September 22, 2020

Oil Chiefs Lash Out Against Tax Proposal

 Rex W. Tillerson, chief executive of Exxon Mobil, called the proposed tax changes “misinformed and discriminatory” as well as “counterproductive.” He added: “By undermining U.S. competitiveness, they would discourage future investment in energy projects in the United States and therefore undercut job creation and economic growth.” 

His remarks came at a hearing of the Senate Finance Committee on a proposal from Democratic senators to end tax subsidies for five oil companies: BP, Exxon Mobil, Shell, Chevron and Conoco Phillips. Except for BP, which saw its profit fall because of the costs of the gulf oil spill, the companies’ first-quarter profits rose sharply, with Exxon reporting a 69 percent rise in quarterly profits.

The proposal, from Senators Robert Menendez of New Jersey, Sherrod Brown of Ohio and Claire McCaskill of Missouri, would use the money saved to reduce the federal deficit. In announcing the legislation, Mr. Menendez said earlier this week that “we simply can’t afford to keep giving away billions in taxpayer handouts to oil companies that are doing nothing to help lower prices.”

A group of Democrats from the Finance Committee wrote to the oil executives earlier this week, effectively urging them to unilaterally renounce the subsidies, an action that seemed unlikely.  “We urge you to take this opportunity to publicly admit that, given your companies’ prodigious profits, you no longer need taxpayer subsidies,” the letter said.

The now-intertwined issues of gas prices and the federal deficit have taken on such angry undertones that the hearing was expected to be something of a showdown.

 By linking the two volatile issues, senior Democrats said earlier that they hoped to press Republicans to back the measure or explain their refusal to taxpayers facing the increasing burden of high gas prices. 

But many Republicans, along with Democratic senators from energy-producing states, appear sure to oppose the plan, and Democrats will probably have difficulty obtaining the 60 votes needed to overcome a filibuster. One oil-state Democrat, Mary L. Landrieu of Louisiana, said this week that oil and gas subsidies account for less than 13 percent of all United States energy subsidies.

The ranking Republican on the committee, Senator Orrin Hatch of Utah, suggested that Democrats were playing a cynical game, seeking to blame oil companies while, he asserted, intending to raise gasoline prices in order to reduce consumption.

“So while the American people ask Congress to do something about high gas prices,” he said, “the response of Democrats is to rail against oil executives, to mask the fact that their policy is actually to make the price at the pump more painful.”

He called the hearing a “dog and pony show” and displayed a blown-up picture of a dog riding a pony, to make the point that the hearing was just a chance for Democrats to score political points, without doing anything about high gas prices or a sensible energy policy.

Marvin E. Odum, president of Shell Oil Company, argued Thursday that high oil prices result not from oil companies’ greed but from an ever-changing confluence of political, economic and climatic factors. “No one person, organization or industry can ‘set’ the price for crude oil,” he planned to say, according to advance remarks. The resumption of world economic growth, and the weakness of the dollar — the currency used in oil transactions — were now driving up prices, he said.

Senate Democrats, however, were not the only ones adding to pressure on the oil companies. President Obama said in his weekly address that while he had no problem with any company reaping the rewards of success, “I do have a problem with the unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies — to the tune of $4 billion a year. When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right. They aren’t smart. And we need to end them.”

The hearing, which started at 9 a.m. Eastern time, can be viewed on the committee’s Web site.

John M. Broder contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=db6688b9e99f87132f62d2e1813b14b8

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