Senate GOP blocks proposed tax on record oil profits
THC
Posts: 525
http://news.yahoo.com/s/ap/20080610/ap_on_go_co/congress_oil_profits
By H. JOSEF HEBERT, Associated Press Writer
26 minutes ago
WASHINGTON - Saved by Senate Republicans, big oil companies dodged an attempt Tuesday to slap them with a windfall profits tax and take away billions of dollars in tax breaks in response to the record gasoline prices that have the nation fuming.
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GOP senators shoved aside the Democratic proposal, arguing that punishing Big Oil won't do a thing to lower the $4-a-gallon-price of gasoline that is sending economic waves across the country. High prices at the pump are threatening everything from summer vacations to Meals on Wheels deliveries to the elderly.
The Democratic energy package would have imposed a 25 percent tax on any "unreasonable" profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year. It also would have given the government more power to address oil market speculation, opened the way for antitrust actions against countries belonging to the OPEC oil cartel, and made energy price gouging a federal crime.
"Americans are furious about what's going on," declared Sen. Byron Dorgan, D-N.D. He said they want Congress to do something about oil company profits and the "orgy of speculation" on oil markets.
But Republican leaders said the Democrats' plan would do harm rather than good — and they kept the legislation from being brought up for debate and amendments.
On world markets, oil prices retreated a bit Tuesday but remained above $131 a barrel. Gasoline prices edged even higher to a nationwide record average of $4.04 a gallon.
At the Capitol, Democratic leaders needed 60 votes and they got only 51 senators' support, including seven Republicans who bucked their party leaders. Sen. Mary Landrieu of Louisiana, a state tied closely to the oil industry, was the only Democrat opposing the bill.
"We are hurting as a country. We're hurting individually as Americans ... and the other side says, `Do nothing. Don't even debate the issue,'" complained Sen. Charles Schumer, D-N.Y.
"Average citizens are scratching their heads and saying, what's wrong with Washington," said Schumer.
GOP opponents argued that little was to be gained by imposing new taxes on the five U.S. oil giants: Exxon Mobil Corp., Chevron Corp., Shell Oil Co., BP America Inc. and ConocoPhilips Co.
While these companies may be huge, they don't set world oil prices and raising their taxes would discourage domestic oil production, the Republicans said of the Democrats' plan.
"In the middle of what some are calling the biggest energy shock in a generation ... they proposed as a solution, of all things, a windfall profits tax," Republican leader Mitch McDonnell of Kentucky chided the Democrats. He called their proposal "a gimmick" that would not lower gasoline prices and only hold back domestic oil production.
"The American people are clamoring for relief at the pump," agreed Sen. Pete Domenici, R-N.M., but "they will get exactly what they don't want" under the Democrats' plan — higher prices and an increase in oil imports.
The bill's supporters argued that their proposal was different from the windfall profits taxes of the early 1980s that thwarted domestic production and led to a rise in imports. The oil companies could avoid the tax by using their "windfall" to push alternative energy programs or refinery expansions, they said.
Shortly after the oil tax vote, Republicans blocked a second proposal that would extend tax breaks that have either expired or are scheduled to end this year for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. Again Democrats couldn't get the 60 votes to overcome a GOP filibuster.
Neither Republican presidential candidate John McCain nor his Democratic rival, Barack Obama, were in Washington to cast votes on the energy issue on Tuesday.
Obama, in a statement, said Republicans had "turned a blind eye to the plight of America's working families" by refusing to take up the energy legislation. Obama has supported additional taxes on the oil companies. McCain is opposed to such taxes and has proposed across-the-aboard tax reductions for industry as a way to help the economy.
Election-year politics hung over the debate. Democrats know their energy package has no chance of becoming law. Even it were to overcome a Senate GOP filibuster — a longshot at best — and the House acted, President Bush has made clear he would veto it.
But there was nothing to lose by taking on Big Oil when people are paying $60 to $100 to fill up their gas tanks.
