Report Strngthens Demorats' Argument to Eliminate Oil Tax Breaks

Good timing. lol

May 11, 2011, 4:25 PM
Report Strengthens Democrats’ Argument to Eliminate Oil Tax Breaks
By CARL HULSE
Senate Democrats have a new weapon in their escalating oil and gasoline war with Republicans, though some party members are none too happy with their leadership’s offensive against the major oil companies.

Trying to counter Republican claims that ending some tax breaks for the five largest oil companies would ultimately hurt consumers, Democrats are now armed with a Congressional Research Service report that predicts a negligible impact on the price of gasoline if the changes are carried out. .

The document, sent to Senator Harry Reid, the Nevada Democrat and majority leader, said that with the cost of oil over $100 per barrel, “prices are well in excess of costs, and a small increase in taxes would be less likely to reduce oil output, and hence increase petroleum product (gasoline) prices.”

In a review of the five specific tax changes being advocated by Democrats, the research service also said that tightening the tax code would make a very small dent in the huge revenues of the industry and that the price of oil hinged on many other, larger considerations.

Political unrest, market gyrations, “macroeconomic growth trends, the value of the dollar and a host of other factors have contributed to fluctuations in the price of oil and gasoline,” the report said. “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 came one day before executives of the five major oil companies are set to testify before the Senate Finance Committee on the Democratic proposal. It is expected to generate $21 billion over 10 years, with the money to be applied to the deficit.

The coming hearing was not well received by Senator Mark Begich, the Democrat from the oil-producing state of Alaska, who accused his colleagues of staging a media event for political purposes.

“Let’s stop this headline grabbing and get serious about energy security,” Mr. Begich said in a floor speech Wednesday afternoon. “There is a lot of talk right now about ending tax incentives for the oil and gas industry. But the high profits of these companies are easy targets. One thing Alaskans know is just because you have an easy target doesn’t mean it is the right thing to shoot. It won’t decrease prices at the pump for our families and small businesses.”
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