Sunday, May 15, 2011

VIDEO: Senate Finance Committee holds hearings on Big Oil subsidies Thursday


According to a press release from the U.S. Senate Committee on Finance, the top five oil company executives in the country will have an opportunity Thursday to testify why they should continue receiving tax subsidies.  Oil receives at least $4 billion a year in tax breaks.  The meeting, announced by committee chairman Max Baucus, is to be titled “Oil and Gas Tax Incentives and Rising Energy Prices” and will feature executives from Exxon Mobil, Shell, ConocoPhillips, BP America, and Chevron.
Democrats are suggesting that we eliminate at least $21 billion in breaks over the next ten years.  Their argument cites the $32 billion in profits the top five oil companies have shared during their first quarter.  Democrats are also suggesting that big oil lobbying is swaying Republican opinion.  According to the nonpartisan Center for Responsible Politics (CRP), house members voting to continue subsidies have received five times more money in 2010 from oil than those who voted against it, contributing over $8.7 million.  The CRP also found that oil spent $145 million and deployed 798 lobbyists to influence Washington.  MSNBC’s Cenk Uygur noted that Republicans had received $21.8 million in 2010 from oil companies.
Republicans are arguing that big oil doesn’t set the price of gasoline.  “Stated simply, oil is a global commodity,” Shell Oil Co. President Marvin E. Odum illustrated.  “With worldwide economic recovery underway, demand is on the rise, sending prices upward.”  He continued to explain that no one person or organization can set the price of crude oil.
Other oil executives are expressing concern that eliminating oil subsidies would increase gas prices and question if repealing them would be American.  ConocoPhillips CEO James Mulva stated in a press release that eliminating subsidies would “raise concerns over un-American tax proposals.”  In another press release, Mulva added that “[the oil] industry already has the highest effective tax rate in the United States.”  Mulva believes that eliminating the subsidies would cost jobs and raise gasoline prices while reducing the government’s tax revenue.
Sen. Robert Menendez,  author of the bill that would repeal the tax breaks, objected to Mulva’s press release,  saying that it is “an insult to have [people] not only pay at the pump, but then also give [oil companies] a tax subsidy out of those tax payer’s pockets.”   Uygur and Menendez illustrated that the subsidies were put in place to increase production and lower gas prices and questioned why we still needed them when profits and production are near historic highs.  A barrel of oil costs about $30 to produce, and oil companies are charging well over $100 a barrel.
The Congressional Research Service found that eliminating the subsidies would unlikely raise gas prices and would raise $1.2 billion by 2012.  Both parties have acknowledged that eliminating the subsidies would do little to lower prices at the pump, but Democrats are questioning the credibility of these cuts and are suggesting that the money saved be used in education, infrastructure, and paying off debt.  "The issue is who shares" the burden of economic recovery, stated Baucus. 
The hearings are set to begin at 10 a.m. in the Dirksen Senate office building.

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