The oil companies have been frequent targets of Congress. Twice this year, top executives of the largest U.S. oil producers have been brought before congressional committees to explain their huge profits. And each time the executives urged lawmakers to resist punitive tax measures, blaming high costs on global supply and demand.
In addition to the proposed windfall profits tax, the Democrats' bill also would have rescinded tax breaks that are expected to save the oil companies $17 billion over the next 10 years. The money would have been used to provide tax incentives for producers of wind, solar and other alternative energy sources as well as for energy conservation.
In an attempt to dampen oil market speculation, the legislation would require traders to put up more collateral in the energy futures markets and would provide authority to regulate U.S.-based trading in foreign markets. And it would make oil and gas price gouging a federal crime, with stiff penalties of up to $5 million during a presidentially declared energy emergency.
After Tuesday's defeat, Democrats did not rule out pushing the issue again.
"This was politics at its worst," complained Sen. Claire McCaskill, D-Mo. "This was a refusal to debate the biggest problem confronting the American people. ... That takes nerve."
By H. JOSEF HEBERT, Associated Press Writer
26 minutes ago
WASHINGTON - Saved by Senate Republicans, big oil companies dodged an attempt Tuesday to slap them with a windfall profits tax and take away billions of dollars in tax breaks in response to the record gasoline prices that have the nation fuming.
ADVERTISEMENT
GOP senators shoved aside the Democratic proposal, arguing that punishing Big Oil won't do a thing to lower the $4-a-gallon-price of gasoline that is sending economic waves across the country. High prices at the pump are threatening everything from summer vacations to Meals on Wheels deliveries to the elderly.
The Democratic energy package would have imposed a 25 percent tax on any "unreasonable" profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year. It also would have given the government more power to address oil market speculation, opened the way for antitrust actions against countries belonging to the OPEC oil cartel, and made energy price gouging a federal crime.
"Americans are furious about what's going on," declared Sen. Byron Dorgan, D-N.D. He said they want Congress to do something about oil company profits and the "orgy of speculation" on oil markets.
But Republican leaders said the Democrats' plan would do harm rather than good — and they kept the legislation from being brought up for debate and amendments.
On world markets, oil prices retreated a bit Tuesday but remained above $131 a barrel. Gasoline prices edged even higher to a nationwide record average of $4.04 a gallon.
At the Capitol, Democratic leaders needed 60 votes and they got only 51 senators' support, including seven Republicans who bucked their party leaders. Sen. Mary Landrieu of Louisiana, a state tied closely to the oil industry, was the only Democrat opposing the bill.
"We are hurting as a country. We're hurting individually as Americans ... and the other side says, `Do nothing. Don't even debate the issue,'" complained Sen. Charles Schumer, D-N.Y.
"Average citizens are scratching their heads and saying, what's wrong with Washington," said Schumer.
GOP opponents argued that little was to be gained by imposing new taxes on the five U.S. oil giants: Exxon Mobil Corp., Chevron Corp., Shell Oil Co., BP America Inc. and ConocoPhilips Co.
While these companies may be huge, they don't set world oil prices and raising their taxes would discourage domestic oil production, the Republicans said of the Democrats' plan.
"In the middle of what some are calling the biggest energy shock in a generation ... they proposed as a solution, of all things, a windfall profits tax," Republican leader Mitch McDonnell of Kentucky chided the Democrats. He called their proposal "a gimmick" that would not lower gasoline prices and only hold back domestic oil production.
"The American people are clamoring for relief at the pump," agreed Sen. Pete Domenici, R-N.M., but "they will get exactly what they don't want" under the Democrats' plan — higher prices and an increase in oil imports.
The bill's supporters argued that their proposal was different from the windfall profits taxes of the early 1980s that thwarted domestic production and led to a rise in imports. The oil companies could avoid the tax by using their "windfall" to push alternative energy programs or refinery expansions, they said.
