Let’s step back for a moment from Congress’ fantasy that higher taxes on oil companies will lower gas prices, and look at a few facts about the oil and gas industry. Perhaps this will enlighten a few elected officials and calm some of the hysteria.   You can’t swing a dead cat without hitting a senator or representative blathering about a windfall profits tax on “big oil.” But if we do that, we should take the beverage, tobacco and pharmaceutical industries to the woodshed, because their profit margins were more than twice those of oil and gas companies in 2007. The average profit margin in the oil and gas industry was 8.3%, anemic compared to the 19.1% and 18.4% margins earned in the beverage/tobacco and pharmaceutical industries, respectively.   Oil and gas profits were even below the average margin for all manufacturing industries if the auto sector is excluded from the calculation.   [Place cursor over graph to enlarge]   In a world economy, U.S. oil companies aren’t the boogeymen many assume, and are small players in a very large market. Investor-owned oil and gas companies, both U.S. and abroad, own only 6% of proven oil reserves worldwide. National oil companies of foreign governments own 89% of the reserves.   A company-specific analysis of production and resource ownership paints an even more sobering picture of how dependent the U.S. is on imported oil, and the absence of pricing power that politicians ascribe to “big oil.” ExxonMobil seems to be viewed as the most nefarious pillager, so let’s take a look at that company.   ExxonMobil accounts for 3.15% of worldwide production of oil and gas. This places the company in a tie for seventh largest company with that oil and gas behemoth everyone loves to hate, Nigerian National Petroleum. By comparison, Saudi Arabian Oil controls 12.3% of worldwide production.   ExxonMobil’s share of worldwide reserves is a paltry 0.62%, slightly higher than the other two major U.S. investor-owned oil and gas companies, ConocoPhillips and Chevron. Saudi Arabian Oil controls nearly 20%.   So what about that windfall profits tax? If enacted, it will punish the very people politicians claim they want to protectmiddle-class Americansthat are shareholders in oil companies. Eighty percent of the stock in the big three investor-owned oil companies is controlled by mutual funds, individual investors, and public and private pension funds.   [Place cursor over graph to enlarge]   The median household income of mutual fund holders is under $69,000, and the average value of accounts in pension funds is $62,280, hardly the financial profile of captains of industry and greedy oil barons the windfall profits tax is intended to punish.   [Place cursor over graph to enlarge]