[Congressional Record Volume 157, Number 67 (Monday, May 16, 2011)]
[Senate]
[Pages S3001-S3002]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                           BIG OIL SUBSIDIES

  Mr. MERKLEY. Mr. President, I rise to speak to S. 940. Tomorrow 
evening, we are going to have a vote on whether to proceed to debate 
this bill, which closes oil and gas tax loopholes, thereby raising a 
significant amount of additional revenue for important projects in the 
United States of America.
  I rise in favor of this motion tomorrow because if we have a 
successful vote tomorrow evening, we will finally get to debate this 
issue of whether we should continue to have massive tax giveaways to 
the most profitable companies in America.
  Gas is at $4 a gallon. Every American is going to the pump, and they 
are finding that, once again, the total toll as they fill up their 15-
gallon tank in their car is well over $50 and can hit $60. That is a 
huge chunk out of my family budget, once or twice a week. It diminishes 
what is available to be spent for other core expenses to the families. 
Indeed, that $4 a gallon at the gas pump is raiding Americans' 
pocketbooks.
  Americans do not also need to be subsidizing the same highly 
profitable oil companies through their paychecks, through tax 
loopholes. Make no question, the companies are highly profitable. Oil 
is now $100 a barrel. So the companies are able to sell oil that costs 
no more to produce today than it did 1 month ago, no more to produce 
today than it did 3 months ago, when oil was much lower, no more 
expensive to produce today than 1 year ago, when it was $3 a gallon.
  So oil companies are experiencing enormous profits. The final 
quarterly filings by ConocoPhillips, $3 billion in profits--this is 
just quarterly, over 3 months--BP, $7.1 billion in profits; Exxon, 
$10.7 billion in profits.
  That $10.7 billion equates to $5 million an hour every hour, day and 
night, throughout the week, throughout the weekend, through the entire 
quarter--$5 million per hour.
  I think, if you have an ounce of common sense, then you will 
recognize if you are making $5 million per hour, you do not need 
taxpayer subsidies to stay afloat.
  These subsidies come in many forms.
  The first is the domestic manufacturing deduction for oil and gas. 
This allows you to deduct a specified percentage--6 percent--of your 
qualified domestic production income. So it is not just that you get to 
deduct expenses, you also get to deduct income as if it was a business 
expense.
  Wouldn't all of us, when we are filing our taxes, like to deduct our 
income as an expense and, thereby, drastically cut our tax bill? Well, 
it is a sweet deal for big oil.
  Then they have the ability to expense intangible drilling costs. The 
basic notion is that when you have equipment that is necessary for the 
success of a company, then you depreciate that equipment over the life 
of the equipment. If it is equipment that lasts 5 years, you expense it 
over 5 years. These are things, for the oil industry, such as derricks 
and tanks and pipelines and other physical structures. But this allows 
the companies to take that deduction of the entire expense immediately, 
not expense it over the life of the capital equipment like everyone 
else. So it is another sweet deal.
  The third is a special deduction called the tertiary injection cost 
deduction. It comes in the form of a tax credit. A tax credit is much 
more valuable than a tax deduction because it is a dollar-for-dollar 
deduction in the taxes you owe. This is for employing enhanced oil 
recovery methods--methods that are to the benefit of an oil company 
because they get a lot more oil out of an oilfield if they employ wise 
stewardship of that field. So they have an incentive to do this anyway, 
but we are giving this huge bonus credit. That is a sweet deal. That is 
sweet deal No. 3.
  Then you have the dual capacity taxpayer credit. This one you almost 
cannot believe is real because dollar-for-dollar, we, the taxpayers in 
America, reimburse the oil companies for the taxes they pay overseas. 
Well, quite frankly, it is America subsidizing the foreign taxes. So 
oil companies just pass through. It certainly is an incentive for the 
foreign governments to tax the oil companies extremely heavily because 
they get it all back from America. It is also proven incentive for 
companies to call royalties a foreign income tax so they get reimbursed 
for their royalties as well.
  As proposed, changing this will reduce the deficit by $429 million in 
fiscal year 2012 and $6.5 billion in fiscal year 2021. That is the 
fourth sweet deal.
  The fifth is the percentage depletion deduction. Firms that extract 
oil or gas are permitted to deduct 15 percent of the sales to recover 
their capital investment in oil and gas reserves. They get to, again, 
deduct their sales, essentially in a situation as if they are an 
expense. That is sweet deal No. 5. In that case, often the value of 
that deduction exceeds the value of the original capital investment by 
the company. They get more than compensated.
  Then, No. 6: royalty relief for deepwater Outer Continental Shelf 
production. The Department of the Interior must allow companies doing 
certain types of drilling on the Outer Continental Shelf--deepwater 
drilling and deep wells in shallow water--it allows them to not pay 
royalties on a certain minimum volume of production. Royalty relief is 
a great benefit to the oil companies and comes at great cost to the 
American Treasury. That is sweet deal No. 6.
  This world in which companies have had, over the years, inserted 
various provisions--making a very strong case for each one at the time 
of why this was necessary, that was necessary--amounts to an enormous 
tax bill. This bill that takes and modifies these provisions for the 
top five companies that have the largest profits would produce about $2 
billion in savings from closing these six tax loopholes.
  The question we all need to ask ourselves is: Can that $2 billion per 
year be put to better work than subsidizing companies that are making 
enormous profits at the pump? One possibility is that $2 billion could 
go toward decreasing our deficit. A lot of folks on the floor of the 
Senate talk about how important that is. Which is more important, 
giveaways to the most profitable

