Oil Profit Hypocrisy

Oil prices are outrageous! Oil companies are making unfair profits off the backs of the regular Joe! The government needs to do something!

At least thats what the Main Stream Media would have you think based on the leading news coverage of this story.

Now, are prices high? Yes, but only in comparison to what we are used to paying. We have been relatively spoiled over the last 25 years to have had low gas prices.

But because of the shock, enterprising politicians want to step in and "help" us by investigating "record profits".

Now Governor Crist is calling for a Congressional investigation into big oil companies and their record profits.

So far, 21 other governors across the nation have joined him.

Now would it surprise you to learn that they might be doing this to distract attention from their own profiteering?

Check out these fun facts from earlier this year:

ExxonMobil's Record Profits -- And Record Taxes
by Jonathan Williams
February 2, 2007

Today, ExxonMobil reported the largest corporate profits in U.S. History. From Yahoo Finance:

"Oil giant Exxon Mobil Corp. on Thursday posted the largest annual profit by a U.S. company -- $39.5 billion -- even as earnings for the last quarter of 2006 declined 4 percent. The 2006 profit topped the previous record, also by Exxon Mobil, of $36.13 billion set in 2005." [Full story]

While they were recording record profits last year, they were also writing checks to Uncle Sam to the tune of $100.7 billion -- two and a half times what they made in net profit. In fact, previous Tax Foundation research found that from 1977 to 2004, federal and state governments extracted $397 billion by taxing the profits of the largest oil companies and an additional $1.1 trillion in taxes at the pump. In today's dollars, that's $2.2 trillion.

So who is really making the obscene profit here??? Federal and State govts are a leech on the normal capitalistic activities of the oil companies, and get to make out like bandits.

Note in this graph from 2005 how taxes have always outstripped corporate profits:


But for arguments sake (ignoring the dozens of other factors influencing pump prices), lets say that the oil companies are engaged in criminal collusion and price gouging in order to rake in the money. Would that not make the very politicians calling for investigations complicit accessories in the fraud? You're darn tootin' it would.

However since there is remote chance that such gouging exits, it simply makes the politicians self-serving hypocrits who desire to deflect the ire of an upset public away from themselves, and on to a convenient target.

Why should we be surprised.....

UPDATE: See Update #4 at Hot Air for good perspective on how oil prices tend to work.