Oil Company Executives Defend Profits

[Kuciwalker]

Originally posted by KrazyHorse
*adds Verto to the list of people who need to experience the joys of a Montreal winter.

Montreal summers are chilly enough.

[Kuciwalker]

Originally posted by JohnT
What - The US government decided that it wasn't soaking Exxon enough when it takes its $40 billion and now wants a couple billion more?

Since when is a 10% profit margin for a company that pays out over $110 billion in taxes every year a windfall? You want to double Exxons profits? Lower its overall effective tax rate by 12%... that should do it.

Are you sure that it's $110 billion? That seems a little high :hmmmm:

[KrazyHorse]

Not really. You get a significant number of days in the low to mid-90s.

Not quite Baltimore levels of humidity, but not really dry either.

The swing from winter lows to summer highs is 125-130 F

[Kuciwalker]

maybe I visited in the spring then. I remember it was something like 60 degrees.

[KrazyHorse]

It can often be 60 degrees in June. Nighttime lows in July or August might be around 60 during a cool spell. Average highs in July are around 80F with a week or two into the low to mid 90s during a warm spell.

[KrazyHorse]

Average lows during January are around 5F, with cold snaps ranging down into the -30 or -35F range

[Kuciwalker]

But you guys don't actually get out of school when it snows, defeating the entire purpose

[KrazyHorse]

Snow?

It doesn't snow when it's -30, son. There's virtually no moisture in the air at that temperature. Plus you can't skate on outdoor rinks because the ice becomes granular and does not hold skate edges well.



Snow happens in December, late February and March. And yes, given that Montreal receives more snow than any other city its size in the world, there tends to be an efficient snow-removal system in place.

[JohnT]

Originally posted by Kuciwalker


Are you sure that it's $110 billion? That seems a little high :hmmmm:

Cite on the $100 billion (page 26). (That should be $100 billion - looks like I hit the wrong key twice).

Of course, this figure includes all taxes, paid to governments all across the globe, not just the US and especially not just US income tax (which is about 6% of all taxes taken out of Exxon).

Income, excise and all other taxes for the third quarter of 2005 of $25,836 million were up $4,146 million compared to 2004. In the third quarter of 2005 income tax expense was $6,132 million and the effective income tax rate was 41.8 percent, compared to $3,854 million and 41.9 percent, respectively, in the prior year period. Excise and all other taxes and duties were higher reflecting higher prices and foreign exchange effects.

This figure corroborates with a formula Sten worked out in another thread about two years ago... ahhh. Here it is.

To quote Sten:

Lets play a game.

Match the XOM cost with it's catagory - from 2002 10-K SEC report. Some catagories were excluded...

All figures in Millions US$

1) Operating expenses
2) Selling, general and administrative expenses
3) Depreciation and depletion
4) Interest expense
5) Excise taxes
6) Other taxes and duties
7) Income taxes
8) Operating income


A) 8,310
B) 22,040
C) 33,572
D) 398
E) 6,499
F) 17,831
G) 11,011
H) 12,356


No fair looking up the numbers.

... 10 posts later...

The reason why I posted this as a question was because it was very different that what I would have guessed...

#3 = A Depreciation and Depletion = $8,310MM

But get this...

The biggest line item was C) $33,572MM and just to make Sava mad, that was #6 Other Taxes and Duties.

#1 = F Operational Expenses = $17,831MM

#2 = H SG&A = $12,356MM

#8 = G Net Profits after Tax $11,011MM


So the company made $11B, and paid $62B in direct taxes. The $30B in Op Ex and SG&A is mostly wages, so you can throw in a good $8-$10B in income and payroll taxes for those funds. A couple billion of the profit is paid out as dividends, taxed at ~30%... I'd say the govy gets a little bit of the revenues of this company.

Just goes to show you that the oil business really is a crap business, and that most of the people that rip on big oil don't understand that the reason the govt loves oil is because of the huge taxes they pay.

[JohnT]

According to later in the same 10-K, you find that Sten was low by about $2 billion.

TAXES

2002
Income, excise and all other taxes and duties totaled $64.3 billion in 2002, a decrease of $2.2 billion or 3 percent from 2001. Income tax expense, both current and deferred, was $6.5 billion compared to $9.0 billion in 2001, reflecting lower pre-tax income in 2002. The effective tax rate of 39.8 percent in 2002 compared to 39.3 percent in 2001. During 2002, the company continued to benefit from favorable resolution of tax-related issues. Excise and all other taxes and duties were $57.8 billion.

2001
Income, excise and all other taxes and duties totaled $66.5 billion in 2001, a decrease of $1.9 billion or 3 percent from 2000. Income tax expense, both current and deferred, was $9.0 billion compared to $11.1 billion in 2000, reflecting lower pre-tax income in 2001. The effective tax rate of 39.3 percent in 2001 compared to 42.6 percent in 2000, benefiting from a higher level of favorably resolved tax-related issues. Excise and all other taxes and duties were $57.6 billion.

Cite: XOM Form 10K, filing date 3-26-2003, page 33.

[KrazyHorse]

Are royalties and other drilling-rights fees included in those taxes?

[Odin]

*adds Verto to the list of people who need to experience the joys of a Minnesota winter.

[KrazyHorse]

Minneapolis and Montreal have similar temperatures throughout the year. Minneapolis only gets ~1.3 metres of snowfall, however...

[JohnT]

Originally posted by KrazyHorse
Are royalties and other drilling-rights fees included in those taxes?

The cost of oil is not ($90 billion in fy 2002, $136 billion in the first nine months of fy 2005 ($180 is the likely figure by the years end, double that of three years ago)). Taxes and royalties imposed above and beyond are included.

But don't forget that many taxes are pegged to the price of oil and gasoline, so as the price of oil rises, the corresponding taxes and royalties increase as well.

[KrazyHorse]

What do you mean, "cost of oil"?

I thought Exxon was a producer as well as refiner and distributor?

If so, then there are two main categories of costs involved:

1) Production expenses (drills, wages etc.)

2) Drilling rights payments (royalties etc.)

Saying "the cost of oil" doesn't make any sense here. Does that so-called "cost of oil" include merely production costs or does it also include the payments to governments for the right to produce the oil? If it doesn't include the latter then are those costs included in the taxes etc.?