Earlier this Tuesday, executives from leading oil companies were criticised by Democrats and Republicans in Washington. This criticism was aimed at the oil company’s higher corporate profits and their inability to invest in renewable energy. Recently, Big Oil has been trying to save all that it can from the government tax subsidies. However, it has also been involved in maintaining record profits. Their profits reached a staggering $123 billion in 2007. Oil and gas companies earn 8.3 cents per dollar for every sale they make. Where as, corporations listed on the Dow Jones earn 7.8 cents per dollar for each sale. Exxon Mobil and Chevron are the only two oil firms in line with this Dow Jones trend. However, Exxon Mobil has been paying higher taxes lately. Their effective tax rate was 44% in 2007. The other eighty US companies have been paying approximately 30% in taxes. Exxon Mobil had to pay taxes that went beyond their total earnings and exceeded their revenue by $19 billion.
Last year, Exxon Mobil earned $40.6 billion which is to date the highest profits earned by an American company. Exxon Mobil’s Senior Vice President Stephen Simon said that, his company is depending on large profits in order to meet their future oil development goals. Simon further added that, "We depend on high earnings during the up cycle to sustain this level of investment over the long term, including the down cycles," in his appearance in front of the House panel. Simon maintained that oil companies are paying record taxes. However he felt that any increase in taxes “will discourage the sustained investment needed to continue safeguarding U.S. energy security."
The lawmakers felt that Exxon Mobil has used most of their profits to gain a stronger position in the stock market. They have used their recent earnings to repurchase stocks. This has increased the value of their remaining shares. The democrats defended the public by saying that high earnings have resulted in fed up consumers who are dissatisfied with the current economic situation.
The House panel intervened when the price of regular unleaded gasoline jumped to a record level of $3.29 per gallon, Tuesday. This was accompanied by rising oil prices that became as high as $111 per barrel. However, they settled back down at $100 per barrel. Analysts are already predicting that during the summer driving season, gas prices can increase to $4 per gallon. However this rapid increase in oil prices has resulted in public protests. Truck drivers have been protesting across the country. Their main concern was the rising price of diesel fuel. Truck drivers lamented that they had trouble keeping up with expenses because of $1000 fill ups for their trucks.