oil companies oil subsidies tax breaks company profits

The Commons Moment is Now
commons

LA Times on Big Business Subsidies

A mainstream newspaper spoke up for reason and fairness, just like some leftist reformers did. We trim, blend, and append three 2011 articles from: (1) Los Angeles Times, Jan 28, on subsidies by the editors; (2) AP, Jan 31, on Exxon by Chris Kahn; and (3) Common Dreams, Jan 24, on commons by Jay Walljasper, editor and chief author of All That We Share: A Field Guide to the Commons.

by LA Times Editors, by Chris Kahn, and by Jay Walljasper

Exxon Mobil Corp.’s profit in the first three quarters of 2010 was $21.2 billion -- during a worldwide recession. Other oil companies have had similar success, thanks to growing demand in India and China. Yet US taxpayers subsidize this industry to the tune of $4 billion a year.

This kind of largesse toward a hugely profitable business seems bizarre, especially at a time when the federal deficit is reaching alarming proportions.

Obama has been trying since his first year in office to cut oil subsidies, calling in his last budget request for the elimination of $36.5 billion in industry tax breaks over the course of a decade. Congress turned him down.

The oil industry and its backers claim that ending these breaks, such as a domestic manufacturing tax deduction and deductions for certain "intangible" drilling expenses, would cause oil and gas prices to rise. Yet a 2007 report by the Joint Economic Committee, which advises Congress on economic matters, found that ending the manufacturing deduction would have a negligible effect on consumer prices. That's because when crude is fetching high prices, as it has for many years and will for many more, companies have ample incentive to drill even without a subsidy.

Obama couldn't persuade Congress to end oil subsidies when it was controlled by Democrats, so it's even less likely he'll succeed now that the House is controlled by Republicans. It's still the right thing to do -- and if Obama can make more Americans aware of their government's generosity to oil giants, he can boost his chances.

To see the entire editorial, click here .

JJS: Just how badly oil extractors don’t need free money from us?

Exxon Mobil earned $9.25 billion in the last three months of 2010, its most profitable quarter since the record third quarter of 2008 which was $14.83 billion in the July-September period.

The largest publicly traded oil company said that net income grew 53% in Q4. Revenue increased 17% to $105 billion.

Global consumption of petroleum products increased during the quarter and oil prices rose 12% to an average of $85.14 per barrel.

Overall oil company profits are on the rebound from 2009. Chevron Corp. last week said net income soared 72% to $5.3 billion for the fourth quarter while ConocoPhillips reported a 54% jump.

For the full year, Exxon Mobil Corp. earned $30.5 billion. Annual revenue increased 32% to $383 billion. Exxon is the biggest US company by market cap, trailed by Apple Inc. and Microsoft Corp.

To see the whole article, click here .

JJS: While oil companies get to keep the value of oil in the ground, that income is not theirs. The profit that is theirs is what consumers pay for extraction, refining, delivery, etc -- for “adding value”. What people pay for oil in the ground -- for the right to suck it out -- that flow of money belongs to everyone equally, as does the entire worth of Earth. The rent for oil and for all natural resources is commonwealth and belongs in the global commons.

Today, it feels as though everything is for sale to the highest bidder -- from the names of sports stadiums to DNA sequences that make human life possible.

At the same time, a group of activists, thinkers, and concerned citizens around the world are rallying support for the idea of a commons-based society. These commoners see possibilities for large numbers of people of diverse ideological stripes coming together to chart a new, more cooperative direction for modern society.

After a long period in which the bulk of the left’s political work has been in reaction to initiatives from the right, activists across many social movements are now aware that an expansive political agenda will succeed better than narrow identity politics and single-issue crusades. This line of thinking also makes sense to some traditional conservatives who regret the wanton destruction of our social and environmental assets carried out in the name of a free-market revolution. In the truest sense of the word, the commons is a conservative as well as progressive virtue because it aims to conserve and nurture all those things necessary for sustaining a healthy society.

To see the whole article, click here .

JJS: The author places commons and markets in opposition. However, markets exist within commons, not only historically (the central marketplace was a common space) but also legally -- business takes place within the body of law (however one-sided those laws may be).

He also opposes commons to freedom. Like most people, he misses the difference between liberty and license. In the latter, anything goes, dog eat dog. But in the former, one is free because others are responsible, dutiful enough to respect the rights of one. So to promote the commons among ordinary people, it is not necessary for the left to alienate them and set up false dichotomies with other values people hold.

Finally, the author defines commons as parks, roads, and schools -- concrete items, “stocks” in economese. But he leaves out intangible items, flows, the most important being “rent” -- all the money that society spends for the nature it uses. If everyone got an equal share of the worth of Earth -- a la Alaska’s oil dividend -- then we all could easily identify with common spaces.

But merely calling some spaces “common” while leaving the immense flow of rents -- like oil revenue above -- in the pockets of a few is not going to bring about the world we want. Overlooking rents means leaving the elite in place, in charge of the state, with a widening gap between rich and non-rich. To topple class and hierarchy, and to make commons viable, once again we must address the basic issue of rent.

Perhaps the ecosystem can not be sustained outside of the commons. But if we’re to ever resurrect the commons, we must use geonomics and put the worth of Earth in it.

---------------------

Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

Who gets compensated? Who gets deceived?
http://www.progress.org/2010/oiltax.htm

Why Pay the Privileged our Public Money?
http://www.progress.org/2010/depend.htm

Simple solutions that can change the world
http://www.progress.org/2010/pollute.htm

Email this articleSign up for free Progress Report updates via email


What are your views? Share your opinions with The Progress Report:

Your name

Your email address

Your nation (or your state, if you're in the USA)

Check this box if you'd like to receive occasional Economic Justice announcements via email. No more than one every three weeks on average.


Page One Page Two Archive
Discussion Room Letters What's Geoism?

Henry Search Engine