Oil Industry’s $21 Billion Tax Break Survives U.S. Repeal Effort

Wednesday, 18 May 2011 07:27 AM

 

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink

The U.S. oil and gas industry survived an effort to repeal $21 billion in tax breaks over 10 years as three Democrats broke with Senate leaders who said the revenue should go to reduce the federal deficit.

Supporters fell short yesterday of the 60 votes needed to advance the bill after Republicans said the legislation would raise gasoline prices and increase dependence on foreign oil. Fifty-two senators supported proceeding and 48 were opposed, including Democrats Mary Landrieu of Louisiana, Ben Nelson of Nebraska and Mark Begich of Alaska. Maine Senators Olympia Snowe and Susan Collins, both Republicans, joined the Democrats.

Democrats said the oil companies can afford to give up the tax benefits after their combined first-quarter profits exceeded $30 billion. Senate Majority Leader Harry Reid said he would work to revive the measure in budget talks with Republicans, who are trying to cut more than $6 trillion in spending.

“Instead of defending oil companies, Republicans should be defending the American taxpayer,” Reid of Nevada said before the vote.

A Republican-backed measure that would increase offshore production and expedite permits faces a vote today in the Senate. The legislation mirrors bills passed by the Republican- led U.S. House this month to speed Interior Department rulings on oil-drilling permits. Without action after 60 days, the application would be deemed approved.

A provision also would require lease sales in the Gulf of Mexico and off the coasts of Virginia and Alaska.

The Senate’s tax legislation targeted about $2 billion in annual tax breaks for Exxon Mobil Corp. of Irving, Texas, London’s BP Plc, Houston’s ConocoPhillips, Chevron Corp. of San Ramon, California, and The Hague-based Royal Dutch Shell Plc. Collectively the companies reported about $36 billion in first- quarter profits, Reid said.

‘More Constructive’

“With this vote we hope Congress will now turn to more constructive policy-making on energy,” Martin Durbin, executive vice president of the American Petroleum Institute, a Washington-based industry group, said in a statement.

Landrieu said she opposed the legislation because it wouldn’t cut gasoline prices and could cost jobs.

Senator Claire McCaskill, a Missouri Democrat, said oil companies shouldn’t get tax breaks given their profits and the size of the federal deficit.

“Maybe we shouldn’t pick on big oil, but what a great place to start,” she said during debate.

The Democratic proposal was not “a serious effort to address the price of gas at the pump,” said Senate Republican Leader Mitch McConnell of Kentucky.

Prices for a gallon of gas in the U.S. averaged $3.944 on May 16, up from $2.867 a year ago, according to AAA.

Virginia, Alaska

Reid said Democrats would resurrect the oil-tax bill as part of legislation to raise the U.S. debt limit. House Speaker John Boehner of Ohio has said Republicans won’t accept any tax increases in the budget negotiations.

The Senate was “right to reject this bill,” which would hurt consumers, said Bruce Josten, executive vice president for government affairs at the U.S. Chamber of Commerce, the nation’s largest business lobby.

“More drilling and more tax breaks won’t lower prices at the pump,” Frances Beinecke, president of the New York-based Natural Resources Defense Council, said in a statement. “All it means is more money for Big Oil companies.”

The White House issued a statement of support for the Democrat-sponsored bill.

“There are much more responsible ways to utilize the billions in taxpayer dollars provided to oil and gas companies through unwarranted tax breaks,” the administration said. President Barack Obama has called for repealing about $4 billion a year in oil industry tax benefits.

Obama announced on May 14 plans to increase domestic drilling by moving ahead on lease sales in the Gulf of Mexico and in Alaska’s National Petroleum Reserve.

The administration also is extending leases to give companies more time to comply with new safety regulations added after the BP oil spill last year.

© Copyright 2014 Bloomberg News. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web

Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 

You May Also Like
Around the Web

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved