Big Oil: ending U.S. tax breaks would up fuel price
WASHINGTON (Reuters) - The world's biggest oil companies on Wednesday launched broadsides against Democratic plans to pare back some of their cherished U.S. tax breaks, saying the measure was "un-American" and would only push up already high gasoline prices.
Top executives from the five biggest oil companies will testify about the tax breaks on Thursday before the Senate Finance Committee. A day before the hearing companies and lawmakers traded barbs over the effort that Democrats say could help cut the deficit by about $21 billion over a decade.
Senate Majority Leader Harry Reid has said he hopes a bill repealing the tax breaks will be voted on in the full chamber next week.
Eliminating the tax breaks has been a goal of President Barack Obama and the call by lawmakers has become louder with stubbornly high fuel prices ahead of next year's elections. The effort will face opposition by Republicans and some Democrats who fear it could send gasoline prices higher. But with $4 a gallon gasoline, it could also be an awkward time for many politicians to appear to be supporting oil companies.
Senators who sponsored the bill said the companies needed to do their part to cut the deficit and they could afford to give up the tax breaks.
"We're here to say 'enough already' to Big Oil. You're doing fine enough on your own," said Senator Charles Schumer, standing at a Washington gas station where prices started at about $4.30 a gallon (3.78 liters).
"Right now people are paying as much for gas as they're paying for healthcare and groceries," said Senator Debbie Stabenow. "Now's the time to take away subsidies."
But Republicans said it would act as a tax that the oil companies would pass onto consumers by pushing up fuel prices.
"JOB DISCRIMINATION" AND "UN-AMERICAN"
Rex Tillerson, the chief executive of Exxon Mobil one of the five companies to appear before the Senate panel, will say at Thursday's hearing that the tax breaks are not special incentives for oil companies, but standard deductions applied across many businesses, including corn farmers, movie producers and coffee roasters.
"Frankly, to then deny a select few companies within the oil and gas industry this standard deduction is tantamount to job discrimination," Tillerson will say, according to a copy of his oral testimony obtained by Reuters.
ConocoPhillips, one of the five oil companies that will testify called the tax proposals "un-American" in a release, angering the bill's main sponsor, Senator Robert Menendez, who demanded the company apologize at Thursday's hearing.
Conoco said the proposal unfairly singles out the five biggest oil companies for additional taxes and would cost jobs and shrink government revenue.
Oil companies, on the defensive after raking in huge profits in their first quarter, also said consumers would pay more if they lose their drilling incentives.
"At a time when everyone is concerned over the cost of gasoline, Congress shouldn't do anything that could actually worsen the situation," said Jim Mulva, the ConocoPhillips chief executive.
Exxon wants Congress to pass Republican bills in the House to open offshore drilling, which they say has been held back by Obama administration rules after last year's BP oil spill.
The Republican-led House passed a bill on Wednesday requiring the Interior Department to act within 60 days on permits requested by oil and gas companies to drill on offshore federal tracts. It is one of three bills the Republicans say would boost domestic energy and government revenues. But the measures face stiff opposition in the Senate.
Several of the oil companies said they already pay more taxes than many other industries. But the Citizens for Tax Justice, an advocacy group, says consumers and workers pay some of the taxes, not the oil companies.
In addition to Tillerson and Mulva, Shell Oil Co U.S. President Marvin Odum, BP America Chairman Lamar McKay, and Chevron Chief Executive Officer John Watson will testify.
Reid and Menendez sent Republicans a letter urging them to support the legislation.
"If we are to truly address our national debt, we will all have to tighten our belts and make sacrifices -- even the most wealthy and powerful among us," the letter said.
(Additional reporting by Tom Doggett; Editing by Cynthia Osterman)
- Tweet this
- Share this
- Digg this
Trending On Reuters
The government sold a 10 percent stake in state-run behemoth Coal India on Friday, in a bumper sale which saw demand from institutional investors marginally exceed supply, giving a welcome boost to the government's faltering divestment drive. Full Article