Chevron paid $2.10 billion in U.S. income taxes, according to Kurt Glaubitz, spokesman for Chevron, with a 10 percent profit margin, which he said is lower than that of many industrial sectors. Glaubitz added that Chevron's effective tax rate was 43.9 percent in 2010.
Shell paid $6.08 billion and BP paid $6.61 billion in total global income taxes for 2010, according to their annual reports.
When asked about potential arguments from the oil companies in favor of keeping the current tax incentives or their inability to keep down rising energy prices, Hatch said in a prepared statement: "Turning [the hearing] into a political side show would be a disservice to the people of our nation who are suffering from soaring energy prices made worse by an administration that's declared war on American energy."
Scott Hodge, president of the Tax Foundation, a non-partisan tax research organization, said singling out particular companies or industries for punitive tax measures is "exceptionally bad" tax policy.
"You shouldn't use the tax code for what amounts to political retribution against a particular industry," Hodge said. "If you do that for oil companies, next it will be Pepsi and Coca-Cola for producing sugary drinks, or McDonald's for fatty foods. You start going down the list to use tax code to punish particular industries. Once that starts, you've started horrible precedent for the future."
Hodge said the profitability of the industry is irrelevant to the issue of whether or not we should keep or eliminate a tax break.
"The real issue is whether the tax provision is good tax policy or does it have distortionary and harmful effects on the economy," Hodge said.
By comparison to other industries, Hodge said, the oil industry receives very few tax provisions, at roughly $3 billion. The renewable energy industry receives more than $11 billion in tax breaks while state and local governments receive $13 billion, he said.
2010 CEO Compensation at Major Oil Companies, from Equilar:
1. Rex Tillerson (Exxon Mobil): $21.5 million
2. James Mulva (ConocoPhillips): $17.9 million
3. John Watson (Chevron): $14.0 million
The compensation for H. Lamar McKay, chairman of BP America and Marvin Odum, U.S. president of Shell Oil are not publicly disclosed figures. The CEO compensation figures of those non-U.S. based companies are $12.8 million for Peter Voser (Shell) and $6.8 million for Robert Dudley (BP).