Friday, April 11, 2008

Exxon Mobil: The Root of all Evil

Since the gas lines of the '70s, Democrats and Republicans have talked about energy independence, but nothing's changed — except now Exxon's making $40 billion a year, and we're paying $3.50 for gas. I'm (candidate's name). I don't take money from oil companies or Washington lobbyists, and I won't let them block change anymore. They'll pay a penalty on windfall profits. We'll invest in alternative energy, create jobs and free ourselves from foreign oil.

-Presidential Contender (who shall remain nameless)

In the very emotional debate over oil, our title suggests what at least a couple (we won’t name names) of the current Presidential candidates believe. One recently suggested that Exxon’s $40 billion 2007 profit should be subject to a windfall profit tax. Great idea!

Lets punish big oil, they are gauging us at $3.50/gallon. If we garnish their profits, surely we’d all be better off, and the price of gas will fall. We should also force them to contribute to renewable energy solutions, viable or not.

Its not sufficient enough that the evil Exxon empire paid $29.864 billion in taxes last year to Uncle Sam. Nor, that the government picked up another $1 billion in taxes paid on $7 billion in dividends Exxon paid shareholders last year. Nor that there's a $.184 per gallon federal tax on gasoline; not to mention the billions states receive through gasoline taxes.

Exxon's 11.32 percent net profit margin is obscene. Lets tax them to the point that it is no longer worth being in the oil business, no longer worth developing technology to find oil in very difficult to reach places. That will make us all very happy. We can all grow our own corn. Make our own ethanol, and we’ll never be beholden to big oil again.

*The author does not have a position in Exxon-Mobil, but does have a position in Vanguard's Energy Fund. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. The author will not trade any of the securities mentioned (buy, sell, short) for at least two weeks following the date of this post.

3 comments:

Anonymous said...

I can't quite tell whether you are being sarcastic or not? I think you are. Another point is this: Do the politicos think that Exxon will just swallow these new taxes? No, guess where they'll be paid...AT THE PUMP! By us! How's $4.25 a gallon sound?

KP CPA

Unknown said...

You can't tell if he's being sarcastic?! Are you brain dead?!

Clyde knows whereof he speaks and these politicians are the lowest of the low. God save us from solutions out of Washington! GO XOM!!

Anonymous said...

Sarcasm aside, volatility in oil patch prices is effecting refining margins.

The NYMEX May/June crack spread (gross refining margin) shrank by more than $6 per barrel to $33.21 as the result of this week's oil price rally. At that level, refiners capture a gross profit of 10% from each barrel of oil. The profit margin stood at 12.5% the previous week.

(The crack spread is monitored weekly by www.HardAssetsInvestor.com and updated after the release of the Energy Department's weekly inventory report on Wednesdays).

You can hedge against oil price hikes by using low-cost exchange-traded funds that track crude oil futures prices, such as the United State Oil Fund (USO), the United States 12-Month Oil Fund (USL), the DB Oil Fund (DBO), or their exchange-traded note cousin, the iPath S&P/GSCI Crude Oil ETN (OIL).