Bill to end tax breaks for Big Oil defeated in Senate

By Holly Jessen | March 29, 2012

Just an hour before the Repeal Big Oil Tax Subsidies Act failed to advance in the U.S. Senate, President Obama spoke out in support of stripping billions in tax dollars from going to the five largest oil companies. “Today, Members of Congress have a simple choice to make,” he said. “They can stand with big oil companies, or they can stand with the American people.”

In the end, the vote was 51-47, short of the 60 votes needed to overcome a procedural issue. Sen. Robert Menendez authored the bill, which would have repealed $24 million in subsidies to the “big five” and reinvest that money in alternatives to oil, including biofuels, natural gas and propane as well as refueling infrastructure. “With their votes, Republicans said loudly and clearly that they’re on the side of Big Oil,” Menendez said. “I will keep fighting for middle class families, for fairness and against these ridiculous, needless subsidies.”

Obama pointed out that the biggest oil companies are bringing in record profits at the same time they receive billions yearly in taxpayer subsidies. He likened it to hitting American consumers twice as drivers pay a premium at the pump due to current prices as well as paying for tax subsidies for the last century. “It’s not like these are companies that can’t stand on their own,” he said. “Last year, the three biggest U.S. oil companies took home more than $80 billion in profit.  Exxon pocketed nearly $4.7 million every hour.  And when the price of oil goes up, prices at the pump go up, and so do these companies’ profits.  In fact, one analysis shows that every time gas goes up by a penny, these companies usually pocket another $200 million in quarterly profits.  Meanwhile, these companies pay a lower tax rate than most other companies on their investments – partly because we’re giving them billions in tax giveaways every year.”

Domestic drilling for oil has to be a key part of energy strategy -- and it is, the president added. In the last two years, for the first time in more than a decade, the U.S. is producing more oil domestically than it purchased from foreign countries. He pointed out that the oil industry is doing just fine with record profits and rising production, with good incentives to produce more due to high oil prices. “Instead of taxpayer giveaways to an industry that’s never been more profitable, we should be using that money to double-down on investments in clean energy technologies that have never been more promising,” he said, pointing to biofuels as well as wind power, solar power and increased fuel efficiency for vehicles and buildings. “We can’t just drill our way out of this problem,” he said. “We use more than 20 percent of the world’s oil, but we only have 2 percent of the world’s known oil reserves.”

While he’s President, the U.S. will continue to pursue what he called an all-of-the-above energy strategy, he said. “Yes, we’ll continue to develop our oil and gas resources in a responsible way,” he added. “But we’ll keep developing more advanced, homegrown biofuels, like the kinds that are already powering truck fleets across America.”

Tom Buis, CEO of Growth Energy, was at the White House for the President’s Rose Garden remarks. He noted that the U.S. ethanol industry agreed to go without its major subsidy, the Volumetric Ethanol Excise Tax Credit, and called on the oil industry to step up and do the same. “We agree with the President that if taxpayers are going to invest in anything, it should be clean energy, like ethanol,” Buis said. “American ethanol creates U.S. jobs, is proven to reduce emissions, and strengthens our national security by reducing our dependence on foreign oil.”