As gas prices soar above the $ 4 dollar mark around the country, and average $ 4.25 here in the Bay Area, the fight over taxing the biggest oil companies draws nationwide attention. The Senate Finance Committee grilled senior executives of the five biggest oil companies today about tax incentives, profits, and soaring gas prices. With the recent financial collapse, the nation can no longer afford gasoline at its recent prices. Congress it seems is taking notice.
The petroleum industry is fighting back however, and fighting hard. Especially against congressional efforts to eliminate the tax benefits they receive, asserting if Congress wants to boost revenues and lower gas prices it should open up more federal land for drilling and coastal waters needed to explore options to generate increased production levels.
B.P., Chevron, ConocoPhillips, ExxonMobil, and Shell, all had their top executives pleading their cases. Here are just some examples of those pleas.
Lamar McKay, chairman and president of BP America said, “I don’t believe raising taxes will lower prices.” And added that the proposed tax changes would also curb the company’s ability to invest in new and emerging technologies like wind, bio-fuels and solar. B.P reported $7.1 billion in profit for the first quarter of the year.
John Watson, Chevron chief executive said, “Tax increases on the oil and gas industry, which will result if you change long-standing provisions in the U.S. tax code, will hinder development of energy supplies needed to moderate rising energy prices.” Chevron reported $6.2 billion in profits for the first quarter of the year.
James Mulva, ConocoPhillips chief executive said, “We have shackles on us. Put us back to work…it’s counterproductive to what the U.S. needs to be doing right now,” and added ”It’s un-American to end subsidies to the Big 5 oil companies.” ConocoPhillips reported $3 billion in profit for the first quarter of the year.
Rex Tillerson, Exxon Mobil chief executive said, “By undermining U.S. competitiveness, congress would discourage future investment in energy projects in the United States and therefore undercut job creation and economic growth,” and added “Arbitrarily punishing five U.S. oil and gas companies by raising their taxes will generate far less government revenues than if we were allowed to compete and produce our nation’s resources,” Exxon Mobil reported $10.7 billion in profit for the first quarter of the year.
Marvin Odum, president of Shell Oil Co. said “It’s hard to make definitive statements around prices because part of the conversation today was around all of the elements that go into the volatility of prices,” and added, “There’s so many factors you can’t say a definitive impact.” Shell Oil Co. reported $8.8 billion in profit the first quarter of the year.
But several lawmakers, pressured back, firing off questions and comments intended to bring the debate and the focus back to the big oil companies. The exchanges grew heated at times, particularly from Senators, Charles Schumer (D-N.Y.) and Robert Menendez (D-N.J.)
Robert Menendez (D-N.J.) said, “It’s time that the big five (oil companies) do the right thing for a change and pay their fair share,” and added, ”Do you think working class families should be the only people sacrificing to lower the deficit?”
Charles Schumer (D-N.Y.) said, “Just as the economy is starting to turn the corner, Upstate New Yorkers are being pummeled with $4 per gallon gas prices every time they head to the pump,” and added, “And at the same time, the oil companies are charging these exorbitant prices and are picking through New Yorkers’ pockets through the tax code, collecting billions of dollars every year in unnecessary taxpayer subsidies.”
Orrin Hatch (R-UT), was more sympathetic to the executives saying, “Everybody is angry about high gas prices. I’m angry at high gas prices,” and added, “But Democrats are exploiting high gas prices for political gain,”
Max Baucus, (D-MT), and Senate Finance Committee Chairman said “You make a lot of money, that’s fine, that’s the American way, but it seems maybe the subsidies are just not that necessary anymore,” and added, “Given profits of $35 billion in just the first quarter alone, it’s hard to find evidence that repealing these subsidies would cut domestic production or cause layoffs.”
President Obama has proposed limiting or cutting provisions that would save about $40 billion over 10 years. They include tax breaks shared by all manufacturers, the oil depletion allowance, and other provisions for the funding and depreciation of drilling costs.
It is sometimes hard to debate the fact that big companies, regardless of product or service, create jobs and produce revenue from taxes to cities, counties, and states. However, with the recent financial crisis, huge unemployment, and three military conflicts in the middle-east perhaps we all should pool together at such a critical time. After all we are all Americans, considering corporations were given the same rights as a person under the law, and all citizens should pay their fair amount of taxes.
In time of peace, prepare for war.