The Repeal Big Oil Tax Subsidies Act
Fighting High Gas Prices Instead Of Protecting Big Oil Profits
Big Oil raked in a record-breaking $137 billion in profits last year, but still received billions of dollars in taxpayer subsidies. The Repeal Big Oil Tax Subsidies Act ends more than $2 billion per year in unnecessary tax breaks for the five major oil companies and invests the savings in clean energy technologies that will make America less dependent on foreign oil, drive economic growth, and create jobs.
The Repeal Big Oil Tax Subsides Act
The Repeal Big Oil Tax Subsidies would put a stop to wasteful tax breaks that pad oil company profits, and use the savings to invest in clean energy technologies that will reduce demand for oil, create jobs, and drive economic growth. Ending taxpayer supports for Big Oil will also help to rein in the deficit.
- Repeals More Than $20 billion in Taxpayer Subsidies to the Five Major Oil Companies. The Repeal Big Oil Tax Subsidies Act would stop half-a-dozen tax breaks from going to the "major integrated oil companies" - the five biggest, most profitable private sector companies. These subsidies include provisions that allow Big Oil to claim foreign royalty payments as a credit against U.S. taxes, take a manufacturing deduction for oil production, take a deduction for the cost of developing wells, take a deduction of oil and gas revenues, immediately deduct the cost of materials used to recover oil from wells, and receive relief from royalties owed on production from the Outer Continental Shelf. Ending these subsidies for Big Oil would save nearly $24 billion over ten years.
- Invests in Clean Energy Technologies. The Repeal Big Oil Tax Subsidies Act uses the savings from tax subsidies that currently go to companies making record profits to invest in job-creating, clean energy technologies like advanced vehicles, wind, solar, and biofuels. These investments include successful programs to provide grants in lieu of tax credits for renewable power projects, tax credits for electricity produced from wind, biomass, geothermal, and solar, tax credits for clean energy technology manufacturing facilities, as well as tax credits for electric vehicles, biofuels, manufacturing of efficient appliances, and energy efficient home building and upgrades. These investments would total more than $11 billion over ten years.
- Reduces the Deficit. The remaining savings from repealing taxpayer subsidies for the biggest private sector oil companies would be dedicated to reducing the deficit.
Big Oil Doesn't Need Big Tax Breaks
Last year, the five biggest private sector oil companies -BP, Chevron, ConocoPhillips, ExxonMobil, and Shell- made record profits. With oil trading at over $100 per barrel and gasoline prices near $4 per gallon, Big Oil doesn't need taxpayer subsidies.
- Five Major Oil Companies Made Nearly $1 TRILLION in Profits Over the Last 10 Years. Last year, the big five oil companies-BP, Chevron, ConocoPhillips, ExxonMobil, and Shell-made a record-breaking $137 billion. Over the last decade their total profit amounts to nearly $1 trillion. [CAP, 2/7/12; CAP, 1/31/11]
- Oil Companies Are Profiting from Higher Gas Prices. As of March 22nd, the national average price of regular gasoline is over $3.88 per gallon - up almost $0.34 from a year ago. For every penny that the price of gasoline increases, Big Oil makes an additional $200 million per quarter. [AAA, Accessed 3/22/12; CAP, 2/28/12]
- The Public Supports Repealing Tax Subsidies for Big Oil. In recent polling, 73% of registered voters were inclined to believe that that the big oil companies are manipulating the price and supply of gasoline to increase their profits, and a majority thinks that repealing subsidies to fund clean energy technology will help lower gas prices. In another recent poll, 66% said that repealing tax subsidies for Big Oil is an acceptable way to help reduce the deficit. [Hart Research Associates, 3/24/12; NBC News/Wall Street Journal Poll, 2/11]
- Ex-Shell CEO Says Big Oil Can Live Without Subsidies. Former Shell CEO John Hofmeister is on record as saying, "In the face of sustained high oil prices it was not an issue-for large companies-of needing the subsidies to entice us into looking for and producing more oil...my point of view is that with high oil prices such subsidies are unnecessary." [National Journal, 02/11/2011]
- Senate Republicans Have Consistently Blocked Repeal of Tax Breaks to Big Oil. Republicans stood with Big Oil - protecting their record profits and billions worth of taxpayer subsidies at the expense of consumers - when they blocked an effort by Senate Democrats to repeal tax subsidies for Big Oil on an almost completely party-line, 52-48 vote. The Democratic bill received a majority of support in the Senate, but failed to clear a procedural threshold. For years, Republicans have consistently opposed efforts to stop providing taxpayer subsidies to the major oil companies. [Vote 72, 5/17/11; Vote 146, 6/10/08; Vote 3, 2/2/06; Vote 330, 11/17/05]
Repealing Big Oil Tax Breaks Won't Raise Prices at the Pump
Contrary to Republican claims, eliminating these wasteful subsidies won't raise gas prices. In fact, many of these handouts have been on the books for decades as prices have fluctuated.
- Repealing Subsidies Won't Impact Production or Lead to Price Hikes. According to an analysis by the Congressional Research Service (CRS) repealing tax subsidies for big oil would not result in higher gasoline prices. CRS concludes that because the current $100 per barrel price of oil far exceeds the cost of production, it is unlikely that a small increase in taxes would reduce output in a manner that decreases supply resulting in higher gasoline prices. [CRS, 03/08/2011]
Clean Energy Technology as Part of a 21st Century Energy Strategy
To reduce our dependence on oil and protect middle class families from gas price spikes, we need to develop clean energy technologies. Investing in these technologies will cut demand for oil, drive economic growth, create jobs, and allow America to lead the global clean energy market.
- The Sec. 1603 Grant Program Provides Much Needed Liquidity To The Financing Market For Renewable Energy Projects. This program has leveraged over $32 billion in private investment in over 22,000 renewable energy projects. [Treasury, 10/31/11]
- The 48C Tax Credit Fuels Job Growth in the Clean Energy Manufacturing Sector. Reauthorization of the Sec. 48C Advanced Energy Manufacturing Tax Credit could create or support an additional 58,000 jobs and leverage another $5.4 billion in private investment. [Energy, 1/8/10]
- The Production Tax Credit Powers the Renewable Wind Industry. The Production Tax Credit has been a major driver of growth in the wind industry, which supported 75,000 jobs across all 50 states in 2010. DOE projects that by 2030, U.S. wind industry could support roughly 500,000 jobs. Since the last reauthorization of the Production Tax Credit in 2005, U.S. wind power capacity had more than tripled to over 8,000 MW. [AWEA, 4/11]
- The Global Clean Energy Market Is Growing And America Needs To Lead. According to the Pew Charitable Trusts report, global clean energy finance and investment reached $243 billion in 2010, a 30% increase from the previous year. [Pew Charitable Trusts, 3/29/11]