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Calling Big Oil's Tax Bluff | Oil Watchdog

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Calling Big Oil's Tax Bluff

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Fri, Dec 14, 2007 at 11:32 am

    Calling Big Oil's Tax Bluff

    12-14-07 by dugan

     

     

    If legislation were poker, this column in the Washington Post would have Big Oil and its corporate allies chucking their hands. It’s too bad that Post business columnist Steven Pearlstein published it the day after the Senate passed its stripped energy bill, but it nails all the deceptions and irresponsibility of a lobby that has put shortsighted self-interest above the national good. Start with this blazing lead:

    "There was a time not long ago when the major business organizations played a constructive role in Washington. Even if you didn’t always agree with their positions, you had to respect the fact that they took a practical, long-term approach, turned out credible analysis and provided adult supervision over industries or companies that got too piggy. But that is no longer true for the U.S. Chamber of Commerce and the National Association of Manufacturers, which have decided to bring the same inflexibility, partisanship and religious fervor to economic issues that Christian conservatives have brought to social issues. Their relentless crusade against taxes and regulation has damaged financial markets, weakened the economy, poisoned the political atmosphere and eliminated any possibility of effectively representing their members’ interests with a Democratic Congress or White House.

    "We saw the latest example of their take-no-prisoners approach yesterday morning as the two organizations lined up with the oil industry against a comprehensive and fiscally responsible energy bill that went down to defeat for the want of one vote to break a Senate filibuster."

     

     
    And later, the two-faced arguments behind the lobbying:

    "[B]ecause of the intransigence of the business lobby, [renewable fuel] subsidies were dramatically trimmed in the compromise bill that passed last night just to make sure the five biggest oil companies — Exxon Mobil, Chevron, ConocoPhillips, Shell and BP — would not have to pay an extra $1 billion a year in taxes.

    "You would never know from the intensity of the opposition that what was at stake was denying the oil industry, a big importer, the benefits of a tax credit meant to help manufacturing exporters.

    "Nor would you have guessed that since the tax credit was enacted in 2004, soaring oil prices have triggered a boom in exploration and drilling and increased the combined profits for the five companies to about $120 billion a year from about $85 billion.

    "To hear it from industry and its business allies, this ‘massive’ new tax on the oil industry would have discouraged domestic energy production, raised energy prices, slowed growth and driven jobs overseas.

    "Even by Washington standards, this is disingenuous nonsense.

    "To begin with, you can’t argue that the new tax would be passed along to consumers in the form of higher prices and to oil company investors in the form of lower profits. It may the one or the other, but it can’t be both at the same time.

    "Nor is there proof that the entire energy bill would have reduced domestic energy supplies, as the industry argued in a newspaper ad yesterday. [Here’s one such ad and another, costing up to $165,000 (at NYT) per page per day] "To know that, you’d have to know that a dollar used to give a tax break to Chevron would stimulate more energy production than using the same dollar to subsidize ethanol and alternative fuels. When I called the American Petroleum Institute for the study to back up that proposition, an economist there said there wasn’t one.

    "Its hard to give much credence to any industry that complains out of one side of its mouth that it can’t get enough rigs and operators to do all the drilling it wants to do and out of the other that a new tax would discourage drilling."

     
    He reminds us of just how two-faced the White House has become on behalf of the oil industry:

    "And let’s not forget our oilman president, George W. Bush, who told reporters in April 2005 that "with $55 oil, we don’t need incentives to oil and gas companies to explore." Now that the price is flirting with $100 a barrel, however, the president has threatened to veto the energy bill because the higher taxes would discourage production. Go figure."

    The effect of this intransigence?

    "It’s one thing for Big Oil to use lies and scare tactics to defeat a tax increase. But it’s quite another for once-respected national business organizations to sacrifice their credibility and political capital to rush to the defense of an industry that has earned windfall profits by raising costs for every business in America."

    Read the whole column for the genesis of this irresponsibility and the likely political consequences on industry after Nov. 2008.

    Politics isn’t just poker, though. For the time being, the U.S. economy and consumers will suffer so Exxon and friends may grow richer at taxpayer expense and all but ignore the whole pesky global warming thing.

     

     

     

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