Cohen, Exxon’s VP of public and government affairs, zeroes in on the Democrats’ plan to strip five oil companies’ ability to claim a deduction for manufacturing and production that’s available to a wide range of industries.
According to the Times’ logic, the price of oil – a globally traded commodity – is up, so people have to pay more for gas, so the government should end tax measures that help protect the jobs of Americans who work in the oil and natural gas industry.
The logic is especially hard to swallow when the Times neglects to mention that it enjoys a higher deduction than we do for one of the measures it’s campaigning to have taken away from our industry,
The measure is the Section 199 domestic manufacturers’ provision. The New York Times – along with auto makers, software developers, movie producers and a whole host of other industries – qualifies for a 9 percent deduction under this provision. The oil and natural gas industry is already limited to a 6 percent deduction.
The Times editorial went after the industry in strong terms — it’s titled “A Big Whine from Big Oil” and suggests industry CEOs acted like a spoiled kids in pushing for continued tax incentives at a Senate hearing last week, alleging:
These subsidies are clearly unnecessary, and returning $2 billion to the Treasury would be a good thing. But more than anything, one has to wonder why the oil companies are fighting so hard for a comparatively small amount of cash, at least for them. The only explanation we can come up with is that they have always gotten what they wanted and expect to do so now, so why not?
The Times editorial also notes that most of the tax breaks that Democrats are targeting are specific to oil companies, and cites a Congressional Research Service report that found that nixing the tax breaks would have almost no effect on prices.
Most of the breaks — deductions for well depletion, intangible drilling costs and the like — are unique to the industry. The exception is a deduction for domestic production, designed to encourage all manufacturing companies to invest in this country. But as the research service pointed out, industry is not going to stop drilling on American territory as long as the oil is there and yielding big dollars.
This post was updated at 2:52 p.m.