Stop Demonizing Oil Profits

Nicolas Loris / May 19, 2011

Last week, Members of Congress called big oil executives to the stand to defend the high profits their companies are making. Some in Congress are using high oil profits as a reason to propose eliminating what they label “oil subsidies,” despite the fact that what they call subsidies are broadly available tax breaks. You can get a breakdown in this paper: “What’s an Oil Subsidy?”

President Obama did the same in his weekly address. Even actor Leonardo DiCaprio is getting into the action, recently tweeting, “Big oil is making huge profits & getting billions in US taxpayer subsidies. End #oilsubsidies.”

The irony of course is that DiCaprio, a successful beneficiary of our system of free enterprise, ignores its strengths and virtues by demonizing profit. These attacks are misinformed and off-base. Demonizing profits ignores why profits matter and the ways free enterprise benefits all Americans. It also ignores the fact that oil and natural gas industry earnings, against their sales, are in line with other manufacturers and are in fact below the manufacturing average.

So while it’s easy for some politicians and outraged denizens of Hollywood to blast high profits for oil companies at a time when families are struggling, the reality is that profits are an integral part of our economy, including the oil industry. (more…)