Thursday, April 27, 2006

Profits and Subsidies.

In a piece regarding the Wright Amendment in Texas and it's attempt to stifle competition by Southwest Airlines, George Will quotes President Reagan who said:

"Washington's approach to intervening in industries is: If it moves, tax it; if it keeps moving, regulate it; if it stops moving, subsidize it.
A Bloomberg News piece picked up by the Washington Post notes that:
Exxon Mobil and other oil companies may benefit from $2.6 billion in subsidies in the energy bill that is nearing passage in Congress. The subsidies, designed to encourage domestic oil and gas production, were part of an oil industry "wish list," according to David Hamilton, the Sierra Club's energy programs director.
Fox News reports on the same Exxon Mobil and their profits:

Exxon Mobil Corp [...] reported [...] the fifth highest quarterly profit for any public company in history, posting gains from higher oil prices that were likely to stoke the furor over outsized oil company earnings.

Despite the 7 percent gain in earnings to more than $8 billion in the first quarter, Exxon Mobil said its earnings came in below its record fourth-quarter because all three of its business -- exploration and production; refining; chemicals -- didn't perform as well.
To recap: Exxon Mobil reported $8.5 billion (with a 'b') in profit for just the first quarter. As a reminder, a quarter is the first three months of the year, and profit is what they brought to their shareholders after expenses (for those that failed Accounting 101 the first time around). Net income minus losses is profit.

On top of that profit, they are expected to get an addition $2 billion (with a 'b') from the government as a subsidy.

The burning question: If Exxon Mobil had only profited $6.5 billion would it have made a difference at the pump?

These subsidies wouldn't even make sense to Reagan.

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