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.
Odum pushed back on the Democrat’s deficit message by arguing, “If you look at ways to impact the deficit…it’s through more production where we pay more bonuses for access, more royalties for production…that’s the way to impact the deficit.”
The executive’s defense, however, seemed small compared to impassioned Democrats warning about the dangers of the growing deficit.
“We have to choose priorities and right now we have a huge budget deficit,” said Sen. Chuck Schumer of New York. “So I want to ask you…what about your priorities?”
“Do you think your subsidy is more important than the financial aid we give to students to go to college?” asked Schumer, directing his question at Mulva. “So if you had a choice as an American, which would you choose?”
ConocoPhillip’s Mulva was targeted heavily throughout the hearing, and made to pay for a press release the company put out yesterday in anticipation of the hearing that called the tax proposal “un-American.”
Both Senator Schumer and Senator Robert Menendez of New Jersey called on Mulva to apologize for the press release.
“I want to hear from you, do you make those accusations lightly?” Menendez directed to Mulva at one point. “Or did you mean to question my patriotism?”
Mulva attempted to explain the release by saying it was not intended to target lawmakers personally, but to characterize a tax proposal that is inconsistent with all taxpayers and that is discriminatory toward one industry.
That was lost on Menendez, however, who went on to call the release “beyond the pale.”
“The bottom line is you’re unwilling to apologize for your company’s statement so I will continue to take offense to it.”
Senator Jay Rockefeller of West Virginia, known as somewhat of a moderate Democrat, also took an exceedingly hard line with the executives, accusing them of being out of touch with Americans, and compared their arguments – which he called “highly defensive” and “caught up in profits” – with Saudi Arabia
At another point, Mulva responded to Rockefeller’s criticism and summed up the industry’s message by saying “We’re constrained. You’ve got shackles on us…put us back to work. Give us access.”
“Maybe you’re right,” replied Rockefeller, “maybe you’re wrong. I think you’re wrong…you just don’t understand. And I think that’s sad.”