Senate Republicans Block Windfall Profits Tax on Big Oil Companies
Democrats fall eight votes short of preventing filibuster
With gasoline prices topping $4 a gallon, Senate Democrats wanted the U.S. government to throttle back on the billions of dollars in profits being taken in by the major oil companies. But with the White House threatening a veto of the bill, the Senate voted 51-43 to close debate, well shy of the 60 votes needed to avoid a filibuster.The proposed windfall profits tax would have been somewhere between 10 and 12 billion dollars for this year, and it would have been levied against the country’s five largest oil companies. The legislation would have also rescinded $17 billion in tax breaks the companies expect to enjoy over the next decade.
“The oil companies need to know that there is a limit on how much profit they can take in this economy,” said Sen. Richard Durbin of Illinois, warning that if oil prices are not reined in, “we’re going to find ourselves in a deep recession.”
- » See also: Whistleblower: World Running Out of Oil Faster Than IEA Says
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A statement issued by the White House’s Office of Management and Budget (OMB) said, “Rather than addressing the principal cause of fuel price increases — rising world petroleum demand without a similar increase in supply — (the bill would) undercut U.S. energy security and decrease U.S. energy production, thus exacerbating market tightness and increasing energy prices.”
I find it quite striking that the White House is still claiming that the principal reason for the precipitous jump in oil prices is the rise in global demand, when according to Chevron Vice President of Strategic Planning, Paul Siegele, demand is not currently on the rise. Siegele raised this very point with me less than two weeks ago at a panel discussion at Stanford. (For more on the slowing of global oil demand, this article in MarketWatch reports on the International Energy Association’s projected slowdown).
Following the bill’s defeat, Democrats said they may work on separate legislation to increase oversight of trading by the Commodity Futures Trading Commission. Many argue that one of the principal drivers of rising gas prices is actually because of futures speculation on the commodities market. Sen. Charles Schumer (D-NY) said that parts of the windfall tax bill including commission provisions could be split into separate proposals.
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@Andy:
Thanks for the elaboration. I generally agree with you that this was not the best piece of legislation - it was more of a political statement, really. And I didn’t intend to imply that the oil companies are necessarily ‘the bad guys,’ as they are often portrayed by some. The problem is much deeper than that.
‘Big Oil’ is owned by Tom, Dick, and Sally, via their 401ks, mutual funds, and retirement plans. If I were to say there is one single problem (which there isn’t), I would say it is one of corporate governance.
I should also add, that it concerns me we do not give the same attention to the development of renewable energy as we do to fossil energy. I am not arguing we can instantly replace anything with solar, wind, or geothermal, just that we have to cut the umbilical cord on the well-established energy industries.
Andy,
It seems to me that you must have some vested interest in the oil industry. Do you work for Exxon or something? There is a big difference between Microsoft Corp. and the Big Oil industries. The oil companies provide a product that Americans cannot live without in daily life. Whether you make $10 a month or $10000, to live and survive, you must utilitze products which require oil to produce. You need oil to run your lights, you need oil to get to and from work (gas), it takes oil (gas) to run the trucks that deliver our groceries to the supermarket. If the oil companies decide to raise prices, we are at their mercy. The government needs to have more control over these companies that rule every aspect of the American way of life. If the government doesn’t step in to regulate this in a better way, the American lifestyle as we know it is doomed. We might at well move to a third world country and get used to hunting for our food, because we will be there soon. Do you know how to grow a tomato? You’d better learn…unless you work for Exxon, of course.
Tim,
The great thing about America is that if there is money to be made in renewable energy then markets will emerge and more and more people will be investing in renewable energy if a profit can be made.
Also another thing is that if there was a viable alternative to oil that could be used in huge volumes, for a decent price and a price that the energy companies could make a profit on, they would 100% bring it on to the markets.
Just think how huge of a project it would be to move away from oil and how much it would cost. There’s just so many barriers to overcome at such a huge cost.
Tax and Spend… Mr. Obama is a true liberal democrat and, if he’s elected, with his buddies in charge of Congress hold onto your wallet. McCain has it right, Obama may be running for Jimmy Carter’s 2nd term. Having lived through that debacle, no thanks.
Corporations don’t pay taxes… their stockholders and consumers make the payments. A windfall profit tax is stupid.
