GOP’s answer to rising gas prices and job growth: Tax breaks and subsidies to oil companies.


Pelican covered in oil, Louisiana 6/2010

Here’s one issue that Republicans are having a difficult time coming up with the right culture-war-dance to frighten the public into agreeing with them; government-issued, taxpayer oil subsidies and tax breaks.

Oil companies, including Exxon, BP, Shell, Chevron, Total, ConocoPhillips, who earned $38 billion collectively during the first quarter of 2011,  get about $8 billion a year in US government taxpayer subsidies. Republicans’ rather feeble culture-war-dance on oil company subsidies: Taking away these tax breaks and subsidies would cause gas prices to rise and oil companies need these incentives to generate new jobs. But before I get to their response in further detail, we should all be wondering about BP.

BP Oil Spill | AP Photo/Charlie Riedel

The BP Deepwater Horizon disaster, where 11 workers lost their lives, resulted in an oil spill that is considered to be the “largest accidental marine oil spill in the history of the petroleum industry,” covering 68,000 square miles.

Doesn’t it bother anyone that BP is one of the oil companies getting US taxpayer subsidies? BP PLC’s quarterly earnings rose 16 percent, to $7.2 billion. Meanwhile, the Gulf Coast will never be the same and the impact will be felt for many decades to come. Click on the photo for a year of pictures taken along the Gulf Coast and ask yourself why is BP getting taxpayer subsidies from the US government. It doesn’t make any sense.

Fortune just released its annual top 500 companies list and at the top are some oil companies with some interesting facts about their earnings. Exxon’s revenue increased 26 percent, to $114 billion (and profits increased 58 percent to $30 billion – so far). ConocoPhillips net income grew 43 percent, to $3 billion, and Occidental Petroleum Corp. said earnings climbed 46 percent, to $1.55 billion. [....]

Democrats decided to do something about the $8 billion a year giveaway to these oil companies and proposed legislation to repeal the law that allows this to happen. Their goal is to use the $8 billion annual savings to ease the national deficit. In April, 28 Democrats sent a letter to House Speaker Boehner requesting an up or down vote on that legislation:

“With gas prices on the rise, we would welcome the opportunity to show our constituents that Congress is ready to stop wastefully subsidizing some of the most profitable businesses in the world and instead use that money to reduce the deficit and invest in real relief from high gas prices.”

House Speaker John Boehner

Boehner’s response was basically a fumble over what he knew he should say, “Yes” but then realized that his deep-pocket donors would not be happy about that. First, Boehner stated that, “oil companies should pay their fair share of taxes and that the industry did not need at least one of the subsidies Democrats want to terminate.” [....]

Then Boehner’s spokesman, Michael Steele, began backpedaling on that message saying that, “The Speaker wants to increase the supply of American energy to lower gas prices and create millions of American jobs. … Raising taxes will not do that.” [....] And there’s the “Chicken Little” additive to this culture-war-dance — “raising taxes.”

First of all, gas prices at the pump began steadily surging after the attack on 9/11, while oil company tax breaks and subsidies were in place. That negates Republican’s argument that tax breaks will help to lower prices at the pump. In fact, the rising oil prices have nothing to do with the tax breaks — its Wall Street speculators, for starters. Politica USA recently reported:

“The CME Group raised U.S. crude oil futures margins by 25 percent as of the close of business on May 10, helping to bring prices down following a $5 a barrel spike on Monday.” On May 10th, the CME announced an increase in margins and the price of a barrel of oil dropped over 2% right away. If that’s not a sign of speculation I don’t know what is.” [....]

Further proof that the tax subsidies have nothing to do with the rising price of oil at the pump is so aptly put by Rachel Maddow:

As for oil tax breaks generating new jobs:  ConocoPhillips sold off $15 billion dollars of assets over the past 18 months and plans to build 150 new oil wells this year “in its Eagle Ford project in southern Texas and anticipates hitting peak production of some 65,000 barrels per day in 2013.” [....] Clearly, their ability to build 150 new oil wells, which will undoubtedly bring some much-needed jobs to the area that will hopefully be given to US citizens, is not a result of any government tax giveaway.

Exxon is also expanding, which will undoubtedly create new jobs, but in Qatar and northern Russia. I wonder who will get those jobs. And if others begin to look into oil company profits, expansions and whose on their payrolls, etc., they will undoubtedly uncover many more such ventures within the industry.

Considering Boehner’s fumble on this culture-war-dance, Republicans will probably find someone else to deliver their message on this. It will be interesting to see what fright tactics Republicans come up with to convince us its okay to cut Medicare, Medicaid, Social Security, etc., and replace these with vouchers rumored to be worth $8000 while maintaining an annual give-away to oil companies for $8 billion, a year.

Sources

Exxon Mobil’s $10.65B earnings are second-best for company | AZ Central

BP Oil Spill Page | The Huffington Post

Boehner rejects oil-subsidy vote | The Hill

Big Oil’s $38 billion defense | CNN Money

More Evidence That Wall Street Is Causing Oil Prices To Rise | Politica USA

Boehner rejects calls for vote on legislation to end oil subsidies | The Daily Caller

Getting drilled: ending Federal giveaways to big oil | The Barefoot Accountant

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