By Andrew Restuccia - 05/13/11 01:05 AM EDT
Senate Democrats dragged the chief executive officers of the nation’s five largest oil companies through a committee hearing Thursday to make their case that the industry should lose billions of dollars in tax breaks.
In a piece of political theater made for the television cameras, Democrats scolded the companies over tax breaks they said the nation can’t afford at a time of belt-tightening and record deficits.
“You’d be likelier to see a unicorn in this hearing room than have Americans believe you need these subsidies,” Sen. Charles Schumer (D-N.Y.) said during the Finance Committee hearing. “We have to choose priorities, and right now we have a huge budget deficit.”
Executives from Exxon Mobil, Shell Oil, Chevron, BP and ConocoPhillips fired back that they are being unfairly singled out while other businesses receive the same tax breaks. They also reiterated their argument that doing away with the breaks would hurt the economy.
Exxon Mobil CEO Rex Tillerson offered an especially blistering attack in his testimony, calling the Democratic effort “misinformed,” “discriminatory” and “counterproductive.”
“By undermining U.S. competitiveness, they would discourage future investment in energy projects in the United States and therefore undercut job creation and economic growth. And because they would hinder investment in new energy supplies, they do nothing to help reduce prices,” he said.
At issue is legislation introduced this week by Schumer and other Democrats that would cut $21 billion in tax breaks for the five largest U.S. oil companies over 10 years. Democrats would use the savings from the bill, which will come up for a test vote in the Senate next week, to reduce the deficit.
The bill has little chance of becoming law, given opposition from House Republicans, and faces an uphill battle to even get out of the Senate.
But raising the issue has been useful for Democrats in the ongoing fights in Washington over the deficit and gas prices, particularly given the companies’ profits.
“Now, businesses should of course make a profit. That’s the American way,” committee Chairman Max Baucus (D-Mont.) said during the hearing. “But do these very profitable companies really need these incentives?”
Sen. Jay Rockefeller (D-W.Va.) told the executives that their companies’ massive profits make the public skeptical of their objections to Democrats’ efforts to eliminate the tax breaks.
“I don’t think you have any idea of what the size of your profits does to the American people’s willingness to accept what you have to say,” he said. “I think you’re really out of touch.”
Republicans on the panel criticized the hearing and legislation.
Sen. Orrin Hatch (Utah), the ranking Republican on the Finance Committee, called the hearing a “dog and pony show,” holding up a large picture of a dog sitting on a pony.
“It is designed to distract their constituents from the simple fact that Democrats have no energy policy whatsoever,” Hatch said. “Let me take that back. They do have an energy policy. Their energy policy is to increase the cost of energy.”
Hatch said repealing the big oil companies’ tax breaks would give them more incentive to drill outside of the United States.
“Oil and gas companies would probably drill with or without these incentives,” Hatch said. “But let’s be clear. They would be less likely to do so in the United States.”
At a separate event, House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) noted an op-ed written in The Wall Street Journal by former Rep. Harold Ford (D-Tenn.) that criticized attacks on the oil companies.
“Why, when gas prices are climbing, would any elected official call for new taxes on energy?” Upton quoted from Ford’s op-ed during a breakfast sponsored by The Hill and the American Association of Blacks in Energy.
At the hearing, Republicans pounded away at the fact that the bill will do nothing to give consumers relief from high gas prices.
“It will not bring down gas at the pump one penny,” Hatch said.
The Congressional Research Service, in a newly released report, says the legislation would have little impact on gas prices.
Meanwhile, the oil company executives called for opening up more areas for domestic oil and natural-gas production.
“More domestic supply, along with aggressive measures to use energy more wisely, is one of the most effective ways to counter rising energy prices, enhance our energy security and stimulate economic growth,” Chevron CEO John Watson said.
Energy analysts say expanded oil production in the United States will have very little impact on gas prices. But Republicans claim expanded drilling will send a signal to markets that could result in lower prices even in the near term.
Republicans have moved a three-bill drilling package through the House, with the final piece approved on Thursday.
The bills authored by House Natural Resources Committee Chairman Doc Hastings (R-Wash.) would compel the Interior Department to offer up offshore areas for oil leasing, speed up the permitting of offshore drilling projects and open up new areas on the Atlantic and Pacific coasts to drilling.
This post was updated at 9:05 p.m.