Judgment Day: Oil execs face angry Democrats

Five executives from America’s leading oil companies were marched in front of the Senate Finance Committee Thursday morning for a public scolding, and told to defend industry tax breaks while Americans are being charged $4 for a gallon of gas.

In other words, Thursday was judgment day the CEO’s of the country’s five largest oil companies. And because most of the committee’s Republicans were attending a budget meeting at the White House, the executives were left to face a very partisan, very unhappy panel of Democrats.

Representing the scorned oil industry was John Watson of Chevron, Marvin Odum of Shell Oil, James Mulva of ConocoPhillips, H. Lamar McKay of BP America, and Rex Tillerson of ExxonMobil.

The hearing came after the committee’s chairman, Sen. Max Baucus, introduced legislation to repeal $21 billion over ten years in tax credits for oil and natural gas companies. In the House, however, legislation was passed Wednesday to actually expand access to offshore drilling.

Nonetheless, Democrats are on the warpath against record profits and tax breaks for an industry that they say should “share in the sacrifice”.

On the other side, Republicans defend the tax breaks, saying they facilitate increased access for drilling, which ultimately leads to lower costs for production and prices at the pump.

Sen. Orrin Hatch of Utah, the lone Republican in attendance for most of the hearing, argued that cutting the tax breaks would do nothing to ease pain at the pump.

The message brought by the industry execs: no one is asking for special government subsidies, only equitable treatment in the tax system that other industries receive.

“It’s not a subsidy; it’s a legitimate tax deduction,” said Tillerson.

He took it a step further by telling the committee, “It is not simply that they are misinformed and discriminatory. They are counterproductive. By undermining U.S. competitiveness, they would discourage future investment in energy projects in the United States and therefore undercut job creation and economic growth.”

In his opening statement, Watson also made it a point of noting that oil companies pay their fair share of American taxes. “Few businesses pay more taxes than oil and gas companies,” he said.

In their questioning, however, the committee’s Democrats framed the issue around the country’s debt and the need to cut spending overall.