[/align]INVESTOR'S BUSINESS DAILY
Posted 12/12/2008
Energy: Another day, another oil company fleeing the country. No, this isn't Ecuador, the banana republic that just defaulted on its debt after chasing out investors. It's the United States, and what we're seeing is self-defense.
Much political hay has been made in Congress about "unpatriotic" corporations that move operations abroad. Weatherford International is the latest, taking its headquarters from Houston to Switzerland. The oil services company said that it wants to be closer to its markets. But what it really meant was that it no longer saw the future in the U.S.
In a political atmosphere of blaming corporations, it's no wonder. Halliburton fled to Dubai in 2007. Tyco International, Foster Wheeler and Transocean International all went to Switzerland. As a pattern emerges, America's global standing diminishes, in part because it's based on the willingness of companies to invest. It's an especially bad sign when domestic companies flee.
"The U.S. is an important market," Weatherford CEO Bernard J. Duroc-Danner told the Houston Chronicle Thursday. But, "it's just a market. It's not the primary market."
How does that sound for a loss of global leadership? If that's not clear enough, try this: "In the hierarchical pecking order, (Houston's) not going to be Rome anymore."
What accounts for this vote of no confidence in the U.S.?
Start with the demonization of oil companies. Executives have been hauled before Congressional star chambers, held up to abuse and ridicule, and then blamed for high oil prices as if they wanted to kill their markets. Rising global demand, nationalizations and Congress' failure to open the country to drilling go ignored.
Huge companies such as Exxon Mobil, whose market cap exceeds the GDP of most countries, create $100 billion in earnings in quarters when oil prices soar. It looks high, but over the years, the industry's average returns, at 9%, are less than other industries.
Nevertheless, Exxon's profits are evidence of its success at extracting oil from miles below the earth's surface, even underwater, and from unbelievably hostile environments, such as the Arctic. Instead of being objects of national pride for their productivity and efficiency, and subjects of heroic Hollywood movies, their success is considered to be dishonest.
Congressional hostility affects oil companies' operations abroad, too: Exxon, remember, noted that Congress' animus toward oil profits directly encouraged Hugo Chavez's uncompensated expropriations of $1 billion of Exxon's assets in Venezuela, which drove oil prices higher.
With an expanded Democratic Congress and an incoming Democratic president determined to create "patriot corporations," it's no surprise to see companies try to get out while they can. Make no mistake "” it's investment fleeing the country. As this goes, foreign capital could flee next.
Congress' abuse sets the political tone for the worst to come.
First, oil companies, like all corporations, endure the second-highest taxation in the developed world (39.25% of their income), which dampens their competitiveness. The 2007 OECD average is 27.6% and falling. Worse still, U.S. firms are taxed on operations around the world, unlike the global standard, making a move of headquarters a defensive move.
Meanwhile, politicians openly say they want to hike taxes on oil firms. President-elect Obama seems to have backed off, but questions remain as to whether he can stand up to a rapacious and economically ignorant Congress that hasn't.
Second, Big Labor is feeling its oats, swaggering confidently with newfound political power. United Steelworkers approved a "national oil bargaining policy" for higher wages and beefed up its "strike defense fund," both of which point to plans to squeeze oil companies, if not launch strikes.
"You have to prepare your membership for 2009," according to USW International Vice President Gary Beevers on a union Web site. "The oil companies are ready for us; we have to be ready for them." With Congress at their back, oil companies are unlikely to lose.
None of this portends well for the U.S. business environment. That's why top-performing firms, such as Weatherford, are exiting. Until Congress learns to appreciate and value oil firms, this will continue, leading to less U.S. investment and influence as more competitive climes beckon.
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John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
RE: Oil Companies Voting With Their Feet (the way it should be)
Of course this is happening, although, this is the very thing that has been allowed to happen in the past years, that needs stopped. Alot of this could have been stopped by placing regulations and penaltiesback into play.
RE: Oil Companies Voting With Their Feet (the way it should be)
Quote:
ORIGINAL: RainmakerIII
Of course this is happening, although, this is the very thing that has been allowed to happen in the past years, that needs stopped. Alot of this could have been stopped by placing regulations and penaltiesback into play.
Please explain exactly how you stop a company from fleeing high taxes and punitive regulations by imposing even higher taxes and more regulations on them? This I got to hear, please enlighten us and educate everyone here.
__________________
John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
RE: Oil Companies Voting With Their Feet (the way it should be)
Quote:
ORIGINAL: Fieldmouse
Quote:
ORIGINAL: RainmakerIII
Of course this is happening, although, this is the very thing that has been allowed to happen in the past years, that needs stopped. Alot of this could have been stopped by placing regulations and penaltiesback into play.
Please explain exactly how you stop a company from fleeing high taxes and punitive regulations by imposing even higher taxes and more regulations on them? This I got to hear, please enlighten us and educate everyone here.
FM, in case you have a short memory, these corps have not been paying their fare share. They have been skating and raping and using every loophole to dodge the laws that are in place. These companies are to entrenched to give up the American investment and economy. With penalties and trade laws put into effect, minus any loopholes, regulation on conduct, you would see alot diff reaction from these corps.
Edit: the copy/paste below didn't work in it's table form. View it at the link.
Table 1. ConocoPhillips, Chevron and Exxon Mobil"™s 2005 Profits in Perspective
[align=center]Annual 2005 Data (totals may not add due to rounding)[/align]Company[align=center]Income Before Income Taxes ($ billions)[/align][align=center]Corporate Income Tax ($ billions)[/align][align=center]Net Income ($ billions)[/align][align=center]Effective Corporate Tax Rate[/align][align=center]Earnings Per Share[/align][align=center]Corporate Income Tax Per Share[/align][align=center]Corporate Income Tax Per Employee[/align]ConocoPhillips[align=right]$23.5[/align][align=right]$9.9[/align][align=right]$13.5[/align][align=right]42.1%[/align][align=right]$9.71 [/align][align=right]$7.11[/align][align=right]$276,732[/align]Chevron[align=right]$25.2[/align][align=right]$11.1[/align][align=right]$14.1[/align][align=right]44.0%[/align][align=right]$6.58[/align][align=right]$5.18[/align][align=right]$198,179[/align]Exxon Mobil[align=right]$59.4 [/align][align=right]$23.3[/align][align=right]$36.1[/align][align=right]39.2%[/align][align=right]$5.76 [/align][align=right]$3.80[/align][align=right]$271,269[/align]Total[align=right]$108.2[/align][align=right]$44.3[/align][align=right]$63.8[/align][align=right]41.0%[/align][align=right]$6.59[/align][align=right]$4.58[/align][align=right]$249,336[/align]
Looks like 4 out of every 10 dollars went to the gov't in 2005. Looking for more current data, though. Maybe you could back up your claim?
RE: Oil Companies Voting With Their Feet (the way it should be)
I asked for evidence. This is a quote from your article:
Quote:
The GAO study did not investigate why corporations weren't paying federal income taxes or corporate taxes and it did not identify any corporations by name. It said companies may escape paying such taxes due to operating losses or because of tax credits.
Care to provide the evidence that Oil Companies do not pay their fair share? I showed that since 2005, they do.
Oil Companies Voting With Their Feet (the way it should be)
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