Oil Execs Try to Defend Tax Breaks Before Senators

With national gas prices topping $4 a gallon, the Senate Finance Cmte. is holding a hearing on tax breaks for the nation’s top five oil companies. On Tuesday, Senate Democrats announced a bill ending $21 billion in tax subsidies for Chevron, Shell, ConocoPhillips, BP America and Exxon Mobil. (See our post yesterday on efforts to end subsidies and to take action.)

Scroll for Sen. Rockefeller’s remarks, which were among the most colorful in this humble blogger’s mind.

Image grab from CSPAN of Chairman Baucus’ Opening Remarks

Oil company executives who testified at the hearing include: John Watson, Chairman and CEO of Chevron Corporation; Marvin Odum, U.S. President of Shell Oil Company; James Mulva, Chairman and CEO of ConocoPhillips; H. Lamar McKay, Chairman and President of BP America; and Rex Tillerson, Chairman and CEO of Exxon Mobil.

PROVISO – These updates are not literal quotes, but provide a flavor of remarks.

10:01 – Chairman Baucus – Subsidies arent really all that necessary any more.

10:08 – Exxon’s Tillerson – Getting rid of subsidies will have little effect on prices.

10:12 Sen. Wyden plays video of previous hearing where execs say they don’t need subisidies to incentivize exploration.

10:25 -Sen. Schumer – The average American family is getting gouged at the gus pump and being asked to shoulder the deficit.

10:26 – Schumer to Conoco’s CEO – Would you choose subsidies over student aid?

10:31 – Sen. Roberts says removing subsidies is unAmerican because it helps Hugo Chavez.

10:33 – Roberts reads Sen. Cornyn’s statement who can’t be at hearing – Cornyn supports more domestic drilling for job creation. Removing subsidies would be “counterproductive.”

10:42 – Sen. Menendez – My colleague from UT (Hatch) should explain to his constitutuents why he supports subsidies.

10:43 – To Conoco’s Mulva, Menendez asks why Mulva implied he was unAmerican for going after industry breaks. Menendez asks for apology and doesn’t get one. ThinkProgress did an extensive blog and has video of this heated exchange.

10:53 – Sen. Cardin – Most remarks on improving industry transparency particularly in developing countries.

10:56 – Sen. Rockefeller – The 5 of you execs are caught up in your profits, you yield nothing. You are out of touch.  You are like Saudi Arabia.

People are losing their health insurance and Head Start because of budget cuts and you share nothing.

11:01 – Tillerson denies that Exxon’s lower tax rate is worthy of comparison to average Americans who pay on average a higher rate.

11:05 – Sen. Stabenow – subsidies are 1 to 2 percent of Big Oils profits.

11:05 – Tillerson says it’s not a subsidy, it’s an incentive to keep producing.

11:06 – Stabenow says it’s not credible to say taking away 1 to 2 pct of profits will cause a rise in gas prices.  What do we have to give you to lower prices she asks. It’s a veiled threat.

11:08 – Conoco’s Mulva says let us drill more to bring more jobs and reduce prices.

11:10 – Sen. Nelson – Consumer’s notice that when barrel price goes up, they pay more.  But when it goes down, prices at the pump don’t go down.

11:11 – Exxon’s Tillerson says there’s a several weeks delay in supply chain and retailers have small margins and chase prices on the way up, and lag on the way down.

11:18 – Sen. Carper – We need to look at every nook and cranny of the budget, go to a culture of thrift, and ask what we are getting for our money. We are not getting the best result with these subsidies. We probably don’t have the votes to pass a Menendez subsidy bill, but when the overall budget comes up, this will likely come up again.

If I were in your business, I wouldn’t consider myself an oil company, but an energy company, and I’d like to know what you are doing to move away from unhealthy fossil fuels.

11:21 – Exxon’s Tillerson talks about biofuels from algae as a renewable with a lot of promise. Conoco’s Mulva says we are “blessed” with a great deal of natural gas. BP’s McKay talks about investments in biofuels and other renewables. Shell’s Odum also says biofuels are the most promising also. Chevron’s Watson says they consider themselves the renewables leader with geothermal being key.

11:30 – CEO’s generally agree on comprehensive tax reform.

11:34 – Sen. Hatch says removing “incentives” will send production offshore.

Hatch – if we made all 5 of you companies into 1, you would only control 2 pct of global oil reserves. US companies have a “wee little sliver.” (holds up chart)

11:37 – Hatch asks Shell’s Odum if government is standing in his way. Odum agrees, particularly when it comes to drilling in Alaska.

11:40 – Hatch says let’s not put these companies at a disadvantasge when they represent so little of world production by gettint rid of “incentives.” All CEOs agree prices won’t come down if Menendez bill passes.

11:42 – Wyden says the industry’s about face on subsidies denies common sense. Then asks McKay why give companies a huge tax credit for a ethanol blenders credit when they are already required to ramp up production.  McKay says he’s open to phaseout of credit.

11:46 – Sen. Cardin – most of these subsidies go back to shareholders as profits.  I don’t agree with Sen. Hatch that the subsidies are incentives to produce.

11:51  – Sen. Rockefeller – I want to repeat that you really are out of touch.  You are accostumed to always winning, while the people of West VA are always losing.  Every day as their senator I feel like I’m pushing boulders uphill for them.  You are always on the other hand succesful, assured, and have no reason to feel threatened by what’s going on at this hearing.  But I yearn for one of you CEOs to feel what average people feel.

11:58  – Conoco’s Mulva says he feels his industry feels constrained and wants access to lands to drill.

12:01 – Chevron’s Watson says he wants lots more drilling on the outer continental shelf.

12:05 – Senator Baucus actually proposes more oil leases in exchange for removing subisidies.

12:07 – Chevron’s Watson says removing subsidies would hurt his industry and slow investment.

12:15 – Hearing concludes with Sen. Baucus reminding everyone the nation faces a difficult fiscal crisis.  Mentions pain in several areas and conservation programs specifically among them.