPhillips and Chevron, among others -- took in a mind-numbing $5 trillion in revenue from sales of oil and related products between 1995 and 2005. After subtracting the cost of equipment, leases, labor and other operating expenses, the companies posted whopping profits of $336 billion. Over the same time span, however, the companies spent even more than they earned -- $550 billion -- on oil exploration and development. Some of them went deeply into debt to finance new ventures, especially during times of lean profits. "
So in a ten year period the oil companies spent $550 billion on exploration and earned on $336 billion in "profits". Does a $ 210 billion loss (over 10 years) sound like "excess profits" to you?
posted by The Lady Logician at
3:42 PM
0 Comments:
Post a Comment
<< Home