May 17, 2011 > Senate Democrat: Oil doesn't need US tax breaks
Senate Democrat: Oil doesn't need US tax breaks
By Stephen Ohlemacher, Associated Press
WASHINGTON (AP), May 13 - Senate Democrats vigorously challenged leading oil industry executives to justify generous U.S. tax breaks at a time when Americans are paying $4 a gallon (almost $1 a liter) for gas.
The chief executives of the five largest private oil companies sat Thursday before the Senate Finance Committee, watching as Sen. Ron Wyden, a Democrat, played a video of a 2005 congressional hearing in which oil company executives said they did not need generous tax breaks because oil was selling at $55 a barrel. As the hearing commenced, the price per barrel hovered just below $100.
``You all said you didn't need them in 2005,'' Wyden said. ``You seem to be telling a different story today.''
Chevron Corp. chairman and chief executive John Watson said the companies do not want special tax benefits - just the benefits that other industries get.
But what the oil company chiefs had to say was not the goal for majority Democrats eager to demonstrate before the 2012 election that they stand with consumers against oil companies recording large profits with the help of billions of dollars in tax breaks.
Flog-the-Chief Executive is a favored tactic of whichever party is in charge in Congress during a crisis - a reality well known to the powerful chiefs of Big Tobacco, automakers and Wall Street.
Big Oil seems a particularly inviting target for Democrats seeking to defend their Senate majority in next year's elections.
Sen. Orrin Hatch, a Republican, did not mince words on his opinion of a televised hearing that majority Democrats organized, displaying a large portrait of a dog sitting on a pony. In American slang, a dog and pony show is an elaborately staged event
``All this hearing is about is providing a justification for tax increases,'' Hatch said.
``For the president and some of my colleagues,'' he said, ``the answer is alway raise taxes. Government spends too much? Raise some taxes. Health care too expensive? Raise some taxes. Gas prices too expensive? I've got it... Let's raise some taxes.''
Democrats shot back that allowing a hugely profitable industry to continue taking billions of dollars in tax breaks is as credible as the notion of a unicorn galloping into the hearing room.
Sen. Robert Menendez, a Democrat and the author of a bill that would repeal the tax breaks for the companies testifying Thursday, demanded an apology from ConocoPhillips chief executive James Mulva for a press release from the company that said in the headline that the tax cut proposals were ``un-American.''
Mulva refused, saying that no personal offense was intended.
``Our industry and company are already taxed heavily compared to other industries in the United States,'' Mulva said.
Thursday's marquee hearing featured the chief excutives of Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp., five companies that booked profits totaling $36 billion during the first quarter. The Democrats say that with profits that high, the big oil companies wouldn't miss tax breaks that average $2 billion a year.
``My guess is you will be able to protect yourselves... You're used to prevailing,'' said Sen. Jay Rockefeller, a Democrat. Oil companies, he added, are ``deeply and profoundly committed to sharing nothing.''
Gasoline prices are above $4 a gallon in much of the country, a high price for American. The national average is about $3.96 a gallon ($.99 a liter) for regular unleaded, up from $2.90 a gallon ($0.72 a liter) a year ago, according to an automobile group.
The nonpartisan Congressional Research Service concluded that eliminating the tax breaks would be unlikely to result in higher gasoline prices, which are influenced by a host of factors. The report, released Wednesday, said eliminating the tax breaks would raise about $1.2 billion in 2012. By comparison, the five oil companies had combined revenues of $1.5 trillion, and profits of more than $76 billion, in 2010, the report said.
Menendez' bill would prohibit the five oil companies from taking a tax deduction originally aimed at boosting domestic manufacturing. The bill would also eliminate a tax break that allows oil companies to reduce their American taxes by deducting royalties paid to foreign governments.
Republicans, who now control the House and have enough votes to block legislation in the Senate, oppose tax increases. They are joined on this issue by a handful of Democrats, mainly from oil-producing states. Seven Senate Democrats joined with Republicans to defeat a tax proposal similar to Obama's in February.
Associated Press Writer Laurie Kellman contributed to this report.