[Congressional Record Volume 150, Number 55 (Tuesday, April 27, 2004)]
[Senate]
[Pages S4385-S4386]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         OIL COMPANY INCENTIVES

  Mr. WYDEN. Mr. President, most American companies make their profit 
by selling the best product at the best price. But too often in the oil 
industry it just doesn't seem to work that way. For example, oil 
companies can even get a subsidy from the Federal taxpayers for 
shutting down a profitable oil refinery by deducting the cost of that 
shutdown from their taxes.
  I come to the floor today because I hope Congress will put a stop to 
the perverse incentives that reward oil companies when they reduce the 
supply of gasoline and gouge our consumers at the pump. In my view, the 
Tax Code simply should not reward companies that shut down a refinery 
to reduce the supply and drive up the price of gasoline. My own view is 
that Congress ought to be providing incentives to oil companies that 
increase their production, as long as they comply with the applicable 
environmental law.
  I think we are all pleased when we see corporate profits go up, and 
we are all pleased when the stocks of those companies go up as well. 
But what I am troubled about with respect to what is going on in the 
oil industry--and we are going to see profits up again this week, and I 
gather some have already been announced--is that too often our 
consumers are getting hosed.
  I have been traveling about Oregon over the last few weeks. I have 
watched as gasoline prices hit over $2 per gallon in some towns. In 
Eugene, Springfield, Medford, and Ashland--a number of our 
communities--the average price has been $2.06 per gallon. Each penny of 
that cost is coming out of the pockets of working Oregonians. It is, of 
course, helping to increase oil company profits. What I am troubled 
about is that the taxpayers at the same time are subsidizing practices 
that are detrimental to their interests.
  There has clearly been a pattern of extraordinary profits in the oil 
industry. A prime example was ExxonMobil, which last year announced an 
all-time record earnings of $21.5 billion. That is not just the highest 
earnings ever recorded by an oil company; that is the highest by any 
company in history.
  Again, I want it understood that I like to see our companies make 
profits. I like it when their stock prices are high. What I don't like 
is when the consumer has to subsidize anti-competitive practices that 
are detrimental to their interests. That has certainly been the case 
with respect to refineries, when an oil company gets an actual subsidy 
from the Federal taxpayers for shutting down a profitable refinery by 
deducting the cost of the shutdown from their taxes.
  This matter has special implications out in the West. I see my friend 
from Nevada on the floor. He made an excellent presentation with 
respect to how his State is affected by gasoline prices. All of us in 
the West are going to be hit, and hit very hard, by Shell's decision to 
close its Bakersfield refinery. In that instance, there seems to be no 
evidence that Shell has gone out and aggressively tried to find a 
buyer.
  Independent analysts have made it clear there is a substantial amount 
of oil in the area. I will tell you, for those of us in the West, 
looking at that refinery closure in Bakersfield, that deal smells. It 
just doesn't add up to have a profitable refinery going down at a time 
when the company doesn't look as if it is moving aggressively to find a 
buyer. There is oil in the area and, as I have pointed out, the 
taxpayer subsidizes the closures of these profitable refineries. Yet 
the Federal Trade Commission has refused to act.
  I hope to be on the floor very shortly with a bipartisan effort to 
address the anti-consumer practices. At a minimum, let us not have the 
taxpayers of America subsidizing anti-competitive practices in the oil 
industry, such as the shutdown of profitable refineries.
  Mr. REID. Will the Senator yield for a question?
  Mr. WYDEN. I will be happy to yield.
  Mr. REID. Last week, I gave a speech about what is going on in 
Nevada. In Nevada, we have gas prices now approaching $2.50 a gallon. 
If someone wants to put 4 gallons of gas in a vehicle, they have to 
bring a $10 bill with them to do that.
  I ask my friend his comments on this: Senator Ensign and I asked the 
Federal Trade Commission to take a look at what was going on in Nevada. 
They took a look and came back and said: We can't tell you why the 
price is that high. It is unusual, is what they said. It is unusual and 
they could not determine why gas prices were that high.
  Does the Senator agree, with the prices going haywire as they are, 
and the consumer being hit very hard, especially in the western part of 
the United States, that the Federal Trade Commission should do 
something more aggressively than what they have done?

[[Page S4386]]

  Mr. WYDEN. The Senator from Nevada is correct. The fact is the 
Federal Trade Commission is AWOL on this issue. It has sent letters to 
all of us in the West saying they are concerned about the issue, but 
they have not been aggressive in standing up for the consumer.
  I pointed out today that the oil companies ought to be rewarded 
financially when they take actions that benefit the consumer, not when 
they gouge the consumer. The consumers today are, in effect, getting 
fleeced from this unfair subsidy that is in the Tax Code when a 
profitable refinery goes down.
  The Senator from Nevada is absolutely correct. The Federal Trade 
Commission, in my view, is just going through the motions. I think they 
hope somehow this issue is going to pass. All of us in the West--a part 
of the country where there is a very tight supply situation--understand 
this problem is not going away. I intend to join with the Senator from 
Nevada in trying to put the heat on the Federal Trade Commission.
  Mr. REID. Mr. President, I would like to ask the Senator one more 
question. The Senator heard the remarks of the Senator from California 
saying that the Bush administration was actually doing nothing to look 
at the prices. In fact, the administration is in the Supreme Court 
today trying to keep secret its dealings with big oil.
  The Senator would acknowledge that this administration, the 
President, and Vice President made their living--certainly part of 
their wealth they have accumulated--dealing with oil companies.
  Does the Senator from Oregon acknowledge that the President has the 
bully pulpit and can certainly ask our so-called friends, Saudi Arabia 
and other countries, to stop cutting back the supply of oil but 
increase the supply of oil? Would that not also help, I repeat, the 
President putting whatever pressure he has--and that is significant--to 
tell the Saudis to start giving us more oil?
  Mr. WYDEN. I agree fully with the Senator from Nevada. In fact, I 
submitted a resolution urging the President do that. In fact, my 
resolution mirrors the resolution that was drafted by our former 
colleagues, Spence Abraham and John Ashcroft, that passed in 2000 when 
President Clinton was faced with the same kind of situation.
  I am very hopeful that the Senate will take up that resolution and do 
exactly as the Senator from Nevada has said.
  I also point out that it was very striking, even before this debate 
about Mr. Woodward's book, that the Saudi Foreign Minister said 
recently when they cut production--and he was quoted on the news 
services saying that he was not even contacted by the Bush 
administration. He heard that the Bush administration was disappointed 
from the press, but he was not even contacted by the Bush 
administration.
  If ever there were an administration that had earned some chips with 
the Saudis, given all that our country has done, this is an 
administration that has done so. I think the points made by the Senator 
from Nevada are extremely important.
  Mr. President, I believe my time has expired. I yield the floor.
  The ACTING PRESIDENT pro tempore. The Democratic leader.
  Mr. DASCHLE. Mr. President, I will use my leader time.

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