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October 19, 2017

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Who needs subsidies?

The oil company is making massive profits while Americans are suffering

In 2005, President George W. Bush said if oil prices were at $55 a barrel, the oil companies wouldn’t need the lucrative subsidies that the federal government gives them.

At the time, oil prices were around $50 a barrel, and in a hearing in the Senate, executives from the five largest oil companies were asked whether they agreed with the oilman-turned-president. They did.

Fast forward to 2011. Oil prices are hovering around $100 a barrel, so the Senate Finance Committee summoned executives from the same companies, and on Thursday asked them if they agree with Bush’s sentiment. They don’t.

ConocoPhillips CEO James Mulva, the only executive to testify this week and in 2005, said the oil companies still needed the subsidies because the price of doing business has gone up.

Before anyone pities the poor, poor oil companies, consider two other things that have gone up: gas prices and oil company profits.

An average gallon of unleaded gasoline is at a record high at $3.90 a gallon, up $1.03 from a year ago. The big five oil companies recorded more than $31 billion in profits for the first three months of this year. They are projected to make $125 billion this year.

Given all of that, the Senate is considering a bill that would repeal the subsidies those five companies receive. It would amount to about $2 billion, a small percentage of their profits. That money would help the government stave off some budget cuts.

But Republicans are taking the oil companies’ view. They say the bill wouldn’t lower the prices at the pump, but if that’s true, what’s the point of giving the subsidies? The Republicans also complain that the Democrats are trying to raise taxes, but Democrats just want them to pay their fair share.

During the hearing, Democratic senators talked about the country making “shared sacrifices” during the economic downturn. Chevron Corp. CEO John Watson said Americans don’t want that but instead want “shared prosperity.”

He was cut off by Democratic Sen. Jay Rockefeller, D-W.Va., a scion of the oil tycoon who founded Standard Oil — the company that spawned Chevron. “Lovely statement,” Rockefeller said, “but do you understand how out of touch that is?”

Unfortunately, the executives and the Republicans are blind to the fact that Americans’ prosperity is hampered by the gas prices. Instead, they offer a litany of spurious complaints:

• One executive complained the industry shouldn’t be “punished” because it’s successful. But if the companies are so successful, they don’t need the subsidies.

• Another executive said repealing the subsidies would “discourage” oil companies from investing in exploration. But no one will be discouraged when they can make the profits the oil companies do.

• In a news release issued before the hearing, ConocoPhillips complained that the plan to repeal the subsidies was “un-American.” That’s disgraceful. Doing your part is fundamentally American — it’s not paying your fair share that is un-American.

The fact is the oil industry can and should pay more. Congress should pass the bill. It’s disgusting that Republicans are letting the oil companies gorge themselves while average Americans get stuck with the bill.

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