There was an excellent comment left by Ken Bouley a while back when I babeled on the difference between U.S. and European gas prices that got me thinking: How much money are the various governmental agencies in the U.S. collecting in tax revenues from petroleum-related activities?  While there are still angles and pieces to this equation that I have not yet drawn conclusions, there is certainly enough enlightening information to share.  Let us begin with the tax receipts that are gleaned directly from income taxes on American oil companies and the per gallon Excise tax levied at the pump.

Dollars in thousands

The Big Three U.S. Oil Companies (ExxonMobil, Chevron, ConocoPhillips) account for a combined $54.7 billion in income taxes paid to the government.  There were nine other U.S. oil companies for which I was able to find financial information, and those account for the Income Tax - Other Oil Companies category at $11.1 billion.  The Gasoline Taxes at $4 per gallon is calculated using the same estimate from the U.S. versus European Gas Prices blog.  The per gallon average tax rate of $0.44 cents is multiplied by the estimated annual comsumption of gasoline in the U.S.  Ultimately, there are $130.1 billion in income taxes and excise taxes collected directly from petroleum and gasoline operations.  Note: this excludes the taxes levied on your natural gas bills, electricity, and the portion of Individual Income taxes that go to providing government vehicles with gasoline and buildings with natural gas.  It also excludes payroll taxes collected from U.S. citizens who work for oil companies.  Either way, $130.1 billion collected in gasoline and other petroleum taxes is a daunting number, but what does it mean in the context of the U.S. government’s total tax receipts picture?

Dollars in thousands

The taxes collected by the oil companies ($65.9 billion) accounts for 17.8% of all Corporate Income Tax collected by the U.S. government in 2007.  Twelve companies out of the countless thousands in the U.S. account for almost one-fifth (1/5) of the total income taxes paid by all Corporations.  The estimated amount of excise taxes collected ($0.44 per gallon in your pump price) at $64.2 billion accounts for approximately 98% of all excise taxes collected.  Examples of other excise taxes are: taxes levied on alcohol, tobacco, and firearms.  In the big picture of total tax receipts, the $130.1 billion described above accounts for 5.1% of all taxes collected by the U.S. government.  Now, how are these funds being appropriated by the government?

Dollars in thousands

The U.S. Federal Government is operating at a deficit, as shown above, but the deficit figure displayed may not be the official figure because of adjustments the IRS includes such as uncollected taxes which are not accounted for in this analysis as that is an immaterial issue for this discussion.  The total funding dispersed to Transportation and Energy equals $100.4 billion in 2007.  The direct taxes received from petroleum activities in 2007 were $130.1 billion.  This leaves a gap of over $29 billion between taxes collected and what is appropriated to government activities directly related those taxes.  The $29 billion is going to cover losses on other government budget items.  This is, of course, how most corporations work as well: you cover your budget overages in some areas with budget surpluses in other areas.

However, this does not account for the quality of the decision to have a surplus in any one area.  The reason that there is a surplus in the transportation spending versus the taxes collected relating to it, is because there are a series of decisions made to not repair or upgrade certain sections of the infrastructure.  So, the surplus is being created from a lack of funding for construction that keeps roadways structurally safe.

There will be more analysis to come, this was an intial look at the tax-picture of gasoline and oil in the U.S.  It is very interesting that the government has been complaining about big oil’s profits recently, especially since they are getting over $65 billion in income tax revenue from their operations.  The Excise tax is being bolstered significantly as well because it is a percentage of the price at the pump.  That means the bigger the price tag at the pump, the higher the per gallon excise tax as well.  Somehow I doubt the government is really concerned about the increased petroleum prices because they are profiting on a scale even larger than the oil companies.

Popularity: 26% [?]