Wednesday, February 16, 2011

Big Oil's Shakedown for Chump Change

Last year, America's top seven oil companies earned a combined $755 billion.

About one percent of that revenue came from federal subsidies.

Yet after President Barak Obama proposed eliminating $4 billion in kickbacks you and I pay Big Oil each year, some conservatives haven't stopped squawking their displeasure.

Yesterday, I blasted Obama for compromising our nation's fiscal integrity by proposing to spend upwards of $500 billion on high-speed rail. Today, I have to give the President some kudos for including in his budget the revocation of the biggest small bribe in modern finance.

Indeed, none other than 43 himself, former President George W. Bush, called for ending taxpayer-funded subsidies to the oil industry back in 2005.

Even experts at the conservative Heritage Foundation believe energy subsidies distort our national economy and should be terminated. Dr. David Kreutzer, Heritage's energy expert, told the New York Times "we know that petroleum and coal survive just fine" without subsidies.

Yet for years, Washington's formidable oil lobby has been able to stymie the best laid plans of legislators to do so.

Which begs the question: who's got more gall? The President, for having the temerity to strip government subsidies to oil companies from his current budget? Or Big Oil's lackeys, for insisting the most lucrative industry on the planet still needs taxpayer subsidies to survive?

Petro-Dollars at Work?

Why does the U.S. oil industry deserve $4 billion annually in tax breaks anyway? Granted, four billion dollars here, and four billion dollars there, and pretty soon, we're talking about real money. But real money for whom? Taxpayers, who could use every red cent to help put our budget back in the black, or oil companies who earn hefty profits providing virtually all of the fuel upon which our economy runs?

Both our government and the oil industry exist as behemoth organizations for whom billions of dollars represents chump change. Except, apparently, when it comes to being deprived of it. Both Uncle Sam and Big Oil have also become mutually-interdependent, a marriage of necessity in a post-industrialized one-superpower planet where their dominance is unrivaled. Except one is supposed to be a civic administrative body, while the other claims to be a for-profit business enterprise.

After President Obama's State of the Union address last month, Big Oil's principle lobbyist Jack Gerard had the audacity to crow that "The U.S. oil and natural gas industry... does not receive payments from the government to support oil and gas development." As if it should. And this means they're entitled to subsidies. Does Gerard mean to imply that Big Oil has purely altruistic motivations when they sell Americans the fuel we need? Are they really non-profits at heart, doing their best to help Americans survive?

Some petroleum pundits say that we taxpayers don't give our benefactors in the crude business enough credit and deference (and yes, the pun is intended). In fact, the American Petroleum Institute insists that Big Oil actually subsidizes our government at a rate of $95 million every day if you factor in all of the benefits their products provide our economy.

If you didn't know any better, it might sound like the Exxon-Mobil's of America are $4 billion away from insolvency.

Big Oil as Thug Oil?

For all of the political and philosophical reasons people disagree with President Obama, we should be able to agree that he's correct in trying to cut the national budget by $4 billion a year. By taking taxpayer-funded subsidies away from a private industry which earns 99% of its revenue well enough on its own.

Doesn't it appear that, considering even President Bush and the Heritage Foundation have come out on the same side as President Obama on this issue, Big Oil's lobbyists hold too much power over legislators? Doesn't this speak volumes about how special interests continue to rule Washington with iron fists?

If Washington cuts off this yearly token to America's oil companies, might they relocate their headquarters off-shore to tax havens in the Caymans and Bermuda? Might they seek to punish the United States for playing politics over such a relatively trivial amount of cash? Some oil services firms have done just that already, although few can argue that the Caribbean isn't a nicer place for corporate executives to comfort themselves than Houston, with its stifling humidity and snarled traffic.

As our economy becomes increasingly global, losing corporate taxpayers with international business dealings does become more of a concern. But if $4 billion is all that's standing in the way of Big Oil's flight from the bosom which bore her, what does that say about the intrinsic integrity of capitalism - for a company like Exxon-Mobil being able to hold taxpayers hostage through entitlements?

We've all heard of "too big to fail." But can we allow "too big to pay?"

After all, this ain't Bensonhurst.

Oil Company Revenue - 2010
Exxon Mobil: 284,650 (million)
Chevron: 163,527
ConocoPhillips: 139,515
Valero Energy: 70,035
Marathon Oil: 49,403
Sunoco: 29,630
Murphy Oil: 19,138

Total Revenue: $755,898,000,000
Source: Fortune Magazine

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