WASHINGTON, D.C. —With the average price per gallon of gas in Ohio up more than $1.22 over the last year and 24 cents in the last month alone, U.S. Sen. Sherrod Brown (D-OH) held a news conference today to outline two new bills that would protect taxpayers and help bring down gas prices. Brown’s Close Big Oil Tax Loopholes Act would end the more than $4 billion in tax deductions, subsidies, and royalty relief given to the five biggest Oil companies each year and use the savings to pay down the federal deficit. The No Oil Producing and Exporting Cartels Act (NOPEC) would give the U.S. new authority to take action against OPEC countries that manipulate the price of oil through collusion or price-fixing.
“It's bad enough that Ohioans have to pay more than $4.00 a gallon at the gas pump when the oil prices rise due to price-fixing by OPEC countries or speculation by Wall Street investors,” Brown said. “They shouldn't need to subsidize the biggest and most profitable oil companies through the tax code as well. Big Oil is reaping huge profits while working- and middle-class Ohioans struggle to make ends meet. It's about time this corporate welfare meets its end."
The Close Big Oil Tax Loopholes Act
Over the last decade, the nation’s five largest oil companies have taken home nearly $1 trillion in profits—including more than $30 billion in the first quarter of 2011 alone—and received tens of billions of dollars in taxpayer subsidies. Oil companies make up four of the top ten spots on the Fortune 100 list of largest corporations. According to a recent report from Citizens for Tax Justice, Big Oil companies spent most of their profits in the purchase of their own stocks and boosting its dividends between 2005-2010. In 2010, four of the largest “Big Five” oil companies (excluding BP due to the oil spill) allocated only 18 percent of their post tax profits on exploration and 60 percent on dividends and stock repurchases. CEO’s from the Big 5 have testified that they do not need incentives for oil exploration. For example, ConocoPhillips CEO Jim Mulva testified, “with respect to oil and gas exploration and production, we do not need incentives.”
The Close Big Oil Tax Loopholes Act is aimed at ending the more than $4 billion in tax deductions, subsidies, and royalty relief to the five biggest oil companies each year. The new bill would end these wasteful taxpayer handouts to big oil companies making record profits and use the savings to reduce the federal deficit. Closing these loopholes will amount to more than $20 billion over ten years for taxpayers.
Among its provisions, the legislation would accomplish the following:
- Recoup royalties that oil companies avoided paying for oil and gas production on public lands
- Prevent oil companies from manipulating the rules on foreign taxes to avoid paying full corporate taxes in the U.S.
- End a number of tax deductions and relief afforded to the oil industry, such as the deductions for classifying oil production as manufacturing, for the depletion of oil and gas through drilling and for costs associated with preparing to drill.
No Oil Producing and Exporting Cartels Act (NOPEC)
Currently, the U.S. does not have the authority to take legal action against oil-producing nations who manipulate the price of crude oil through price-fixing or collusion. The NOPEC Act would give the U.S. Attorney General the authority to pursue legal action against oil-producing nations, like the Organization of the Petroleum Exporting Countries (OPEC), that band together to manipulate the price of oil, natural gas, or any petroleum product. The bill clarifies that OPEC's activities are not protected by sovereign immunity and that the federal courts should not decline to hear such a case based on the "act of state" doctrine. This would enable the Department of Justice to take action against foreign states for colluding to set the price or limit production of oil. Brown also cosponsored this bill in the 110th Congress.
Addressing Wall Street Speculation and Production Levels
Brown is working to lower gas prices for Ohio’s families and small businesses. Earlier this year, Brown announced new plans for cracking down on oil speculation, which may be responsible in part for driving up prices at the pump. Brown sent a letter to the Commodity Futures Trading Commission (CFTC) urging the agency to use its full authority under the recently-passed financial reform bill to protect consumers and small businesses from artificially inflated gas prices. He has also called on U.S. Secretary of State Hillary Clinton to push Organization for Petroleum Exporting Countries (OPEC) to increase production levels.