Thursday, May 5, 2011

Climate Progress: Big Oil has their Cake and eats your tax dollars, too

CAP’s Seth Hanlon explains in this repost why Big Oil companies don’t need $70 billion in tax subsidies (over the next decade) at a time of record profits and prices double what they were when Bush made his remarks.

The five largest oil companies—BP, Chevron, ConocoPhillips, Exxon Mobil, and Shell—last week announced first-quarter profits of $32 billion, up 30 percent from the first quarter of 2010. Exxon Mobil Corp. alone reported quarterly earnings of $11 billion, nearly 70 percent higher than a year ago.

At a time when gas prices exceed $4 a gallon, these profits are coming out of ordinary people’s pockets, and not just at the pump. American families are also padding the oil companies’ enormous profits with their tax dollars. In effect, U.S. taxpayers wrote a collective $7 billion bonus check to the oil industry when they filed their taxes last month.

That’s because the tax code is stuffed with a host of subsidies for oil and gas. These subsidies are delivered through the tax code but they are essentially no different from government spending programs that provide money directly.

Some of these tax earmarks have been around for nearly a century, and the deep-pocketed industry has successfully challenged previous repeal attempts. But today’s high gas prices and inflated profits have undermined the industry’s argument that their tax breaks benefit consumers. Meanwhile, federal budget deficits have sharpened Congress’s focus on eliminating wasteful government spending—of which oil subsidies are one of the worst examples.

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