Exxon Mobil CEO Rex Tillerson has labeled an attempt by US Senate Democrats to pass a bill that would repeal tax breaks for oil companies as counterproductive and has charged the undertaking as “misinformed and discriminatory.”
Tillerson, along with the bosses of Chevron, Shell, ConocoPhillips, and BP testified Thursday morning before the Senate Finance Committee and have called on US lawmakers to allow the expansion of domestic oil and natural gas production, calling the denial of tax breaks for the Big Five as being unfair.
In written testimony filed with the committee regarding the repeal attempt, Tillerson stated: “It is not simply that they are misinformed and discriminatory. They are counterproductive,” The Hill reports.
Tillerson, Exxon’s boss, took home a compensation package in 2010 of $21.5 million, tops for oil company CEO’s. Exxon, along with the other top four oil companies, recently reported first quarter profits of more than $35 billion, with $10.65 billion of those profits going into Exxon coffers.
A repeal of the tax breaks is seen by some politicians as a way of helping reduce the massive federal deficit. The Democratic proposal calls for an elimination of $21 billion in tax breaks over a 10-year period, putting an end to subsidies for the oil and gas profit makers.
Republicans and Big Oil officials argue the legislation will lead to higher taxes that might lead to even higher gasoline price for the consumer.
Tillerson stated that an increase of taxes would discourage further energy investment. “Increasing these companies’ taxes would only discriminate against certain U.S. workers, make our companies less competitive against others who are in the same business, and discourage future energy investment,” he said, according to Bloomberg News.
A report by Congressional Research Service delivered to Sen. Harry Reid, D-Nev., shows that an increase in taxes for the five oil companies is not likely to raise gasoline prices because of other factors at play. “Any effect due to changes in the tax treatment of the oil industry would be hard to separate from the changes due to other factors,” the report read in part, according to Bloomberg.
Sen. Max Baucus, D-Mont. and Chairman of the committee, said in a statement on Thursday:
Energy incentives should help us build the energy future we want to see – not pad oil company profits. Americans want us to work toward an energy future made in America. They want us to develop energy sources that won’t be depleted, like the wind and the sun.
On Wednesday, touting an apparent patriotic mantra, ConocoPHillips CEO James Mulva called the repeal of tax breaks for the Big Five “un-American,” Bloomberg reports.
New York’s Democratic Senator Charles Schumer and Sen. Robert Menendez, D-NJ, pressured Mulva for an apology, but Mulva has stated his comment was not directed toward any particular lawmaker.
Reid, in a letter to his colleagues on Wednesday, noted that an estimated $2 billion annually in taxes for the top 5 oil companies would more than be offset by their projected profits, which for 2011 are projected to be $125 billion.
“Some have claimed that cutting $2 billion in annual oil subsidies to the Big 5 oil companies will somehow make oil and gasoline more expensive. We all know this argument is false. If we just compare the $2 billion in taxpayer subsidies to the projected $125 billion in profits the Big 5 oil companies are expected to make this year, it becomes very clear that repealing these subsidies would be only a small sacrifice for these companies. If the Big 5 oil companies could live with just $123 billion in profits, they could pay their fair share in taxes, help lower the deficit, and not raise the price of gasoline,” Reid said in his letter.
For his part, Tillerson remains adamant about the need for oil and gas tax breaks. “There is a more effective way to take steps to reduce prices and raise revenues — but, unfortunately, it is a way Congress and the Administration has so far rejected,” his statement read, Bloomberg notes. “If the U.S. oil and gas industry was permitted to develop our nation’s enormous untapped energy supplies, it could put downward pressure on energy prices and increase revenues for government budgets,” he added.