No–despite the title of this post, it isn’t about the insanity of the GOP’s meltdown over Kevin McCarthy’s inability to round up votes to make him Speaker–that will have to wait for a resolution. (Meanwhile, pass the popcorn…)
This is about one of America’s insane public policies.
A few years ago, research for a book required me to look more closely at the federal budget than I had previously done–especially at our bloated defense expenditures, but also at the persistence of various subsidies that may (or may not) have been prudent in the past, but clearly are counterproductive in the present.
One of those continuing subsidies supports the fossil fuel industry to the tune of twenty billion dollars a year. (That’s the conservative estimate–others put the number even higher.)
It’s bad enough that the government is continuing to support the use of an energy source damaging to the planet at a time when those funds should be incentivizing a transition to green energy. It is absolutely unconscionable that our tax dollars keep flowing to an industry that is enormously–embarrassingly, obscenely–profitable.
An industry that is also shameless.
I’ve previously defined the Yiddish word “chutzpah.” It is the word that first came to mind when I read the following. (Okay, the actual first words that came to mind were too filthy to employ in this blog.)
Fresh off posting the highest quarterly profit in its history, the U.S.-based fossil fuel giant ExxonMobil sued the European Union on Wednesday in an attempt to stop the bloc from imposing its recently approved windfall tax targeting major oil and gas companies.
The Financial Times, which first reported the new lawsuit, noted that the challenge takes aim at the European Council’s “legal authority to impose the new tax—a power historically reserved for sovereign countries—and its use of emergency powers to secure member states’ approval for the measure.”
“The new tax is due to take effect from December 31 and will apply a levy of at least 33% on any taxable profits in 2022-23 that are 20% or more above average profits between 2018 and 2021,” the newspaper explained.
In a statement, Exxon spokesperson Casey Norton insisted the company recognizes that sky-high energy costs are “weighing heavily on families and businesses” but claimed the tax would “undermine investor confidence, discourage investment, and increase reliance on imported energy.”
Excuse me if I don’t sympathize. The tax would cost Exxon an estimated $2 billion through the end of next year—in other words, a fraction of the company’s 2022 profits.
Europe has experienced a mounting cost-of-living crisis, and passage of the windfall profits tax was intended to generate revenue to provide financial support to households and companies struggling with high energy costs.
Oil and gas companies like Exxon have been accused of exploiting global energy market chaos spurred by Russia’s war on Ukraine to hike prices and pad their bottom lines.
Ya think?
Exxon previously announced that the company had generated profits of $19.7 billion between July and September. That exceeded the profits of any other quarter in the company’s history.
Further evidence of corporate greed: the company has announced it will raise its dividends and expand its share buyback program, and it raised the pay of several of its top executives. (It increased the annual salary of CEO Darren Woods from $1.70 million to $1.88 million for the coming year.)
So–while consumers in Europe and the U.S. continue to struggle with elevated prices at the pump and with the inflation to which those elevated prices have substantially contributed, Exxon and its peers in the fossil fuel industry have chosen to reward their wealthy investors rather than contribute a small part of their bloated profits to the amelioration of problems they have helped to cause.
This revealing conduct joins the evidence that continues to emerge, showing that Exxon deliberately lied for years–actually, for decades– about what the company’s scientists knew about the climate crisis and the central role of fossil fuels in creating that crisis.
Congress probably can’t punish Exxon for those years of lies, but there is no excuse for continuing to subsidize an industry that continues to profit handsomely from knowingly harming the environment and spitting on the common good.
The windfall profits tax that Exxon wants to evade would cost the company a fraction of its profits, and an even smaller fraction of what American taxpayers fork over annually to the fossil fuel industry.
Continuing those subsidies makes about as much sense as handing a gun to the guy who came to rob you. it’s the definition of insanity.
Great article! Insanity Yes! $20 billion subsidy in our budget. What’s the figure for Alternative Fuels?
It’s insanity alright and living in Europe means higher heating costs. When we bought this house in 2018, we knew the oil fired furnace would need replacement so that’s what we’re doing next week. Bosch heat pump starting on Monday. It’s 40k$. We wanted it installed in October but supply chain caused delays.
Thanks for reminding us of other critical issues that often get lost as we watch the circus that republicans politics is trying to make of the House. As to those words you say aren’t fit for your column? As a fan of James Fell and his Sweary History I suspect the use of “those words” might not be as inappropriate as you believe especially with regards to the party that claims it wants to drain the swamp as it makes the swamp ever bigger, deeper and more toxic.
The ethanol industry is no angel either. They have managed to receive large taxpayer subsidies, force the fossil fuel industry to include from 10-15% ethanol in their gasoline mixes, and demand that auto manufacturers redesign engines to handle a higher percent of ethanol. They’ve accomplished all this while choosing to use fossil fuel in their ethanol manufacturing process.
Why do they use fossil fuel instead of ethanol to manufacture the ethanol that they have managed to force the public to purchase? Their answer – because fossil fuel is cheaper than ethanol!
This from Sheila, “Exxon and its peers in the fossil fuel industry have chosen to reward their wealthy investors rather than contribute a small part of their bloated profits to the amelioration of problems they have helped to cause.”
Some might say that these “bloated profits” by industry are the root cause of inflation. The Federal Reserve (Central Bank) machinations are completely reactionary and further the pain on working Americans with higher interest rates. The FED forces us into a recession.
And Jeffrey, BOTH political parties play this game along with the oligarchs.
