Dems Declaring War On American Oil
Dumbfounded does not even begin to describe my reaction to Congress’ most recent failure to look out for Americans, and American companies best interests. H.R. 5351: Renewable Energy and Energy Conservation Tax Act of 2008 passed the House on Wednesday by a 236-182 vote, and is surely a bill which will have lefties cheering their own ignorance. Mixed in with all of the tax credits offered for biofuels and other renewable energy sources is a section which will have Americans paying an even higher price at the gas pumps this summer. As CQ Politics is reporting:
The tax package (HR 5351), which passed 236-182, repeals subsidies for five major oil and gas companies to offset $13.7 billion of the $18.1 billion in renewable-energy tax breaks contained in the bill.
Meanwhile, Citgo Petroleum Corp. would continue to receive a 6 percent deduction for domestic manufacturing that the largest firms would lose.
The five big companies targeted by the bill — Chevron, BP, ExxonMobil, Shell and ConocoPhillips — all produce and refine oil and sell gasoline in the United States, and therefore under the bill would lose the domestic manufacturing deduction they received as part of a corporate tax law in 2004 (PL 108-357).
“This bill raises taxes for U.S. oil and gas production . . . while giving more American dollars to a dictator that has threatened to take away U.S. energy supplies,” said Republican Phil English of Pennsylvania.
This bill was in part due to Exxon’s recent earnings statements, with Sen. Charles E. Schumer (D-N.Y.) saying at the time “Congratulations to ExxonMobil and Chevron — for reminding Americans why they cringe every time they pull into a gas station and for reminding Washington why it needs to act swiftly to break our dependence on foreign oil and roll back unnecessary tax incentives for oil companies.”
Like Schumer, most Democrats enjoy reminding the American people that economics 101 is not a required course for holding public office. Before going into the difference between a profit, and a profit margin, I would like to make one quick point with regards to Exxon’s record earnings. For fiscal 2007 Exxon paid $29.8 billion in income taxes to the federal government, representing just over 42% of their income. In comparison, the bottom 50% of individual tax payers paid a total of $28.6 billion off of $66.3 trillion in income, or roughly 3%. Yet it is those bottom 50% (I myself am included in that bracket), paying an average of 3% in taxes, who generally will cry about Exxon’s profits.
Exxon did indeed post a record profit of $40 billion last year, yet they took in $400 billion in revenue. With Exxon’s profit margin at 10%, down slightly from the year before, they can hardly be blamed for rising gasoline prices. Removing the tax incentive they currently enjoy would put a serious strain on their already miniscule profit margins. Common sense would dictate that if a company were forced to pay more to conduct business, they would need to raise prices to offset those costs.
For all of the talk revolving around reducing our dependence on foreign oil, Democrats have taken a giant step towards assuring that dependence only grows in the future. Domestic oil companies have been the target of the left for years, with the bulls eye only growing larger after Bush was elected. An attack on oil companies is likened in most lefty’s minds as an attack on the Bush administration, therefore it is welcomed, and even applauded on the left.
Ignored in the debate over dependency on foreign oil, is that we have yet to come up with a viable alternative. Although there options such as biofuels, and plug-in hybrids, these technologies are not widely available as of yet, leaving our dependency on oil very high. Any increase in gasoline prices, as this bill would almost guarantee, will have a negative effect on our overall economy. Of course Hugo Chavez and Citgo Petroleum will not have to worry about it, Democrats have deemed them worthy of a tax advantage that American companies will no longer enjoy.
Sphere: Related ContentIf you enjoyed this post, make sure you subscribe to my RSS feed!
o H.R. 5351: Renewable Energy and Energy Conservation Tax Act of 2008 (Act)
o 2/27/2008: Passed the House.
o 2/28/2008: Received in the Senate and Read twice and referred to the Committee on Finance.
o The Act would impose a conservation fee on oil and gas taken from deep waters of the Gulf of Mexico; scrap nearly $6 billion worth of oil industry tax breaks enacted by Congress in recent years; and seek to recoup royalties lost to the government because of an Interior Department error in leases issued in the late 1990s. The Act passed the House with the partisan vote of 99% of Democrats supporting and 100% of Republicans opposing.
o The Republican leader, John Boehner states the Republican opposition like this: “Unfortunately, the Majority’s ‘no energy’ bill will only make matters worse by raising taxes and setting the table for even higher prices at the pump. Worse yet, it actually carves out tax breaks for Venezuelan dictator Hugo Chavez – courtesy of American taxpayers.”
o This partisan remark is about Citgo, the U.S.-based company owned by the government of Venezuela. Only the biggest oil companies would have their subsidy reduced by the Act. Citgo is not big enough.
o Democrats said the Act could produce as much as $15 billion in revenue. Most of that money would pay to promote renewable fuels such as solar and wind power, alternative fuels including ethanol and biodiesel and incentives for conservation. The Heritage Foundation says these alternative energy methods have failed before. They say Congress should go back to the drawing board and craft a policy that places greater emphasis on the market.
o Republicans do not offer an alternative bill
Calvin Leman
http://fp1.centurytel.net/democracy/
Apr 24th, 2008 at 11:21 am
[…] high energy prices. It was because of this line of thinking that House Democrats voted to roll back $13 billion worth of tax subsidies to American oil companies, despite still offering subsidies to foreign […]