Comparing relative profit: American oil and gas companies

http://dailycaller.com/2011/04/25/the-truth-about-americas-oil-gas-...

 

I would like to use this article as an opportunity to further address the idea that "Big O&G" is somehow "in the wrong" based on the idea that they make too much money, or that they "gouge" the public, and so forth.  Bear in mind as there are very few absolutes in the real world, things like refining margins and who-knows-what-else play a direct role in this discussion and I would love to hear some of the professional's thoughts on the matter in this thread.  Also if anyone has other information that has convinced them O&G companies are somehow immoral, or too subsidized, or whatever, from a source they think is at least as credible as the federal government, we can compare it's relative "truthiness" to the very simple case laid out in the article above.

 

One more thing I would like to say about this, every time we begin to get to the point of widespread support for increased drilling in general, for the last 40? years we always hear "it will take too long to help, it won't help at all because we don't have enough resources," et cetera.   Well, we now have access to sufficient resources to make an enormous difference.  If we're going to throw massive amounts of borrowed money at new technologies we should also be doing as much as we can on what we KNOW will work.  Drill it all and drill it NOW.  The world is starting to pass us by, as our buying power as a nation shrinks and overseas demand for O&G grows.

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Permalink Reply by essay on May 3, 2011 at 4:49
Permalink Reply by essay on April 26, 2011 at 9:54
seems to me that's a bit of cherrypicking data out of cherrypicked data, 2010 was an anomaly for CHK (and probably other O&G's, plus GE to boot)
Permalink Reply by essay on April 30, 2011 at 16:31

now that all that is out of the way i guess i'll keep the discussion going, watch out for some of the comments in the link it might get political.

 

http://seekingalpha.com/news-article/1003005-obama-rising-gas-price...

 

note opec is suddenly on the periphery, we're now going to "prompt" them to produce more sulfurous, heavy crude that the refineries would probably lose money on at this price.

 

also i wonder, how much of the price we pay at the pump is taxes, vs. how much is profit?  probably wouldn't be all that much trouble to figure for somebody who knew what they were doing, but i'll just take a wag and say taxes by a lot.

Permalink Reply by Robert Duke on April 30, 2011 at 19:28

I think it averages about 40 cents a gallon is all for gasoline - at least according to various online sources.  I did not troll around enough to be sure the numbers are solid, but this is a govt. source:

 

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/petr...

 

Permalink Reply by Robert Duke on May 1, 2011 at 4:46
Hmmm, looks like the "other taxes" category that the DOE did not report account for the additional 8 cents or so.  I actually remain surprised that the overall tax bite is as low as it is (not that I love getting taxed), but I understand later arguments about it being significantly higher than actual profits.  Here in Washington we have a sales tax of 9.5 percent (in Seattle area), which is not added to gasoline, but if it was, would hit almost 40 cents with $4.00/gal gas (so the tax rate is just a bit steeper on gasoline than everything else - actually, our rate on gasoline is also above the national avg, but we don't have an income tax).  I have been inclined to think that one problem government agencies have with CNG as a fuel is that there is not a model for taxing the stuff if folks fill up at home...
Permalink Reply by Robert Duke on May 1, 2011 at 5:39
In regard to taxes on natural gas delivered to the home here in Washington, they add 3.85%.  So that is a significantly lower tax rate than on gasoline (say roughly half), and a dollar spent on natural gas is going to go at least twice as far (actually further for home-sourced NG:  Quick analysis - I pay $1.07 per therm, and a therm is energy equivalent to 0.8 gal of gasoline.  So NG from the home in WA state currently would cost you $1.34 per gasoline gallon equivalent.  Sounds good to me, as we are currently around $4/gal for gasoline...  This $1.07 per therm includes all charges except what is effectively a $10/month flat billing charge.  Note that at $1.07/therm the cost of 1 MCF NG is about $10.00 - about 2.5x the wellhead price).   So two points:  1) the effective tax revenue per btu fuel would be reduced to roughly one sixth of the current revenue, and 2) the revenue is not earmarked for roads and what have you (I need to go look at the allocation of gasoline taxes info you all posted to understand how big a deal this really is, I suppose).
Permalink Reply by LP on May 1, 2011 at 5:55

Hmmmm....very interesting.

Maybe this is what is causing the stall and lack of enthusiasm in Congress. NG would/could reduce the revenue received through transportation taxes.

