Oil companies, lawmakers debate incentives

May 12, 2011 at 1:52 PM   |   Comments

| License Photo
WASHINGTON, May 12 (UPI) -- Sen. John Rockefeller, D-W.Va., said the five major U.S. oil companies seem clueless defending their tax breaks while making huge profits in an economic slump.

"You are deeply, profoundly out of touch," Rockefeller said Thursday during a Senate Finance Committee on a Democratic plan to remove roughly $4 billion in tax incentives oil companies receive to help lower the federal deficit.

The five oil company leaders are "caught up in profit" and "accustomed to prevailing" in Congress, so they don't have "any idea" about how their collective $100 billion in profits is perceived by the American people who are stretching their dollars to get by, Rockefeller said.

"The size of the amount of money you take is really hard for average people ... to come close to understanding," Rockefeller said.

Sen. Orrin Hatch, R-Utah, the committee's ranking Republican, said the hearing was called for one reason: politics.

"On the one hand, they are able to score some cheap political points against politically unpopular oil companies," Hatch said. "On the other hand, all of their sound and fury signifies nothing. It is designed to distract their constituents from the simple fact that the Democrats have no energy policy."

During his opening remarks, Hatch drew attention to a poster of a dog riding a horse -- signifying the dog-and-pony show he thought the hearing would be.

Hatch, at the end of the hearing, said eliminating tax incentives "will not bring gas [prices] down one penny."

Sen. Max Baucus, D-Mont., committee chairman, said in his opening remarks that the five oil companies -- Exxon Mobil, BP, ConocoPhillips, Shell and Chevron -- collectively took in more than $35 billion in profits in the first quarter of 2011.

"Businesses should make a profit -- that's what drives our economy -- but do these very profitable companies actually need taxpayer subsidies?" Baucus said. "Energy incentives should help us build the energy future we want to see -- not pad oil company profits."

And, Baucus said, ending the incentive won't raise the cost of a gallon of gasoline at the pump -- now hovering near $4 for regular unleaded.

John Watson, Chevron chairman and chief executive officer, said in his opening statement raising taxes on the oil and gas industry "will hinder development of energy supplies needed to moderate rising energy prices."

"It will also mean fewer dollars to state and federal treasuries … and fewer jobs all at a time when our economic recovery remains fragile and America needs all three," he said.

Rex Tillerson, Exxon Mobil Corp. chairman and chief executive officer, said it was a matter of a maintaining a level playing field among industries.

"Everything has to be on the table," Tillerson said. "Repeal [the tax incentive] for everybody. Simplify the tax code. We've got to grow way out of this deficit problem."

There's agreement that comprehensive tax reform must be undertaken, Baucus noted, generally meaning lowering rates and broadening the tax base.

"If we're doing that, that means we're starting to cut back on some incentives," Baucus said.

After the hearing, Shell Oil-United States President Marvin Odum said the hearing was helpful because it provided all parties a chance to say "there's a bigger picture," whether it involves work to reduce the U.S. deficit or expands opportunities for energy companies to explore and develop.

Asked whether repealing the incentives would lead to higher pump prices, Odum said higher taxes would hurt the U.S.. economy because there would be less investment and the United States would get less product.

"There are unintended consequences as well," Odum said. "If the economic opportunity looks less interesting in the United States," companies will look elsewhere.

© 2011 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
Trending News
Most Popular
Photos
Video
x
Feedback