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Senators scold oil executives on Hill
Blast high profits, target tax breaks
With gas prices once again flirting with $4 a gallon nationally, Democratic senators called CEOs from the country’s five major oil companies to Congress on Thursday for what has become a regular scolding over their high profits, and said the time has come to end tax breaks the industry enjoys.
Democrats said recapturing the tax money isn’t about punishing companies, it’s about choosing between corporate giveaways and needed services such as student aid at a time when deficits are pushing record levels.
But the CEOs pushed back, saying they don’t get special “subsidies” but rather take tax write-offs the same way many other companies do, and they said halting those breaks is less productive than opening up more U.S. territory for drilling.
Sen. Charles E. Schumer, New York Democrat, and other Democrats said the estimated $30 billion in tax breaks the industry will get over the next 10 years could make a dent in the deficit, but would be small change compared to the more than $100 billion in profits the five companies are projected to reel in this year.
“You would choose the oil subsidy over aid to students - that’s what you’re telling me,” Mr. Schumer demanded of the executives.
“Arbitrarily punishing five U.S. oil and gas companies by raising their taxes would generate far less government revenue than if we were allowed to compete and produce our nation’s own resources,” he said.
On the other side of the Capitol, the companies were having better luck. House Republicans this week pushed through legislation that would streamline the oil drilling permit process and open up more land to exploration.
The streamlining bill passed 263-163 and the legislation to move forward on new exploration areas passed 243-179, and both gained some Democratic support.
At issue are a series of breaks for companies including their ability to avoid double-taxation for foreign income taxes paid and changing the way they are able to write off some costs.
The hearing got testy at times, with Sen. Robert Menendez, the New Jersey Democrat who has written a bill to recapture the tax breaks for the big five oil companies, demanding to know if ConocoPhillips stood by its press release this week saying that proposal was “un-American.”
“That is beyond the pale. And I was hoping you were going to come here and apologize for that,” Mr. Menendez said.
James Mulva, the company’s CEO, said the attack was not “intended personally” but said going after the tax breaks was “a question of fairness.”
“OK, so the bottom line is you’re unwilling to apologize for your company’s statement. OK, so I’ll continue to take offense to it,” Mr. Menendez replied.
His bill, and a competing Republican proposal to push more exploration, are slated to go to the Senate floor next week.
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