May 04, 2006
OIL COMPANIES CASH IN ON TAX BREAKS
Caption: This oil magnate is sitting even prettier thanks to tax breaks passed two years ago. "Let them eat Vaseline," he says.
If you have been as worried as El Cabrero about whether oil companies are doing OK these days, you can relax. Not only is Big Oil cashing in on record prices, but a tax break passed in 2004 has turned out to be oil-fired gravy train.
According to the May 8 issue of Business Week,"The tax breaks were part of a 2004 law intended to benefit U.S. manufacturers. But oil producers, along with many other businesses, got in on the action. Profits from both oil produced domestically and foreign crude refined in the U.S. are eligible. 'There is no reason why they should have this deduction, except they have very effective lobbyists,' says Leonard E. Burman, co-director of the Urban-Brookings Tax Policy Center."
Just how much are the tax breaks worth? Reportedly, Conoco-Phillips saved $106 million last year. Business Week says the "provision has already cut taxes paid by oil companies by hundreds of millions of dollars and could be worth as much as $10 billion over the next decade."
You gotta hand it to those oil industry lobbyists. Selling this administration on tax breaks for oil companies--that's got to be a tough job.
GOAT ROPE ADVISORY LEVEL: HIGH BUT NOT AS HIGH AS OIL COMPANY PROFITS
by El Cabrero