Friday, April 29, 2011

As Oil Profits & Gas Prices Soar; Standoff Continues On Tax Subsidies

Apr 28: As major oil companies posted increased first quarter profits, Representative Earl Blumenauer (D-OR) and 28 other House Democrats urged Speaker John Boehner (R-OH) to allow an up-or-down vote on the repeal of nearly $8 billion a year in wasteful subsidies for the nation's largest oil companies. President Obama, the day before, had called on Congress to end "$4 billion per year in these subsidies." [See WIMS 4/27/11]. Representative Blumenauer has introduced a bill, H.R.601, which he indicates would end nearly $8 billion a year in taxpayer subsidies to the largest oil companies. All members that signed the letter to Speaker Boehner are cosponsors of this legislation. The bill now has 35 cosponsors.
    In a release, Blumenauer indicated that the letter to Boehner comes as oil majors report skyrocketing quarterly profits, including a spike of nearly 70 percent for ExxonMobil. Media reports indicated that ExxonMobil, ConocoPhillips, Chevron, and Shell posted a combined $18.2 billion in first quarter profits -- a 40 percent increase over their profits in the first quarter of 2010. Exxon alone posted a $10.7 billion profit. He said, "Today we learned that ExxonMobil saw its profits soar nearly 70 percent while Americans are getting clobbered at the pump. It is unconscionable that we are cutting government services left and right while continuing billions in giveaways to giant oil companies. Now is the time for Republicans to respect the will of the people and hold an up-or-down vote on repealing these wasteful subsidies."

    In their letter to the Speaker, the Representatives said they were acknowledging the Speaker's statement earlier in the week that he was "
open to eliminating unnecessary tax subsidies for the oil and gas industry." They said, "We agree with you that, especially in an era of high gas prices and high profits, the big oil companies don't need all of the generous subsidies that taxpayers currently provide." The said their legislation (H.R.601) reserves the subsidies for small independent producers, but "would save roughly $40 billion over the next 5 years."
    As WIMS previously reported, Speaker John Boehner, through a statement from his spokesman, backed away from his comments in an ABC News interview, and indicated that "raising taxes was a non-starter." Additionally, Senate Majority Leader Mitch McConnell (R-KY) immediately rejected the President's call for eliminating the tax subsidies saying the President's request was "predictable as it is counterproductive." Instead, McConnell said the President should open "areas to development, stop penalizing American job creation with new fees and tax hikes, and call an end to the anti-energy crusade at the Environmental Protection Agency."

    In their letter the House Democrats said, "President Obama has written to Congress urging us to pass legislation to eliminate unwarranted tax breaks for the oil companies. This position is shared by a majority of the Democratic Caucus, as evidenced by the vote on the Motion to Recommit on H.J. Res. 44 (Roll Call 153), and by 74 percent of the American public according to recent opinion polls. You may hear concern from some in your caucus that closing tax loopholes for the oil companies will raise gas prices. As you know, this is not the case. The Joint Economic Committee and other experts have determined that closing tax loopholes for the big oil companies will not increase consumer energy prices. Since the price of oil is set on the world market, the subsidies we provide in this country only do one thing: increase oil company profits.

    "Oil prices are sufficiently high for companies to explore and drill without incentives. In the words of former President George W. Bush, 'I will tell you with $55 oil we don't need incentives to oil and gas companies to explore.' Today prices are double that amount, making tax incentives even less necessary. As Exxon Mobil, BP and other big oil companies announce record profits in the coming days, we urge you to schedule an up-or-down vote on the House Floor providing members with the opportunity to vote to repeal some of the most egregious tax subsidies. With gas prices on the rise, we would welcome the opportunity to show our constituents that Congress is ready to stop wastefully subsidizing some of the most profitable businesses in the world and instead use that money to reduce the deficit and invest in real relief from high gas prices."
    In a report from The Hill publication, Speaker Boehner again replied to the letter through his spokesperson, Michael Steel in an email saying, "The Speaker wants to increase the supply of American energy to lower gas prices and create millions of American jobs. Raising taxes will not do that."
    Representative Ed Markey (D-MA), Ranking Member on the Natural Resources Committee sent his own letter to Speaker Boehner outlining three more measures. in addition to H.R.601, that he said the House should pass to decrease gas prices in the short term, increase drilling safety, and end oil company practices that hold hostage American oil underneath taxpayer owned lands. Beyond H.R.601, he listed:
  1. The Enhanced SPR Act (H.R.1017), which would help consumers at the pump by deploying a small amount of our nation's Strategic Petroleum Reserve (SPR), and strengthen the reserves by later adding refined petroleum product like gasoline when prices subside.
  2. The USE IT Act (H.R.927), would impose a fee on oil companies to pressure them to begin drilling on the tens of millions of acres of public land where we know there is oil and they are not producing.
  3. The Implementing the Recommendations of the BP Oil Spill Commission Act (H.R.501), to increase safety in the offshore oil industry.
    Access the release and letter from Rep. Blumenauer and the list of signers (click here). Access the report in The Hill (click here). Access a release and letter from Rep. Markey (click here). Access legislative details for H.R.601 (click here). Access a fact sheet from Rep. on H.R.601 (click here). Access legislative details for H.R.1017 (click here). Access legislative details for H.R.927 (click here). Access legislative details for H.R.501 (click here). [*Energy/OilGas]