Americas largest oil company, Exxon-Mobil (NYSE:
XOM)
is reporting some jaw-dropping profits tonight, record profits in
fact for any American company ever, gasped anchor Brian Williams in
a brief news read on the January 30 NBC Nightly News.
Williamss reporting was characteristic of the medias
take on oil profits in this case, the $36.1 billion Exxon earned
in 2005. But in 2004, Exxon reported lower profit margins than major
companies in other industries, including companies which own and
publish major newspapers. Additionally, a new Tax Foundation study
found that the U.S. government is already cashing in from oil
profits with corporate tax monies.
While Exxons profit is large in terms of absolute
dollars, but so is the company. In 2005, profits for the worlds
largest oil company were only 9.7 percent of its revenues, up from
9.6 percent of revenue in 2004, and far less than the 2004 Bank of
America (NYSE:
BAC)
profit margin of 21.6 percent or Johnson and Johnsons (NYSE:
JNJ)
18 percent, according to data from
Forbes magazine.
Within the petroleum industry, ExxonMobil was vastly outperformed by
Communist Chinas state-owned PetroChina, which yielded nearly a 23
percent profit in 2004.
Newspapers, part of the media that criticize oil profits,
heavily outperformed Exxon in 2004. The average 2004 operating
margin of publicly owned newspapers was 20.5 [percent], the Los
Angeles Times cited industry analyst John Morton in its Nov. 24,
2005, paper.
Williams and his evening news competition on ABC and
CBS avoided the temptation to feature full-length stories focused on
windfall profit tax advocates. But print publications followed the
next morning with the Exxon profits as a springboard to showcase
left-leaning critics of the oil industry. David Lynch, in the
January 31
USA Today, featured Rep. Edward Markey (D-Mass.) calling the
$36.1 billion profit report grim news for American consumers,
while the same day, The
Washington Posts Justin Blum recorded criticism from Exxpose
Exxon, which he labeled merely as coalition of environmental and
advocacy groups.
Blum left out that the coalition skews heavily to the
left MoveOn.org and Sierra Club are two key members and that
Exxpose Exxon targets the Texas-based company in part due to its
continued lobbying for Congress to open the Arctic National Wildlife
Refuge (ANWR) for oil exploration.
While putting Exxon on the defensive for its successful
business, neither Bloom or Lynch reported the windfall the U.S.
treasury sees from taxes already paid by corporations, or more
accurately, paid by consumers at the pump and forwarded to the
government by oil companies.
During 2005, the
Tax Foundations Jonathan Williams and Scott Hodge found,
Exxon-Mobil, Chevron (NYSE:
CVX),
and ConocoPhillips (NYSE:
COP)
paid a combined corporate income tax burden of $44.3 billion on
their reported gross earnings. Compared to last years combined
corporate income taxes of $29.7 billion, their burden for 2005 has
increased by 49.2 percent and follows the overall trend of
escalating corporate tax collections in the United States.
Williams and Hodge added in their January 31 Fiscal
Fact that the average effective tax rate on the major integrated
oil and gas industry is estimated to equal 38.3 percent. This
exceeds the estimated average effective tax rate of 32.3 percent for
the market as a whole.
The Business & Media Institute (BMI) has previously
documented biased
media coverage of oil company profits. BMI has also reported how
economists deride the proposed windfall tax as detrimental to
oil company investment and to the savings of retirees benefiting
from oil stock dividends.
Media Emphasize Exxon Profit, Restart Focus on Windfall Taxes
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