Stratospheric Retirement Packages: Go Figure!
Commissioner Tommy Adkisson
September 11, 2006
According to ABC News, "Last year, Exxon made the biggest profit of any company ever, $36 billion, and its retiring chairman appears to be reaping the benefits.
"Exxon is giving Lee Raymond one of the most generous retirement packages in history, nearly $400 million, including pension, stock options and other perks, such as a $1 million consulting deal, two years of home security, personal security, a car and driver, and use of a corporate jet for professional purposes."
Much has been said about how this is all about the American private or "free" enterprise system as justification for such outrageous deals and the conduct that underlies these corporate activities. In the interest of rounding out the conversation, I thought I would share some information about public subsidies from our federal treasury given to the oil industry. With these public investments in mind, we should expect better stewardship of our precious energy resources.
15 Largest US Government Subsidies to the Oil Industry
The following list details the millions of dollars of US taxpayer money that the US government gives to oil industry in subsidies. Subsidies are sums of money given by the government specifically to support and/or stabilize industry. They are given without any obligation to pay them back. All dollar amounts are in millions.
- Oil Defense: Defense operations to protect and secure Persian Gulf oil shipments and infrastructure.
US$10,459 - US$23,333
- Strategic Petroleum Reserve: Storage of crude oil to be used during price shocks and supply disruptions to stabilize domestic supply.
US$41,560 - US$5,427
- Foreign Tax Credit: Allows a portion of foreign tax payments to be credited against, rather than deducted from, US taxes due.
US$486 - US$1,057
- Accelerated depreciation of machinery and equipment: Allows machinery and equipment within the oil industry to be depreciated more quickly than their actual service lives.
US$720 - US$976
- Excess of percentage over cost depletion: Allows firms to deduct more than their investment in oil properties from their taxes.
US$335 - US$746
- Public liability for plugging, abandoning, and remediation of onshore wells: Annualized shortfall in bonding (insurance) levels needed to cover existing liabilities in on-going operations.
US$119 - US$451
- Accelerated depreciation of buildings and other rental housing: Allows buildings owned by the oil industry to be depreciated more quickly than their actual service lives.
US$234 - US$355
- U.S. Coast Guard: Water infrastructure (maintenance of coastal shipping; provision of navigational support; ice clearing)
US$308 - US$308
- Deferral of income from controlled foreign corporations: Allows oil companies to delay payment of U.S. taxes due on earnings from certain foreign corporations.
US$62 - US$303
- Low Income Home Energy Assistance: Assistance for low income energy consumers to buy oil
US$274 - US$274
- US Army Corp of Engineers: A government agency that maintains waterways heavily used by oil tankers and barges.
US$239 - US$259
- Expensing of exploration and development costs: Allows expenses related to multi-year oil well assets to be deducted from taxes in the current year rather than capitalized.
(US$146) - US$243
- U.S. Export-Import Bank: Subsidized loans and insurance to support the sale of oil-related equipment and consulting services abroad by U.S. corporations.
US$197 - US$241
- Royalty Under-collection due to Artificially Low Posted Prices: Under-collection due to use of below-market prices in computation of production value by integrated companies.
US$31 - US$130
- Tax break from federal/state interaction: State revenue losses from federal tax breaks due to basing state taxable income calculations on federal tax returns.
US$56 - US$119
- All other subsidies
US$724 - US$970
TOTAL VALUE OF TOP 15 SUBSIDIES
Excluding Defense: US$4,477 - US$10,889*
Including Defense: US$14,936 - US$34,323*
*The two numbers in each line item represents a range between the highest and lowest estimates of each specific subsidy.
SOURCE: "Fueling Global Warming: Federal Subsidies to Oil in the United States," by Douglas Koplow and Aaron Martin, Industrial Economics, Inc for Greenpeace, June 1998.
Meanwhile, consumers pay record high gas prices and taxes to assist this industry!