NEW YORK (CNNMoney) -- The top five oil companies in the United States made nearly $1 trillion in profit since 2000.
The Obama administration is eying that huge pile of cash as it looks for ways to pay for its renewable energy and energy efficiency programs.
But the oil industry wants the government to keep its hands off its cash, saying it already shoulders a massive tax burden. The industry says it has a tax rate of 48% -- one of the highest for any sector -- and pays nearly $100 million a day in state, local and federal taxes. That adds up to more than $36 billion a year.
The industry says that raising taxes on it would cost jobs and government revenue because drilling projects would get shelved or moved overseas.
In his State of the Union Address, Obama called for cutting over $4 billion in yearly in tax breaks for big oil companies.
The money would be used to pay for things like a $7,500 rebate for buyers of electric cars, investments in renewable energy R&D and tax credits and other incentives to make commercial buildings 20% more energy efficient by 2020.
"We need to get behind this innovation," Obama said during his speech. "And to help pay for it, I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don't know if you've noticed, but they're doing just fine on their own."
It's true that the oil companies are doing quite well on their own. In 2010 Exxon Mobil (XOM, Fortune 500), Royal Dutch Shell (RDSA), BP (BP), Chevron (CVX, Fortune 500) and ConocoPhillips (COP, Fortune 500) made a combined profit of $76 billion.
And that was a so-so year. In 2007 they made $124 billion.
"It's a mature, extremely profitable industry," said Seth Hanlon, director of fiscal reform at the Center for American Progress, the left-leaning think tank. Putting those tax breaks into renewables is "a much smarter way of using the resources we dedicate to our energy future."
There are nine tax breaks the administration is targeting, according to a Center paper, but four account for the lion's share of the money.
Domestic manufacturing tax deduction: This is the largest single tax break, and would save over $1.7 billion a year if eliminated.
The tax deduction, passed in 2004, is designed to keep factories in the United States. Companies that manufacture here can deduct 9% of their income from operations that are attributed to domestic production.
But some question if that incentive is really appropriate for oil companies.
"What are they going to do, move the oil field to the North Sea," said one staffer at the Center for American Progress.
No, but higher costs in the United States may make them move the drill rigs to the North Sea or some other place.
Eliminating the tax breaks "would actually discourage new energy projects and new hiring in one of the nation's most dependable job-creating industries," the American Petroleum Institute said in a statement, noting the industry currently supports over 9 million jobs.
The percentage depletion allowance: This lets oil companies deduct about 15% of the money generated from a well from its taxes. Eliminating it would save about $1 billion a year.
The deduction essentially lets oil companies treat oil in the ground as capital equipment. For any industry, the value of that equipment can be written down each year.
But critics say oil in the ground is not capital equipment, but a national resource that the oil companies are simply using for their own profit.
The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries. Altering this tax credit would save about $850 million a year.
Foreign governments can collect money from oil companies through royalties -- fees for depleting their national resources -- and income taxes.
A royalty would be deducted as a cost of doing business, and would likely shave about 30% off a company's tax bill. Categorized as income tax, it is 100% deductible.
Foreign governments long ago grew wise to the U.S. tax code. To reduce costs for everyone involved and attract business, they agreed to call some royalties income taxes, allowing oil companies to take the 100% deduction on a bigger slice of their bill.
Intangible drilling costs: This lets the industry write off about $780 million a year for things like wages, fuel, repairs and hauling costs.
All industries get to write off the costs of doing business, but they must take it over the life of an investment. The oil industry gets to take the drilling credit in the first year.
The industry claims it has an effective tax rate of 48%. An effective tax rate is simply the sum of all taxes paid -- federal, state and local -- divided by profits.
On paper, the five big companies operating in the U.S. have an effective tax rate of around 40%, said Anne Mathias, director of research at MF Global's Washington Research Group.
That's considerably higher than the U.S. average of 28%, and would mean a company like Exxon Mobil has a higher tax rate than 90% of U.S. corporations.
But Mathias said what they actually pay tends to be lower than what they report as their "effective tax rate."
She said companies can use various accounting techniques to mask their true tax bill, including adding a lot of expenses to their U.S. income statement, chalking up more royalty payments as income taxes, or keeping profits offshore.
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