FOR IMMEDIATE RELEASE:
July 31, 2008
Brian Kennedy (202) 434-8200
Earnings Week Intensifies Silly Season on Capitol Hill
Does podium pounding lower prices for consumers?
Washington, DC – Record oil prices have led to record-high earnings for oil companies, which in turn leads Washington politicians to podiums and news cameras to declare their ‘outrage’ and call for additional taxes. Thomas Pyle, president of the Institute for Energy Research (IER) issued the following statement today following rousing, but intellectually bankrupt, news conferences on Capitol Hill:
“The profits of oil companies have been the subject of senseless political rhetoric in Washington for more than a century, and today lawmakers gathered to partake in this time-honored tradition by responding to this week’s earning announcements with new calls for tax hikes and additional layers of regulation – two things that have never increased the supply or lowered the price of anything.”
“While it may be cathartic for some lawmakers to blame oil companies for prices at the pump, it certainly doesn’t solve any problems for American consumers. If these politicians were really interested in slashing prices and profits, they might try something like increasing supply to help meet demand. But that might make too much sense for Washington.”
The following research from IER cuts through the rhetoric about profits and subsidies, and puts into perspective the realities associated with the global market for oil:
Fact Sheet: A Rational Look at “Big Oil” Profits
- Record oil prices have led to record earnings for oil companies and their shareholders. They have also led to a windfall of new revenue for the federal government (taxpayer) in the form of income taxes, royalties, and bonus bids. Lessons of the past make it clear that windfall profits taxes fail to generate their projected revenues and lead to decreases in domestic production and increases in our dependence on foreign sources
Fact Sheet: Energy Subsidies: Oil and Gas vs. Wind and Solar
- Congress has increased subsidies for renewable fuels considerably, from 17 percent of the total in 1999 to 29 percent of the total in 2007. Conversely, natural gas and petroleum-related subsidies declined from 25 percent to 13 percent during the same period. Coal and nuclear subsidies remained roughly constant.
For electricity generation, taxpayers provided the following subsidies in 2007:
- Solar Subsidy: $24.34 per megawatt hour
- Wind Subsidy: $23.37 per megawatt hour
- Coal Subsidy: $0.44 per megawatt hour
- Oil & Gas Subsidies: $0.25 per megawatt hour
- Hydropower Subsidy: $0.67 per megawatt hour
- Nuclear Subsidy: $1.59 per megawatt hour
Fact Sheet: Big Oil vs. State-Owned Oil
- The nine largest private, investor-owned oil companies control less than 5 percent of the world’s oil reserves. The profits of the world’s largest companies, which are controlled by nations like Saudi Arabia, Venezuela, Iraq and Nigeria, aren’t public information, but they certainly dwarf those of the ‘Big Oil’ companies. While politicians bloviate about oil company profits, the returns of investor-owned companies actually pale in comparison to those of the foreign nation-owned companies that profit from our growing dependence.
The Institute for Energy Research (IER) is a not-for-profit public foundation that conducts intensive research and analysis on the functions, operations, and government regulation of global energy markets. Founded in 1989, IER is funded entirely by tax deductible contributions from individuals, foundations and corporations. No financial support is sought or accepted from government (taxpayers).