Interesting idea. 

Permalink Reply by Max on May 1, 2011 at 5:19

I have been inclined to think that one problem government agencies have with CNG as a fuel is that there is not a model for taxing the stuff if folks fill up at home...

 

I believe they're already scratching their heads over that one.

Permalink Reply by essay on May 1, 2011 at 16:33
my perception is that in-home fueling will never happen on any large scale, call it a hunch
Permalink Reply by LP on May 1, 2011 at 0:19

Regarding the amount of taxes per gallon of gasoline, the state tax varies per state. Federal tax is the same. Here is a chart of gas taxes per state from 2009.

 


Taxes on Gasoline and Diesel for Transportation by U.S. State in U.S. cents per gallon as of July 2009[3]
State↓ Gasoline Tax (includes federal tax of 18.4¢/gal)↓ Diesel Tax (includes federal tax of 24.4¢/gal)↓
US Average 47.0 51.4
Alabama 39.4 46.3
Alaska 18.4 24.4
Arizona 37.4 43.4
Arkansas 40.2 47.2
California 64.5 68.9
Colorado 40.4 44.9
Connecticut 59.3 69.5
Delaware 41.4 46.4
District of Columbia 38.4 44.4
Florida 52.9 54.2
Georgia 31.4 37.3
Hawaii 62.7 70.8
Idaho 43.4 49.4
Illinois 57.2 64.4
Indiana 52.2 65.9
Iowa 40.4 47.9
Kansas 43.4 51.4
Kentucky 40.9 43.9
Louisiana 38.4 44.4
Maine 49.4 56.6
Maryland 41.9 48.7
Massachusetts 41.9 47.9
Michigan 53.1 55.1
Minnesota 45.6 51.6
Mississippi 37.2 43.2
Missouri 35.7 41.7
Montana 46.2 53.0
Nebraska 45.7 51.7
Nevada 51.5 53.0
New Hampshire 38.0 44.0
New Jersey 32.9 41.9
New Mexico 37.2 47.2
New York 63.4 67.7
North Carolina 48.6 54.6
North Dakota 41.4 47.4
Ohio 46.4 52.4
Oklahoma 35.4 38.4
Oregon 42.4 48.4
Pennsylvania 50.7 63.6
Rhode Island 51.4 57.4
South Carolina 35.2 41.2
South Dakota 42.4 48.4
Tennessee 39.8 42.8
Texas 38.4 44.4
Utah 42.9 48.9
Vermont 41.7 50.4
Virginia 37.8 43.8
Washington 55.9 61.9
West Virginia 50.6 56.5
Wisconsin 51.3 57.3
Wyoming 32.4

38.4

GASOLINE TAX MAP JANUARY 2011

 

Permalink Reply by essay on May 1, 2011 at 0:46

boy was i naive, turns out from the outside looking in trying to estimate any sort of average profit per gallon of gas is somewhere between "heroic, and incredibly misguided."  the only thing that seems to be agreed upon is that the government makes more per gallon than the independent refiners, and it "might" be a tossup for the big players depending on a lot of factors.  recently an exxon exec claimed they were only making about 7 cents per gallon earlier this year.

 

http://www.steelguru.com/middle_east_news/Exxon_and_Shell_profits_s...

 

is that accurate?  it was about what i expected to find, honestly.  i won't call the guy a liar, i couldn't prove it.  anyway, he did say "and other products" so it still doesn't give us much of an answer about gasoline specifically, but it's worth noting that the ratio of tax to profit is almost 6 to 1.  even if he were completely full of crap and it was double, even triple or quadruple that amount, the company would still  be making less than the various governments do on gasoline sales.

 

somebody stop me if my thinking is incorrect, seems to me that the government might be the one doing the gouging on a consistent basis.  i also think at least some of the more proactive state governments that happen to possess natural gas reserves know quite well they could tax natural gas as a transportation fuel even more than they tax gasoline and diesel, while still enabling their consumers to save money.

 

the era of clean and relatively inexpensive energy is here if only we grasp it, and i wish i thought the federal government could expeditiously facilitate such a change but alas, as i've said before, the states will have to lead the way.  our window of opportunity won't last forever.

Permalink Reply by LP on May 1, 2011 at 1:09

Your perception looks right to me.

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