[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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