A Risk Big Oil Companies Can Afford to Share
In his 2010 budget, President Obama wants $31.5 billion from oil companies over the next 10 years with new taxes and by closing tax loopholes. This is a mere $3.15 billion a year, but the oil execs still say Obama is the creature stealing their black lagoon.
"With America in the midst of an economic recession, now is not the time to impose new taxes on the nation's oil and gas industry," said American Petroleum Institute president Jack Gerard in a statement. "New taxes could mean fewer American jobs and less revenue at a time when we desperately need both."
Exxon Mobil CEO Rex Tillerson said, "Any steps which cause the industry to be less competitive overseas or cause the cost of development here at home to go up, ultimately, in my view, does not serve the interests of the American people."
The Independent Petroleum Association of America is throwing out every disaster scenario possible. A fact sheet says Obama's plan would "crush America's clean energy and energy security . . . strip essential capital from new American natural gas and oil investment . . . (and) could cripple the American producers." IPAA president Barry Russell called Obama's proposals "a devastating blow." IPAA vice chairman Bruce Vincent told the Dallas Morning News, "I am just absolutely flabbergasted. It's like putting a dagger in the heart of the oil and gas industry in America. If you actually did all these things, it would kill the industry."
Americans should be flabbergasted that the industry most in the black has the nerve to cry as millions of Americans are seeing pink and sinking into the red. Obama's proposal, if anything, is relatively modest. ExxonMobil alone set a new annual record for profits last year, at $45 billion. Chevron made a record $24 billion. Royal Dutch Shell made $26 billion. BP made $21 billion. ConocoPhillips, despite major write-downs in asset values, still turned a profit of $16 billion. That alone is $132 billion in profits last year, as a desperate America goes nearly $800 billion deeper into the red with the stimulus package.
In some ways, it is just fine that the industry whines like General Motors. All that will do is get it even less sympathy than it had before. The problem is that the industry, with Exxon alone reportedly sitting on $31 billion of cash reserves, has enough energy and capital to make Capitol Hill miserable. ExxonMobil may have downshifted from its funding of global warming-doubters from the late 1990s to just a couple years ago. But last year, it spent $29 million to lobby Capitol Hill, according to the Center for Responsive Politics. BP, Chevron, ConocoPhillips, Marathon Oil, and Shell each spent between $3 million and $10 million to be thought of as fondly as possible at legislation time.
The industry did not get its preferred candidate for the White House, having given $2.3 million in campaign cash to the losing John McCain, compared with under $1 million for Barack Obama. But its tentacles are already reaching out to every Democrat in an energy-rich state to get them to dissuade Obama from his tax plan. This does not even get to all those cute ads that Big Oil places in major newspapers to convince us how urgently they are helping us move toward clean energy.
Tillerson, in an interview on Fox News, cried like nearly-bankrupt General Motors about his $45 billion in profits. He said that outrage about oil profits illustrates "a lack of understanding by many policy-makers and the public at large over the risk-reward balance . . . this is a high-risk business. And we experience a lot of failures." What Tillerson did not say is that the risk has always been paid for by the people at the pump. With the people in pain, all Obama is asking now is for Big Oil to truly share the risk.
© 2009 The Boston Globe