Oil Executive Defends Tax Breaks with a Straight Face
Proving that Washington politics is the theatre of the absurd, oil executives claimed, with a straight face, that proposals to eliminate the oil industry's tax breaks are unfair and will punish working Americans.
"It's counterproductive to what the U.S. needs to be doing right now," said ConocoPhillips (NYSE: COP) CEO James Mulva during the company's annual shareholders meeting. Mulva, along with CEOs from ExxonMobil (NYSE: XON) and Chevron (NYSE: CVX), is expected to testify before a Senate committee today, putting into the formal record his contention that taking away tax breaks for his company will harm consumers.
Mulva is expected to take intense fire from Senate Democrats, who see an opportunity to score political points with a public weary of paying high gasoline prices while oil companies set profit records every quarter.
The tax break under discussion is relatively new. The Bush administration signed it into law in 2004 to stimulate job growth in the production and manufacturing sector, which in turn, would encourage more domestic energy production. Since then, domestic oil production has dipped and then regained, currently sitting right near its 2004 levels. In other words, no net gain for the American public, despite billions in investment tax breaks to oil companies.
Meanwhile, over the same period, oil prices have risen from $30 a barrel to over $123 a barrel in April. Gas prices took a similar jump, and threaten to sink the economy every time the economy starts trending upward.
At the same time, ConocoPhillips saw its 2010 earnings more than double to $11.4 billion. The tax deduction allows ConocoPhillips to deduct taxes it pays on its overseas operations from its US tax bill. The proposed change would return oil companies to the rules they played under from the beginning of time until 2004, when they had to actually pay taxes on their full income.
As of May 10, 2011, the US government holds a total debt of $14,331,522,797,881.61. Someone has to contribute taxes toward reducing that debt. ConocoPhillips and other oil companies apparently feel that is someone else's burden to bear.
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