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Bankrkuptcies, Profits, Subsidies, expectations.

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[quote user="schlimm"] And your feelings on the ~$4 Bil. tax breaks of various types that the oil companies receive annually? The sugar subsidy and restrictions on sugar imports? The list goes on and on, and these measures do little if anything to benefit the public, yet cost a bundle. [/quote] Oil company tax credits, deductions, and one-offs have nothing to do with passenger rail subsidies.   Corporations don't pay taxes.  Assuming the corporation has market pricing power, which is the case for the oil companies, inasmuch as people want their products and will pay practically anything for it, in part because they don't have a choice, the taxes are paid by the customers.  To the extent that they cannot be passed through to the customer, they will be worn by capital and, in some instances, depending on the elasticity of the labor supply, they may be worn in part by labor. Approximately 85 per cent of the so-called tax breaks enjoyed by big oil, if that is your definition of the oil companies, are the same as those that flow through to every company in the United States.  There are a few tax preferences, mostly associated with high risk drilling activities, that are unique to the oil and gas industry. Take them away and the price of the product probably goes up.  So the reverse is true.  So called subsidies flow back to the customers, although the split in the flow back between the customers and capital is debatable. Whether the credits, deductions, etc. are wise tax policy is another issue. In 2010 the 17 largest oil companies in the United States, all of which are listed in the S&P 500, had an average return on sales of 8.1 per cent.  Four of the companies lost money.  The average return on net assets was 3.5 per cent, and the average return on equity, which is a key indicator, was 6.5%.  This places the oil companies as a whole well below the norms for the S&P 500 with respect to return on assets and returns on equity.  Of course, this is seldom printed in the popular press.   The popular press usually focuses just on the two or three largest oil companies, where the returns are higher. And they don't even state the returns as a percentage of sales, assets, or equity.  They simply give the profits as if that is a meaningful number.  It is one of the worst forms of taking data out of context.
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