A Big Oil CEO making more than $31 million a year recently branded efforts to curb taxpayer-funded subsidies to the biggest and most profitable oil companies as “un-American”.
Disparaging labels won’t solve the problems facing our country.
In the boardrooms of small businesses and at kitchen tables of Ohio homes, Americans are tightening their budgets to pay for gasoline that is near $4.00 per gallon. The average price per gallon of gas in Ohio is up more than $1.78 over the last year – and 20 cents in the last month alone.
Earlier this month, I stopped by a Cleveland gas station to meet with truckers, small business owners, and consumers who are being hit hard by rising gas prices. They’re seeing revenue decrease and the cost of doing business increase with no end in sight.
I recently received a letter from a constituent who said, “Hopefully, Washington will get involved in the rising cost of gasoline because…people [need] to get back and forth to work.”
With two pieces of legislation, that’s what we’re fighting to do.
First, the No Oil Producing and Exporting Cartels Act of 2011 – or NOPEC – would make it illegal for oil-producing nations to band together to manipulate the price of oil, natural gas, or any petroleum product.
It would also give the U.S. Attorney General the authority to pursue legal action under the Sherman Antitrust Act. Combined with new enforcement mechanisms to go after speculation – which occurs when wealthy Wall Street investors drive up prices by betting on the price of oil – the federal government would have new tools to combat destructive anti-competitive behavior.
Next – to make certain that the burden does not rest solely on American families – I also co-sponsored the Close Big Oil Tax Loopholes Act of 2011. It would repeal tax loopholes to the 5 largest, most profitable oil companies in the world: BP, Exxon, Shell, Chevron, and ConocoPhillips (also known as “Big 5”).
These companies reported a net $32 billion in profits over the last quarter alone, while taxpayers have shelled out extra money at the pump – and on their tax bills as they help subsidize these companies.
All savings realized as the result of the bill’s elimination of the tax breaks and other subsidies currently going to the Big 5 will be used to help pay down the federal deficit.
Cutting these subsidies will not result in less oil production. Currently, instead of using their enormous revenues to invest in drilling, the Big 5 oil companies are buying back stock and issuing dividends. In other words, instead of investing in increased production to lower prices, they are enriching their executives and shareholders.
For example, ExxonMobil nearly doubled its profits from 2010, reaping close to $11 billion dollars. Chevron spent 12 percent, while Shell and BP each spent less than 1 percent on repurchasing their own company shares. And ConocoPhillips devoted $1.6 billion of its $3 billion first-quarter earnings to stock buybacks—more than 50 percent of its profits.
According to a report issued by the nonpartisan Citizens for Taxpayer Justice, the Big 4 oil companies – excluding BP because of the debacle in the Gulf of Mexico – “spent 3.3 times as much on dividends and stock buybacks as they did on exploration in 2010. The strategy works for oil company executives. For example, the value of the Exxon stock held by CEO R.W. Tillerson rose by $32 million in just the last 12 months.”
Even when these companies sold their oil for lower prices, executives testified that they did not need the subsidies for oil exploration. In fact, ConocoPhillips CEO Jim Mulva testified, “with respect to oil and gas exploration and production, we do not need incentives.”
Now that oil sells at $96 per barrel – translating into upwards of $4 per gallon for consumers – there is absolutely no reason taxpayers should be financing this form of corporate welfare.
For too long our government has favored energy policies that help oil companies rather than middle class families. This bill would end the more than $2 billion in tax subsidies, deductions, and royalty relief that the five big oil companies receive each year.
It’s bad enough that Ohioans have to pay more than $4.00 per gallon at the gas pump. They shouldn’t need to subsidize the oil industry – when that subsidy does nothing to lower gas prices – through the tax code as well.
Big Oil is reaping big profits while working and middle-class Ohioans struggle to make ends meet.
While Big Oil CEOs might think ending this is un-American, I don’t share their view of patriotism.
It’s about time we end this un-American corporate welfare.
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