RUSH: This is really going to make people mad. The oil companies are rejecting these accusations that they are gouging. That’s going to really make ’em mad. When Senator Durbin accuses you of gouging, you better agree with it or they’re going to do even more than want to see your books and force you to give your profits away. We’ve got the numbers here for ConocoPhillips. Their profit in the first quarter was $3.29 billion compared to ExxonMobil’s $8.4 billion, and so we can figure that the federal government made about — let’s round this up to $3.3 billion, so $6.6 billion on the gasoline. In fact, you know what? I’m shooting low on this. I’m going to start this again.
ExxonMobil’s profit was $8.4 billion in the first quarter, and there’s nine cents per gallon of profit in the sale of a gallon of gasoline. So it’s easy to figure. The federal taxes are 18 cents, so the feds get twice what the oil companies get in their profits. So the $8.4 billion profit for ExxonMobil translates to $16.8 billion that the feds get. But ExxonMobil then pays taxes on their profits. ExxonMobil pays taxes, so that $16.8 billion is actually larger by the time Exxon pays its taxes; same thing with ConocoPhillips — and, of course, the drive-by media is playing right along with this because the profit is one thing. But it’s the profit margin that you actually need to look at, and that’s where you can find gouging.
Now, the first quarter 2004 profit margin for most of Big Oil is about 8%. This first quarter, it was 9.4%. The first quarter 2004 was about 8% and the first quarter this year, 2006, is 9.4%, and that’s an increase of about 14% in the profit margin with an increase in revenue of 24%. They’re taking in a lot more money, but their expenses eat up almost half the gain. So if you wanted to suggest that they’re gouging, you would have to find evidence that their profit margin is skyrocketing, and the profit margin is not. Just looking at the number of dollars in the raw profit, you know, that’s the simpleton way, and that’s the way to get everybody all ticked off and everything.
It’s a big business, for crying out loud. What are they doing with all the profits? They give it to the executives when they retire is what they do with all the profits. I don’t know what they do. They pay it to their stockholders. They’re publicly traded. You know, Exxon shares, this profit adds a buck thirty-seven to the average Exxon shareholder per share. That’s one of the things they do with it. I’ll tell you, economics education is so woefully inept.
RUSH: You know, as I mentioned yesterday, folks, it’s not just ExxonMobil and Big Oil that are experiencing great economies and lots of profit. The economy is good, a lot of companies have profit. Microsoft’s profit’s are 38%, and nobody cares. Don’t give me this you don’t need Microsoft every day business like you need oil. It’s not the point. Just try these headlines. “GlaxoSmithKlein Profits Surge in First Quarter.” Big Drug! “Siemens Beats Expectations in Second Quarter, Eyes $1.86 Billion US deal.” Jackpot! “Harrah’s First Quarter Income Jumps 75%.” “Foreign Businesses Still Gung-Ho About USA, CEOs Say.” This is in USA Today.
There’s all kinds of great economic news out there, but “a Senate committee on Wednesday announced an investigation into taxes paid by Big Oil and asked the IRS for the company’s tax returns. A Senate finance committee promised a comprehensive review of the federal taxes paid by oil companies on their record profits last year. Senator Charles Grassley (R-IA) the committee’s chairman, said the panel was concerned about high profits and executive compensation at oil companies. ‘I want to make sure the oil companies aren’t taking a speed pass by the tax man.'” It embarrasses me. It just embarrasses me that Republicans are leading the effort, and it’s just pure election year politics.
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