“We need to guard against premature, reactive change to regulation and legislation,” Swiger told a news conference. “We shouldn’t jump to conclusions and introduce regulation without fully understanding what happened.”

Government officials should allow the investigation into what caused the spill to be completed, then have a pragmatic discussion of what may or may not need to change, he said.

Since the oil spill began in late April, Exxon Mobil has provided technical assistance, specialists and equipment to aid BP’s cleanup and containment efforts, he said.

Earlier, Swiger tried to dispel the notion that the E&P industry’s environmental standards are inadequate while addressing the 15th Asia Oil & Gas Conference: “The reality is that our industry has consistently improved environmental performance while working in increasingly challenging locations…Some claim the era of easy oil is over. In fact, it never really began,” he said. “Our oil industry has only made it look easy over decades.”

As demand for petroleum increases, producers have had to continually exploit previously untapped sources, he said.

Global energy demand is expected to increase by more than 35% by 2040 compared with 2005, led by growing demand from developing countries from regions such as Asia, he said, noting that between 2005 and 2030, energy demand in non-OECD (Organization for Economic Cooperation and Development) countries is expected to grow by 65%, while growth in the OECD will remain essentially flat.

BP’s containment cap is capturing an increasing amount of oil spewing from a ruptured Gulf of Mexico well, but the U.S. admiral leading the government relief effort said on Sunday the coast will be under siege from the massive spill for many more months. BP said at the weekend its latest effort had captured 10,500 barrels of oil (439,950 gallons/1.67 million litres) in 24 hours and a second containment system should enable it to soon control the vast majority of oil spewing from the leak about 1 mile (1.6 km) below the water’s surface.

Here’s a simple question in Economics: If Exxon Mobil, the largest U.S. energy company, made a profit of $35 billion, and if the income tax paid is $15 billion at a tax rate of 47%, how much did it pay to the IRS? The answer is, according to a report published recently in Forbes magazine, zero.

How come the results when 47 percent of the profit had been paid as taxes? Well, it helps to have wholly owned subsidiaries domiciled in countries such as Bermuda, Cayman Island and Bahamas to pipeline cash flows from operations in Azerbaijan, Abu Dhabi and Angola.

The report, as expected, created a huge outcry in the media as well as among the general public when it detailed the taxes paid by corporations in the US last year. Truly, Exxon is not alone. GE submitted a mammoth 24,000-page tax return and managed to avoid income tax for profits worth $10.3 billion last year.

Likewise many companies though benefiting from corporate welfare in the U.S., use tax shelter practices to send their earnings overseas. According to a report by the Government Accountability Office (GAO), 2008, two out of three US companies paid no federal income taxes from 1998 through 2005. The report had covered 1.3 million corporations in the US with collective sales of $2.5 trillion.

So to the important question: Is it illegal to do so? No, not at all, in fact, it’s well within the purview of law. Under Net Operating Loss Carry forwards (NOLs), if a company makes a profit of, say, a million this year but incurs a loss of a million the next year, the previous year’s loss could be tallied against the gain. Thus a company could get a zero tax liability in the US. It’s the same story in the case of foreign tax credit too.

The foreign tax credit is applied to situations where the company has already paid taxes elsewhere in the world. This is done by the IRS to prevent double taxation for corporations. Thus there is a choice of tax credit or deduction against the US taxes. If a corporation pays over the US corporate rate of 35%, that could offset the tax in the US. Since in Exxon’s case the rate was 47% it helped the company offset the income tax in the US.

Since the news broke out, Exxon has clarified that it had paid substantial income tax to the U.S. Treasury in 2009, and that it had overpaid taxes in 2008. The company says that it was expecting a significant income tax liability for 2009. Still, unclear is the actual income tax liability as the company hasn’t disclosed it so far. Besides, the company has recorded U.S income tax benefit of $46 million, with non US income taxes accounting to $15.165 billion.

The company’s 2009 Financial and operating review, states, ‘strong earnings of $19.3 billion in a challenging business environment’ with ‘sales and other operating revenue include sales-based taxes of $26,936 million for 2009′.
Still, some points to ponder upon:Last month the unemployment rate in the US was 9.70%. Exxon Mobil provides stable jobs 79,000 employees- as of march 2009. These 79,000 employees pay income and property taxes, a taxable bounty to local government. If Exxon had to pay income taxes it would most likely shed some of its 79,000 workforce, which would have a devastating effect on families and the local economy (schools, hospitals, etc…) Society may better off not taxing the company but its employees instead. Taxes paid by Exxon employees are taxes paid by exxon indirectly through salaries. This is accounts for billions in Federal tax revenue generated by Exxon, which usually isn’t reported by mainstream media Most of the profit earned by the company was from operations abroadThe company hasn’t done anything illegal. Ultimately, it is for the US government to plug all loopholes in the tax extraction process.

Ironically the oil giant has agreed to pay $32.2m in a settlement with the US government, last week. This is to resolve claims that the company intentionally and falsely reduced royalties for natural gas from Federal and Native American leases. The company, it seems, had claimed deductions for money spent on transporting the gas, and had understated the value of their natural gas production every month.

Exxon Mobil, meanwhile, continues to lament its increased tax burden saying that additional taxes raise prices and reduce supplies. It says its U.S. tax burden is already very large, that for the first three quarters of 2009, the worldwide income tax rate had increased to over 48 percent with total tax obligations exceeding $59 billion. “From 2004 to 2008 our earnings grew by 79 percent, but our income taxes grew by 130 percent” says the oil giant.

And the clincher, “Imposing punitive taxes on American energy companies, which already pay record taxes, would discourage the sustained investments needed to safeguard U.S. energy security.” True, we do need investment in the energy field but not by denying income to the government.

And, though, Exxon boasts of ‘record performance in workforce safety that continues to lead industry’, check this: Last month, the company was ordered to pay $1.2 million to sixteen Louisiana workers for exposing them to dangerous radioactive materials while cleaning used oil drilling pipes between 1977 and 1992. Looks like words hardly match the deeds-What do you think?