[[Page S3002]]

companies or reductions in the national deficit?
  How about creating jobs? We have constantly been trying to get a bill 
to this floor that provides low-cost loans for energy saving 
renovations. It is considered the most powerful job creator dollar-for-
dollar of any idea that has been put forward. It is in the form of HOME 
Star, which provides low-cost energy saving loans to families, and they 
can pay them back from the savings in energy. So it is a win-win for 
the family, and it puts people to work in America in a construction 
industry that is 50 percent unemployed.
  How about Building Star? It does the same thing on commercial 
buildings. How about Rural Star Energy, the bill that provides these 
low-cost loans through rural co-ops, so rural America can benefit from 
energy savings and can pay back these low-cost loans from the savings 
on their monthly utility bills.
  The reason this creates so many jobs is because not only can you not 
outsource overseas the jobs themselves for the construction work that 
is done, but almost every single thing that is used in the energy 
saving economy--from the insulation, to the caulk, to the double-paned 
windows--is made here in America. That is why you get so much 
tremendous leverage. You put the American construction industry to work 
and you utilize American products.
  Maybe it is more important to create jobs than it is to give away $2 
billion a year to the most profitable five oil companies in America. 
Maybe it is important to shore up Medicare. Some of my colleagues have 
talked about they want to dismantle Medicare. They want to turn it into 
a voucher program, where the voucher would not increase as medical 
costs increase, so that slowly Medicare would be wiped out as the 
ability to provide health care for our seniors. Maybe it is more 
important to provide a strong Medicare Program than it is to give away 
$2 billion a year to the most profitable five oil companies in America.
  Maybe it is more important to enable our children to get loans to go 
to college. We are becoming the first generation of adults whose 
children are getting less education than we have because the cost of 
tuition has gone up disproportionately to the income of a working 
family. The more tuition goes up, in comparison, the more our students 
have to wrestle with whether they can afford to go to college and, if 
they go, whether they need to drop out after the first year in order to 
go back to work in order to save to go the second year. When students 
leave college in that situation, they do not often get back.
  Maybe it is more important that we proceed to help American 
students--our children--go to college than to give away $2 billion to 
the five most profitable oil companies in America.
  Tomorrow, we are going to have a vote. The vote is simply whether 
this is important enough to debate, whether it is important enough for 
us to come together as a Chamber and say it matters whether tax 
loopholes were carved out through special interest lobbying over the 
past 20 years in order to get very sweet deals when they serve no basic 
core purpose in the American economy. We need to have that debate. I 
wish to encourage my colleagues across the aisle to vote yes tomorrow, 
to vote yes on a motion to proceed, so we can get to the bill and have 
that debate.
  Under the rules that have been established, we need 60 votes; 
otherwise, my colleagues across the aisle threaten to filibuster, that 
they are going to do a silent filibuster, blocking the ability of this 
Chamber to have a debate. Let me tell you, this needs to be debated.
  Fiscal responsibility needs to be debated. These tax giveaways need 
to be debated. The tradeoffs between assisting our students and tax 
giveaways need to be debated. The tradeoff between reducing the deficit 
and these giveaways needs to be debated. The contrast and comparison 
between shoring up programs that provide health care to our seniors and 
these giveaways need to be debated.
  I encourage my colleagues: Do not shy from your responsibility to 
wrestle with difficult challenges. Come and vote yes tomorrow evening 
on proceeding to debating the giveaways to the five most profitable oil 
companies in America so we can consider whether those funds will be 
better serving American citizens by reducing the deficit or by 
providing core programs.
  Thank you, Mr. President.

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