Great thing about America is that companies can make record profits and still get massive tax breaks, while the average citizen suffers. That is great.
Bring it to market? much like the auto industry rapidly adopted the electric car. Not so sure you understand how much the big oil companies have been green washing themselves, they want status quo, not change. Here Andy is some Kool-Aid for you to drink.
Many of us are thinking of how huge the problem is and are trying to solve it and the solution does not begin with giving windfall tax breaks to mega corporations.
“Um, no one is proposing increasing consumption. Rather, many are for maintaining, even decreasing, consumption, at reasonable fuel prices. Succintly stated at”
Umm…. I believe its already been proven, this is not going to happen. “SUVs ideling in the Wal-Mart Parkinglot and Trucks Hauling no Cargo, just for show.”
Now we have four SUV and Truck plants shutting down and Ford is hurting also. Econ cars production is being ramped up. Price is doing what social controls could not. The public would have never supported a tax rate like this either.
One person I talked to had just got rid of their truck 15 mpg on a 25 mile comute for mid size car and gained 25 mpg.
“Congress wants to) “force conservation, force biofuels, force diesel. And we should do it on the backs of the poor and the middle class.”
Any road to energy to energy independence is going to be harsh. As a income earner at the poverty line. I understand and appreciate this. I also understand what will happen when cel. ethonal production fully comes on lone. Sure fuel will be at 2.50 a gallon but I know I will never complain about it.
“After all, if someone can’t afford a Prius: well, fuck ‘em. And, by the way: those who are suffering from the dictatorships and authoritarian governments propped up by American fuel dollars? Fuck them, too.”
There are cars out there that are not hybrid that get the same fuel mileage as the Prius that are a lot cheaper.
Amy: As a holder of a 401k plan. Congress needs to leave the dividend money alone.
What I think really needs to be discussed by our government is a national energy policy that considers for at least a moment that the crazy rise in oil prices is going not just feed the bottom line of the big oil companies, but also the coffers of Al Quaeda, Iran, Syria and their ilk as well. With a lot more money flowing through the middle eastern word, it is inevitable that these “outlaws” will have greater resources and greater ambition to cause trouble.
If we had spent the trillion dollars spent in Iraq on reducing our dependence on foreign oil by creating and subsidizing alternatives, the price of oil would be lower our dollar would be stronger and the bad guys would have less resources. Energy policy goes hand in hand with national security policy.
Raising taxes on the oil companies would lead you to assume that they pay taxes in the first place. CORPORATIONS DO NOT PAY TAXES, WE DO. If Obama gets elected and passes all these tax hikes he is proposing, the price of gas will sky rocket even more than it already has. The reason is because the oil companies will just pass the cost of the taxes down to the consumer.
A tax on windfall profits is just an election year game trying to fool the American public into believing the oil companies are to blame while the true blame lies with the people in Washington (mainly Democrats).
They have make it illegal to drill just about everywhere. Right now, China and Cuba are drilling 60 miles off the coast of FL while it is illegal for us to do so.
They have discovered oil in the mid-west that would yield more oil than what is in Saudi Arabia, but alas, it is illegal to drill for.
Nothing will happen about these gas prices until the American public realizes that the true blame lies with politcians that are beholding to radical Enviromentalists.
Drill Here, Drill NOW, Pay Less.
If you’re typing on a Mac right now, or listening to your iPod, or using windows, you better start writing your congressmen to tell them to tax Apple and Microsoft the same windfall taxes because they’re making a lot more off of you in profit margin than Exxon is
I agree that we are in a capitalist society. However, the difference between Microsoft/Apple and Big Oil is the product. Quadruple the cost of computers and everyone complains. But overall, they simply won’t replace their disposable electronics as often. Quadruple the cost of gas, the country goes into recession. Their is a direct relationship between oil and everything else. I don’t see the same relationship between computers and everything else.
My brother in law works in Texas for a oil company as an accountant. There’s no doubt they are making good money right now. But the real profits are going to our Arab friends on foreign soil.
Seems funny don’t you think that we the last few times we heard from Bin Laden he was threatening to crush our economy and have us on our knees. I don’t think we’re there yet, but if core essentials like energy and food keep going up we may get there soon. So is his group behind this, and how has he done it? Any conspiracy theories here?