Big Oil, Ukraine, and Taxes

Over the last month, I've watched magazines like Forbes praise Big Oil for pulling out of Russia because of the Ukraine invasion. Example:

Perhaps most surprising among the exodus has been the voluntary departures of western oil companies. In late February, BP said it plans to sell its 20 percent stake in the Rosneft, the Russian national oil company. Shell announced it would exit its joint ventures in Russia and stop purchases of Russian oil on the spot market. And Exxon Mobil declared it would close its operations in Russia and exit the Sakhalin-1 project, which the company helped launch, amid much fanfare, in the mid-1990s. (1)

All efforts to reign in the unforgivable Stalin-type actions of Putin’s Russia are important. Yet, we might well question the real motives behind the oil companies’ highly publicized reasons for doing so. Did the decision to pull out have anything to do with fears that Russia might nationalize oil assets? The possible repercussions in the multitude of countries where these companies drill for oil or sell their products, including those made from plastic? Or the fact that Europe and other parts of the world are committing to ending Russian oil imports?

Like all of us, I want Russia to withdraw its military from Ukraine. I want Putin to be held responsible for his brutal, outrageous invasion and all the war crimes he is alleged to have perpetrated. I want to believe that multinational companies, investors, and other businesses are leaving Russia in protest of the war. And I do believe that many of them are doing it for the right reason. But I’ve also learned to question motives, particularly in the case of Big Oil and other companies that have proven to focus almost entirely on maximizing their own profits, regardless of the environmental and social costs and the destruction to lives and property that they cause.  

Any of you who’ve read my books know that my job as an economic hit man taught me that there is almost always a story behind THE story.  The corporate propaganda machines are extremely effective at getting us to believe the stories they tell us. And most of us are gullible.  

As the White Queen said to Alice, “Sometimes I have believed as many as six impossible things before breakfast.”

So, before you give too much credit to Big Oil for ending business in Russia because they are the “good guys,” think about: 

Over the first three months of the year, Chevron reported $6.3 billion in profits, and ExxonMobil reported $5.5 billion in profits. Meanwhile, U.N. Secretary-General António Guterres has criticized how fossil fuel companies are responding to the war. In a tweet, he wrote, “Fossil fuel interests are now cynically using the war in Ukraine to try to lock in a high carbon future. A shift to renewables is crucial to mending our broken global energy mix & offering hope to millions suffering climate impacts today.” (2)

BP has become the latest oil giant to announce massive profits. The company made $6.2 billion in profits in the first three months of the year — that’s almost $3 million in profit every hour. (3)

And this:

Shell and BP, which together produce more than 1.7bn tons of greenhouse gases a year, have not paid any corporation tax on oil and gas production in the North Sea for the last three years, company filings reveal.

The oil giants, which have an annual global footprint of greenhouse gases more than five times bigger than Britain’s, are benefiting from billions of pounds of tax breaks and reliefs for oil and gas production. (4)

And these: 

Then there was Chevron. . .Despite a US pretax income of $4.5 billion—which would mean a new corporate tax rate of $954 million . . .Chevron paid about negative $181 million in taxes. That means the massive oil company will enjoy a tax rebate from the IRS. (5)

Large oil companies in the United States have been paying taxes at a significantly lower rate than most other corporations. The chief reason is that there are provisions in the U.S. tax code that allow energy companies to defer and avoid federal income tax payments.

The 2017 Tax Cut and Jobs Act also slashed the effective tax rate for corporations, and oil companies were among the biggest beneficiaries of the changes because of the ability to defer taxes. The industry also benefits from generous subsidies. (6)

Regular-grade gas prices reached $4.17 on Tuesday (March 8, 2022) — a 55.4 cent increase from a week ago, according to the American Automobile Association. This increase is in addition to the 40% year-over-year increase in gas prices as of the end of January. The cost of gas jumped by more than $1 per gallon in 2021, on average. (7)

The long and short of it is that if you pay taxes in the US, Great Britain, and many other countries, you are subsidizing Big Oil. If you buy gas, oil, or anything made of plastic, you are fattening Big Oil’s already obese bottom line. You are subsidizing and profiting an industry that is causing terrible pollution and climate change, destroying forests, deserts, and many other areas, spilling oil into the oceans and across the planet, and causing the deaths of millions of people, animals, and plants. 

These companies now are trying to convince you that they are the good guys because they are pulling out of Russia. 

Let’s do everything possible to end the horrors of the terrible, unforgivable war Russia is waging against Ukraine. But let’s not be duped into making heroes out of companies that wage war against life on this planet. 

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