#FollowTheMoney
Nancy, I have also read that it takes more energy to produce ethanol than it produces. How’s that for a kick in the shorts?
Shelia I’m right there with you regarding the oil company subsidies. Absolute insanity. How about a column on the other insane part of the US budget, the “Defense” budget. I’ve also read, been told, or whatever that each and every congressional district has one or more “defense” contractors within it’s boarders. How about that for an interesting “coincidence”. It’s way overdue that we recognize the “Defense” Department is not about defending the US, but exports war all over the Earth. I’ve seen first hand what happens and that’s why I have PTSD. Thanks for that “gift” from the US Navy and all those “defense” contractors.
Capitalism run amok. Gosh, all this unregulated capitalism could lead to… wait for it: Total collapse of world-wide economies. Who knew? Well, Karl Marx predicted that collapse if capitalism was allowed to run amok.
Fasten your seatbelts.
So many things this country “can’t afford” to do: Channel funds toward critical infrastructure; ensure affordable health care for all citizens; shore up shortfalls in education…the list goes on but I have only so much time and space. Meanwhile, we fling mega bucks at an industry that needs no subsidies and a military complex that spends most of its goodies on shoring up manufacturers of planes, etc., and not the people who are serving. Our system is obscenely skewed, and we taxpayers are obscenely screwed.
Who wouldn’t like to write their own profit margin?
These so-called investors continuously drive up the cost of fossil fuel using sleight of hand and chicanery. They buy contracts for the fossil fuels, but never take delivery! That way, it looks like there’s a shortage which drives up the cost of the fuel. When the cost is high enough, they sell the contracts. All on paper, none of them ever touches the fossil fuel.
This also happens with another necessity of life, food! Pork bellies, corn, wheat, soybeans, it’s all rigged to extort money from those who can least afford it, the consumer!
The law needs to be changed, that if an investor buys contracts for oil or other commodities, they must take physical possession or delivery of it and not just shuffle digital contracts around to make it look like there’s a shortage thereby continuously driving up the cost for the consumer!
All the while making obscene gobs of profit which hurts every single families bottom line! And, not just in this country of course.
Vernon’s comments on capitalism are spot on!
Wouldn’t it be something if a comparatively decent Republican member of Congress (if any are left) wrangled a deal with both Republicans and Dems to get elected Speaker of the House? Hey, dreams are free.
Wow! Only $1.88 million for the CEO of Exxon seems like chump change, especially when it’s compared to total compensation for that poor underpaid soul. I don’t have last year’s numbers, but in 2019 it was about $23 million. All of those stock buy-backs are increasing the price per share, which is a key factor in executive compensation.
Dare I say (or write) it? Nationalization. There, I dood it! Which comes first, buyback stock purchases, executive compensation, depletion allowances, subsidies by those gouged, or the United States of America (whose political underbelly is already under attack by the likes of Boebert, MTG, Jordan, and a guy who says his name is Santos)?
Although the fossil fuel industry is fighting tooth and nail to preserve the status quo, soon (if we are not already too late) we will have to go green or go – period, so the effects of such a public takeover are likely to be of relatively short duration during such transitory period.
So, Socialism? Communism? Hardly. I call it survivalism.
“Human-induced climate change and the war on Ukraine have the same roots, fossil fuels, and our dependence on them,” said Svitlana Krakovska of the Ukrainian Hydrometeorological Institute.
The global military industrial complex is codependent on fossil fuel to mobilize its aging fleet.
What to do to optimize our national defense capability alternative to subsidizing the oil industry that provides fuel for military air and ground inventory.
Not a salient argument for this blog and those who contribute ebullient seemingly erudite rants from the comfort of a recliner. What is the reasonable and prudent advice you gave to offer our military industrial complex? Be careful what you wish for?
And, Peggy:
“Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) paid their chief executives more than $22 million each last year, according to securities filings released on Thursday, the day after U.S. lawmakers accused oil companies of price gouging at a time of high gasoline prices.
Exxon paid CEO Darren Woods $23.6 million last year, up from $15.6 million in 2020. Woods also received a $3.1 million cash bonus, the filing showed.”
https://www.reuters.com/business/exxon-chevron-paid-their-ceos-over-22-mln-each-last-year-filings-2022-04-07/
California did,this when i lived in L.A. in 1979 i believe due some gas stations literally gouging customers in rural areas. the effect was immediate, the price in Calif droped overnite. face it,corps/and wall street believe they are above paying any tax for any reason. shareholder BS its a fact of funneling profit money to a few over the needs of those who,do,the work.the greed factor is like a blinder,it does a substantial work keeping the conversation away from the ignorant. the total cost of living is being
stabbed and drained because of,greed, may it be the loss of profits from the covid shutdown or any myth the greed factor wants promote. congress is the biggest reason why there is no control, name on me,ener who doesnt invest in the markets and gets a free return by those who get those profits. catch 22 jack,,,
The flaws of democracy, first encountered with Plato in high school in Key West.
Abuse of the commons, legislative capture, corporate secrets, corrupt justice and most importance, evolved greed and xenophobia.
We won’t pull out of this death spiral.
Enjoy your life now.
So with big boosts in CEO pay and payouts to shareholders, are the office workers at Exxon being told that the company doesn’t have enough money to raise their pay, and perhaps will have to make them pay more for their health insurance?
Just wondering.
Before coming to the lying part of today’s blog, I had intended to emphasize that in my reply. there is less need for that now,
and, I expect, people here know that these bastards are just following the tobacco industry’s playbook. AND no one is
ever held accountable! That’s insane as well.