By Alexander Bolton - 05/13/11 03:38 PM EDT
Senate Democrats stepped up their push to repeal tax breaks for major oil companies Friday by unveiling a report showing that it would not affect gas prices.
The report by Congress’s Joint Economic Committee found that eliminating tax breaks for the nation’s biggest oil companies “will not affect the output or price of crude oil or natural gas.”
The staff of the Joint Economic Committee, chaired by Sen. Bob Casey (D-Pa.), conducted the analysis.
“By taking this action, by eliminating the tax breaks, we can actually have substantial deficit reduction over the next 10 years, $21 billion in deficit reduction, if we do this,” Casey said during a conference call with reporters Friday morning.
“This report makes it very clear that any actions taken as a result of the reduction of subsidies to big oil companies is not going to in any way affect our investment decisions,” he added.
The report stated that oil prices depend on fluctuation of global supply and demand, and found no evidence that losing tax breaks would cause companies to cut back on drilling activities. It concluded that companies would continue to produce oil and natural gas as long as the cost of extraction was below the market price.
Oil company executives who testified before Congress Thursday warned that repealing tax breaks could affect gas prices, but Senate Democrats say the report undercuts that argument, which Republicans have also made.
“I think Republicans are just trying to justify their opposition to ending these subsidies, they’re giving the same excuse,” said Sen. Charles Schumer (N.Y.), chairman of the Democratic Policy Committee and a member of the Finance panel. “The verdict is in on the argument that getting rid of these subsidies would raise prices at the pump.
“Getting rid of these outrageous subsidies is a no-brainer,” Schumer added.
In the first three months, the oil industry earned $36 billion in profits.
Democrats have also pointed to a report released Wednesday by the Congressional Research Service that found repealing the tax breaks would not increase the price of oil or gasoline.
Senate Democrats were joined on the Friday conference call by Alan B. Krueger, a professor of economics and public affairs at Princeton University.
“Because the U.S. is such a small producer in the world market, eliminating the subsidies will have virtually no effect on the world supply of oil, on the price of oil or the number of workers employed,” Krueger said.
Republicans, however, questioned Krueger’s political impartiality, pointing to campaign finance reports showing that he gave $1,000 to President Obama’s 2008 campaign. Records also show three $1,000 contributions to Democratic Rep. Rush Holt (N.J.), who represents the district that houses Princeton.