Democrats should be rooting for America’s oil and natural gas producers to succeed—the nine million people employed by the industry and millions of shareholders certainly are. Not cheering yet? You should be. In all likelihood, you are Big Oil.
Nearly half the population holds stock in oil and natural gas companies through pension funds—there are 145 million retirement accounts invested in oil and natural gas companies. The average value of these pension accounts is less than $55,000. 48.6 million American families hold IRAs that are invested in oil and natural gas companies—80 percent of these IRA holders earn $70,000 or less. All in all, corporate management owns 2.8 percent of oil companies; middle class Americans largely own the rest.
But Americans looking to retire comfortably aren’t the only ones pulling for oil and natural gas companies—so are the millions employed by the industry. Each well an oil and natural gas producer drills costs millions, sometimes billions of dollars. This money is spent purchasing drill bits from Wisconsin, steel from Pennsylvania, computers from California, and assets from every other state. Paying their workers a premium of $96,844, more than twice the national average, oil and natural gas companies ensure their employees are well compensated.
The pending Keystone Pipeline XL—an oil pipeline that would deliver crude oil from Canada to refiners in Oklahoma and Texas—is a great case study. Providing an immediate boon to the struggling Midwest, the project is slated to cost about $12 billion dollars and would create 13,000 construction jobs. Just as important is the ripple effect the Keystone pipeline would have on the larger American economy. The Keystone pipeline would create over 340,000 additional U.S. jobs between 2011 and 2015 in related manufacturing and service industries.
In fact, safely developing America’s natural resources would create 530,000 jobs by 2025. Unfortunately for unemployed Americans, the Obama Administration has effectively barred these jobs through prohibitive agencies like the Department of the Interior and Environmental Protection Agency. Instead of facilitating economic growth, Democrats and the Obama Administration have proposed job killing tax increases on an industry so many have come to rely on.
Yes, oil and natural gas companies make a lot of money, but they also pay a lot of taxes and create a lot of jobs. Contrary to rhetoric from the Left, ExxonMobil, America’s largest oil and natural gas producer, has a global effective income tax rate of 44 percent. Over the past five years, Exxon has paid $171 billion in global income taxes, an enormous sum.
Back at home, Exxon’s effective income tax rate over the past five years is 32 percent. Paying $21 billion in income taxes over the same period, it is hard to say that Exxon is not paying its “fair share.” But that’s not all; Exxon still pays the government royalty and lease payments, property taxes, excise and sales taxes on gasoline.
Paying nearly $100 million a day in income taxes, the oil and natural gas industry’s tax expenses average 48 percent, compared to 28 percent for other S&P Industrial companies.
Use whatever metric you want, oil and natural gas companies pay a lot in taxes—and they don’t ask for any help from the government. These employers don’t receive a penny from taxpayers to produce oil or natural gas. Raising taxes on these companies, as Democrats propose time and time again, would force producers to delay or scrap future projects as it becomes significantly harder for them to recover their investment costs.
So the next time you hear that ConocoPhillips or ExxonMobil made a few billion, sit back and smile, your retirement just got a little more secure.