Shortly after the oil tax vote, Republicans blocked a second proposal that would extend tax breaks that have either expired or are scheduled to end this year for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. Again Democrats couldn't get the 60 votes to overcome a GOP filibuster.
Neither Republican presidential candidate John McCain nor his Democratic rival, Barack Obama, were in Washington to cast votes on the energy issue on Tuesday.
Obama, in a statement, said Republicans had "turned a blind eye to the plight of America's working families" by refusing to take up the energy legislation. Obama has supported additional taxes on the oil companies. McCain is opposed to such taxes and has proposed across-the-aboard tax reductions for industry as a way to help the economy.
Election-year politics hung over the debate. Democrats know their energy package has no chance of becoming law. Even it were to overcome a Senate GOP filibuster — a longshot at best — and the House acted, President Bush has made clear he would veto it.
But there was nothing to lose by taking on Big Oil when people are paying $60 to $100 to fill up their gas tanks.
The oil companies have been frequent targets of Congress. Twice this year, top executives of the largest U.S. oil producers have been brought before congressional committees to explain their huge profits. And each time the executives urged lawmakers to resist punitive tax measures, blaming high costs on global supply and demand.
In addition to the proposed windfall profits tax, the Democrats' bill also would have rescinded tax breaks that are expected to save the oil companies $17 billion over the next 10 years. The money would have been used to provide tax incentives for producers of wind, solar and other alternative energy sources as well as for energy conservation.
In an attempt to dampen oil market speculation, the legislation would require traders to put up more collateral in the energy futures markets and would provide authority to regulate U.S.-based trading in foreign markets. And it would make oil and gas price gouging a federal crime, with stiff penalties of up to $5 million during a presidentially declared energy emergency.
After Tuesday's defeat, Democrats did not rule out pushing the issue again.
"This was politics at its worst," complained Sen. Claire McCaskill, D-Mo. "This was a refusal to debate the biggest problem confronting the American people. ... That takes nerve."
“Kept in a small bowl, the goldfish will remain small. With more space, the fish can grow double, triple, or quadruple its size.”
-Big Fish
-Big Fish
Post edited by Unknown User on
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Comments
It led to less domestic production, and more dependence on imported oil, which is a bad thing.
By the way, do you know how much oil companies make in profit off of each gallon of gas? 7 cents. If, out of the goodness of their hearts, the oil companies decided tomorrow not to make a profit, and just to break even -- we'd be paying $3.93 per gallon instead of four bucks.
Where the companies are making record profits is in quantity ... they are selling more oil than ever before. We have to decrease demand, somehow. Taxing oil companies for making money isn't the answer.
for the least they could possibly do
However, any and all tax breaks that are give to oil companies should be rescinded.
was like a picture
of a sunny day
“We can complain because rose bushes have thorns, or rejoice because thorn bushes have roses.”
― Abraham Lincoln
When are we going to wake up and realize that we should not be relying on and nor were we designed to have our government control everything. We as a people should be standing up. But no, we bitch moan and complain as we fill up our vehicles and say or government needs to fix this.
We all need to get off our lazy asses and start fixing things ourself!!! Our government is worthless no matter what side of the aisle you are on.
i do happen to have a degree in economics, and it does actually make sense to tax companies who do not employ decent percentages of the population and are extracting money out of your economy and into the hands of the few who are overseas. more money in more peoples pockets means more spending. its called the 'money multiplier' effect. more money is had, and thus spent...and that employs more people. it does make ecomomic sense, and besides...its the right thing to do!
here is info on the theory that supports my claim.
In Keynesian economic theory, a factor that quantifies the change in total income as compared to the injection of capital deposits or investments which originally fueled the growth. It is usually used as a measurement of the effects of government spending on income, and it can be calculated as one divided by the marginal propensity to save.
