Gasoline prices are up to $4 a gallon. Is that 'Big Oil's' fault?
Pointing to record profits and unprecedented gasoline prices, President Obama and congressional Democrats want to end subsidies to the oil and gas industry. Republicans and the industry say that would harm the economy.
If you have to fill your gas tank this weekend – whether or not it takes a second mortgage to pay the tab – you’re a soldier in the hottest political fight over energy and the economy. Or maybe you feel more like “collateral damage” as President Obama, lawmakers, and “Big Oil” battle over who’s at fault for $4-per-gallon gasoline.
In his radio and Internet address Saturday, Obama repeated his call to end “unwarranted taxpayer subsidies we’ve been handing out to oil and gas companies – to the tune of $4 billion a year.”
“When oil companies are making huge profits and you’re struggling at the pump, and we’re scouring the federal budget for spending we can afford to do without, these tax giveaways aren’t right,” Obama said Saturday. “They aren’t smart. And we need to end them.”
Them’s fightin’ words to his political opponents, particularly those from oil-producing states.
"The president may think he's punishing CEOs of big companies, but his plan will hurt the everyday consumer of energy and imperil the jobs of millions of hardworking people in American-based companies," first-term Congressman James Lankford from Oklahoma said in the Republicans' weekly address.
Obama says oil companies are at least partly to blame, and his main ammo are their newly-announced profit statements.
ExxonMobil reports first-quarter profits of $10.7 billion – 69 percent above the company’s first quarter of 2010. Royal Dutch Shell marked $6.9 billion in profits, an increase of 40 percent over last year’s first-quarter number. Chevron Corp. saw its first-quarter net income go up 36 percent to $6.2 billion. BP made $5.5 billion.
Industry spokesmen say such figures should be put into broader perspective.
“We should be proud of the success of an industry that supports 9.2 million American workers and 7.5 percent of our economy while also supplying income to millions of the nation’s retirees,” American Petroleum Institute CEO Jack Gerard said in a statement Thursday. “Oil and natural gas companies are a vital part of our nation’s industrial and manufacturing base. They provide most of America’s energy and are responsible for one in every five dollars invested in renewable energy.”
Record industry earnings “reflect the size necessary for companies to be globally competitive with national oil companies, along with a steady rise in crude oil prices driven by rapidly growing world oil demand and instability in the Middle East,” Gerard said.
Obama’s political problem regarding high prices at the pump – and the reason for his current finger-pointing tactic – are obvious.
Polls show people are more inclined to blame him and the Democrats than they do Republicans for high gasoline prices. At the same time, according to a recent McClatchy-Marist Poll, three times as many respondents say US oil companies are the culprits behind record prices at the pump.
This was the second Saturday in the row that Obama has hit on gas prices and oil industry subsidies in his weekly address.
He may have some openings on the GOP side.
In a TV interview Monday, House Speaker John Boehner said oil companies should “pay their fair share in taxes.”
“I don't think the big oil companies need to have the oil depletion allowances,” he also told ABC News.
A Boehner spokesman quickly walked back those assertions, but the White House and congressional were quick to jump on them.
“We’re talking about reforming the safety net, the welfare system; we also want to get rid of corporate welfare,” Ryan said. “And corporate welfare goes to agribusiness companies, energy companies, financial services companies, so we propose to repeal all that.”
The Senate could take up the issue as soon as this coming week. Expect more sparks to fly.