"The common perception is that the oil and gas industry earns unreasonably high profits, but that comes from the nominal numbers," Weinstein says. "There are huge costs associated with energy exploration and production, so it's not appropriate to look at profitability in gross terms."
But despite the disparities in tax rates and profit margins highlighted by the API report, aggregate numbers comparing industries aren't terribly meaningful according to Clint Stretch, senior tax policy counsel at premier tax publisher Tax Analyst. According to Stretch, the diversity of companies operating in the oil and gas space makes it difficult to make accurate sweeping statements about the entire industry. It's just not apples to apples.
"It'd be like looking at your kid's high school and saying all the kids have IQs of 110," Stretch says. "The average might be 110, but there are going to be some kids with 120 IQs and some kids with 100 IQs."