Keynesian economic theory contends, among other things, that any injection into the economy via investment capital, government spending or the like will result in a proportional increase in overall income at a national level. The basic premise of this theory is that increased spending will have carry-through effects which result in even greater aggregate spending over time. The multiplier itself is an attempt to measure the size of those "carry-through effects".
http://www.investopedia.com/terms/m/multiplier.asp
-Big Fish
ding ding ding!
winner, winner, chicken dinner.
for the least they could possibly do
"would have imposed a 25 percent tax on any "unreasonable" profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year."
i dont understand an arguement where the price goes up...the profits go up outragously...and they should not be taxed on it? if you make more next year...you can bet your ass you will be taxed more...
i couldnt agree more though that we need to begin doing something that changes our own lifestyles to be less dependant on oil. it is because we can not stop filling up our tanks ...is the reason why gas is really up so high. it is the speculators who are driving up those profits because they know we hooked on gas like a crack fiend...
-Big Fish
-Big Fish
Hey ... I live in Texas ... when do I get my free oil?
for the least they could possibly do
At $30 a barrel the oil companies were estimated to reap at $7 billion dollar tax free royalty profit over the next 5 years.
Oil is over $130 a barrel want to guest as to what their tax free royalty profit (which does not have to be disclosed) has amounted to and will continue to grow and at what cost will it stabilize?
This is one tax package that could have benefitted the U.S. economy as a whole without hurting the oil companies.
==========================
Common Dreams.org
Published on Tuesday, Feburary 14, 2006 by the New York Times
U.S. Royalty Plan to Give Winfall to Oil Companies
by Edmund L. Andrews
http://www.commondreams.org/headlines06/0214-01.htm
WASHINGTON - The federal government is on the verge of one of the biggest giveaways of oil and gas in American history, worth an estimated $7 billion over five years.
New projections, buried in the Interior Department's just-published budget plan, anticipate that the government will let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.
Based on the administration figures, the government will give up more than $7 billion in payments between now and 2011. The companies are expected to get the largess, known as royalty relief, even though the administration assumes that oil prices will remain above $50 a barrel throughout that period.
Administration officials say that the benefits are dictated by laws and regulations that date back to 1996, when energy prices were relatively low and Congress wanted to encourage more exploration and drilling in the high-cost, high-risk deep waters of the Gulf of Mexico.
"We need to remember the primary reason that incentives are given," said Johnnie M. Burton, director of the federal Minerals Management Service. "It's not to make more money, necessarily. It's to make more oil, more gas, because production of fuel for our nation is essential to our economy and essential to our people."
But what seemed like modest incentives 10 years ago have ballooned to levels that have alarmed even ardent supporters of the oil and gas industry, partly because of added sweeteners approved during the Clinton administration but also because of ambiguities in the law that energy companies have successfully exploited in court.
Short of imposing new taxes on the industry, there may be little Congress can do to reverse its earlier giveaways. The new projections come at a moment when President Bush and Republican leaders are on the defensive about record-high energy prices, soaring profits at major oil companies and big cuts in domestic spending.
Indeed, Mr. Bush and House Republicans are trying to kill a one-year, $5 billion windfall profits tax for oil companies that the Senate passed last fall.
Moreover, the projected largess could be just the start. Last week, Kerr-McGee Exploration and Development, a major industry player, began a brash but utterly serious court challenge that could, if it succeeds, cost the government another $28 billion in royalties over the next five years.
In what administration officials and industry executives alike view as a major test case, Kerr-McGee told the Interior Department last week that it planned to challenge one of the government's biggest limitations on royalty relief if it could not work out an acceptable deal in its favor. If Kerr-McGee is successful, administration projections indicate that about 80 percent of all oil and gas from federal waters in the Gulf of Mexico would be royalty-free.
"It's one of the greatest train robberies in the history of the world," said Representative George Miller, a California Democrat who has fought royalty concessions on oil and gas for more than a decade. "It's the gift that keeps on giving."
Republican lawmakers are also concerned about how the royalty relief program is working out.
"I don't think there is a single member of Congress who thinks you should get royalty relief at $70 a barrel" for oil, said Representative Richard W. Pombo, Republican of California and chairman of the House Resources Committee.
