By Josiah Ryan
The Senate is set to vote Tuesday on the Democrats' controversial bill that would cut the tax breaks received by the big five oil companies.
Senate Majority Leader Harry Reid (D-Nev.) filed cloture Monday night on the legislation, which means it would come to a vote at 6:15 p.m. Tuesday evening.
It must reach a 60-vote threshold to proceed in the legislative process. Democrats estimate that the bill will bring in about $21 billion in revenue over a decade and they vowed to use the money to pay down the nation’s $14.3 trillion deficit.
Opposition among Republicans to the plan is strong and even some Democrats, such as Sen. Mary Landrieu (D-La.), also oppose it. It is unlikely the legislation will garner enough votes to reach cloture.
moreBy Daniel J. Weiss, Kate Gordon
The Senate plans to vote tonight on the
Close Big Oil Tax Loopholes Act, S. 940—legislation that would eliminate $21 billion of tax loopholes over the next decade for the five largest oil companies. The bill, sponsored by Sen. Bob Menendez (D-NJ) and 28 of his colleagues, would close tax loopholes for Chevron Corporation, ConocoPhilips, Exxon Mobil Corporation, and the U.S. subsidiaries of BP Plc and Royal Dutch Shell Plc. And it would require that all recovered funds go to the U.S. Treasury to reduce the federal budget deficit.
Given the current drive to reduce the deficit by slashing existing programs, these funds could potentially replace cuts in other vital programs such as Medicare, cancer research, and food inspections. Yet these five companies continue to fight hard to maintain unfair tax advantages underwritten by everyday Americans who are struggling to pay their bills even as these companies make record profits. Big Oil, in short, wants its tax breaks and its huge profits, too.
Each time Americans’ gas bills go up, so do Big Oil’s profits. In the first quarter of 2011 alone, Persian Gulf unrest combined with speculators bidding up prices led to oil prices rising by more than one-third. Higher oil prices on the world market led to higher gasoline prices across our nation, and the
big five oil companies made $32 billion in profits. Profits of this size are quite common. Between 2001 and 2011, a period marked by gas price volatility, these five companies collectively made more than $900 billion in profits. In 2010, Exxon Mobil finished first in the
Fortune 500 list of company profits for the eighth year in a row, with Chevron coming in third and ConocoPhilips 16th.
These companies often use their profits not to explore for more oil on or near our shores but rather to boost their stock price via stock buybacks. This is where a company purchases its own shares in the marketplace to reduce the overall number of shares on the market and drive up the price of those remaining shares.
Exxon and Conoco spent more than half of their first quarter 2011 profits on buybacks. Back in 2008, when record 2008 oil prices also brought record profits,
four of the Big Oil companies spent a major proportion (one-third by Chevron) to nearly all (88 percent by Exxon) on stock buybacks.
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