Those Evil Oil Companies

by Crista Huff, Chief Analyst, Cabot Undervalued Stocks Advisor

 

The following is an excerpt from the weekly issue of Cabot Undervalued Stocks Advisor, a stock market newsletter that focuses on mid- and large-cap growth stocks. Learn more at www.CabotWealth.com.

 

Those Evil Oil Companies

A couple days ago, an attorney was talking at me on social media (not talking with me, because he wouldn’t address any of my points) about those evil oil companies and how they don’t pay their fair share of taxes; with his focus on all the government tax breaks from which oil companies benefit. As proof, he posted a chart showing that oil companies receive a total annual tax break of $3.93 billion for four various income tax deductions that he deemed to be unfairly advantageous to oil companies; thereby cheating the U.S. government out of income tax revenue.

Just in case any of my subscribers wants to invest in energy companies, but feel bad that perhaps those companies are cheating America, there are three things I’d like to point out about ExxonMobil (XOM):

1. ExxonMobil’s pre-tax net income, from 2012 through 2016, was $218.0 billion. After benefiting from approximately one billion dollars per year of those supposedly unfair income tax deductions, ExxonMobil paid $78.3 billion in income taxes, which amounts to a 35.9% tax bill.

2. ExxonMobil has approximately 71,000 employees. Some of those employees are married to other employees, so you can estimate that ExxonMobil supports at least 65,000 families, including their mortgages, cars, health insurance, children, tuition, food, clothing and birthday presents.

3. In addition to providing for 65,000 families, 43% of ExxonMobil’s income tax payments, totaling $33.7 billion, went to help people living in the U.S. If you use the government’s expense breakdown as described in this pie chart, ExxonMobil provided $18.0 billion dollars toward the healthcare of poor people and illegal immigrants, $11.0 billion toward education and $4.7 billion in welfare payments over the last five years. Bravo!

I know that there’s a faction of people in the U.S. who like to portray oil companies as “evil.” From my point of view, any company that keeps 65,000 families afloat, and also contributes an additional $33.7 billion dollars (over five years) toward the health, education and welfare of poor people, deserves a tip of the hat. Thank you, ExxonMobil.

Were you worried that buying shares of ExxonMobil and its energy peers was somehow contributing to America’s problems? Stop worrying. Our country has large problems, but coercing oil companies to pay billions of dollars in federal taxes is not one of them.

 

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Crista Huff is a stock market expert who has outperformed the S&P 500 index for the 5.5 consecutive years ending June 30, 2017. Send inquiries to research@goodfellowllc.com, or use the contact form at www.GoodfellowLLC.com.

Ms. Huff is President at Goodfellow LLC, and Chief Analyst at Cabot Undervalued Stocks Advisor.

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