Republicans have rejected a bill that would have killed tax breaks for big oil companies. Despite the President’s plea to end oil subsidies, on Thursday March 29 the Senate voted 51-47 against a Democratic bill that would remove billions of dollars in oil company tax breaks. President Obama has been a champion of ending big oil’s subsidies since taking office. “It’s like hitting the American people twice,” Obama said. “You’re already paying a premium at the pump right now. And on top of that, Congress…has thought it was a good idea to send billions of dollars more in tax dollars to the oil industry.”
To justify their lack of support for the bill Republicans are using the flawed logic of higher gas prices. In February the average price of gasoline in the US was $3.58 a gallon, an 11.5 percent increase over February 2010.
According to a panel of experts testifying before members of the Senate Committee on Energy and Natural Resources the US has reduced demand and increased supply.
The President has said, “American oil is booming. The oil industry is doing just fine. With record profits and rising production, I’m not worried about the big oil companies.”
According to the panel of experts there is not much the US can do domestically to reduce increasing gas prices. High gas prices are largely due to the looming showdown with Iran and geopolitical instability in major oil exporting countries like Sudan, Nigeria and Iraq.
“We are held captive by global markets that we have no control over,” said Sen. Joe Manchin III, D-W.Va.
Although Republicans are trying to suggest that eradicating oil subsidies would increase the price of gas, Frank Verrastro, senior vice president of the Energy and National Security Program, explains this is simply not the case.
Verrastro said the elimination of tax breaks for oil companies would not change the price at the pump which is due to the global nature of the oil market.
International events beyond American control are driving oil’s price volatility. New projects like the Keystone XL pipeline will not have much of an effect on the retail price of gas either so there is little chance of any immediate cost relief.
The only way to gain control over the costs of energy is to reduce dependence on foreign oil and the only way to do this is to develop alternative sources of power.
“With the ability to access these new, unconventional resources, we may very well be on the verge of an American energy renaissance,” Verrastro said.
However $20 billion in federal subsidies to the largest oil and gas companies make it more difficult for these alternatives, particularly renewable sources, to grow to a size where they can make a difference in America’s energy picture. Subsidies make even less sense when you consider that The five largest oil companies reported a combined $140 billion in profit in 2011.
“They can either vote to spend billions of dollars on oil subsidies that keep us trapped in the past,” said President Obama, “or they can vote to end these taxpayer subsidies that aren’t needed to boost oil production.”
“Members of Congress have a simple choice to make: They can stand with the big oil companies, or they can stand with the American people,” Mr Obama said before Thursday’s vote in the Senate. It would appear the GOP would rather wallow in the past and stand with big oil.