"It was Congress's intent," Mr. Pombo said in an interview on Friday, "that if oil was at $10 a barrel, there should be royalty relief so companies could have some kind of incentive to invest capital. But at $70 a barrel, don't expect royalty relief."
Tina Kreisher, a spokeswoman for the Interior Department, said Monday that the giveaways might turn out to be less than the basic forecasts indicate because of "certain variables."
The government does not disclose how much individual companies benefit from the incentives, and most companies refuse to disclose either how much they pay in royalties or how much they are allowed to avoid.
But the benefits are almost entirely for gas and oil produced in the Gulf of Mexico.
The biggest producers include Shell, BP, Chevron and Exxon Mobil as well as smaller independent companies like Anadarko and Devon Energy.
Executives at some companies, including Exxon Mobil, said they had already stopped claiming royalty relief because they knew market prices had exceeded the government's price triggers.
About one-quarter of all oil and gas produced in the United States comes from federal lands and federal waters in the Gulf of Mexico.
As it happens, oil and gas royalties to the government have climbed much more slowly than market prices over the last five years.
The New York Times reported last month that one major reason for the lag appeared to be a widening gap between the average sales prices that companies are reporting to the government when paying royalties and average spot market prices on the open market.
Industry executives and administration officials contend that the disparity mainly reflects different rules for defining sales prices. Administration officials also contend that the disparity is illusory, because the government's annual statistics are muddled up with big corrections from previous years.
Both House and Senate lawmakers are now investigating the issue, as is the Government Accountability Office, Congress's watchdog arm.
But the much bigger issue for the years ahead is royalty relief for deepwater drilling.
The original law, known as the Deep Water Royalty Relief Act, had bipartisan support and was intended to promote exploration and production in deep waters of the outer continental shelf.
At the time, oil and gas prices were comparatively low and few companies were interested in the high costs and high risks of drilling in water thousands of feet deep.
The law authorized the Interior Department, which leases out tens of millions of acres in the Gulf of Mexico, to forgo its normal 12 percent royalty for much of the oil and gas produced in very deep waters.
Because it take years to explore and then build the huge offshore platforms, most of the oil and gas from the new leases is just beginning to flow.
The Minerals Management Service of the Interior Department, which oversees the leases and collects the royalties, estimates that the amount of royalty-free oil will quadruple by 2011, to 112 million barrels. The volume of royalty-free natural gas is expected to climb by almost half, to about 1.2 trillion cubic feet.
Based on the government's assumptions about future prices — that oil will hover at about $50 a barrel and natural gas will average about $7 per thousand cubic feet — the total value of the free oil and gas over the next five years would be about $65 billion and the forgone royalties would total more than $7 billion.
Administration officials say the issue is out of their hands, adding that they opposed provisions in last year's energy bill that added new royalty relief for deep drilling in shallow waters.
"We did not think we needed any more legislation, because we already have incentives, but we obviously did not prevail," said Ms. Burton, director of the Minerals Management Service.
But the Bush administration did not put up a big fight. It strongly supported the overall energy bill, and merely noted its opposition to additional royalty relief in its official statement on the bill.
By contrast, the White House bluntly promised to veto the Senate's $60 billion tax cut bill because it contained a one-year tax of $5 billion on profits of major oil companies.
The House and Senate have yet to agree on a final tax bill.
The big issue going forward is whether companies should be exempted from paying royalties even when energy prices are at historic highs.
In general, the Interior Department has always insisted that companies would not be entitled to royalty relief if market prices for oil and gas climbed above certain trigger points.
Those trigger points — currently about $35 a barrel for oil and $4 per thousand cubic feet of natural gas — have been exceeded for the last several years and are likely to stay that way for the rest of the decade.
So why is the amount of royalty-free gas and oil expected to double over the next five years?
The biggest reason is that the Clinton administration, apparently worried about the continued lack of interest in new drilling, waived the price triggers for all leases awarded in 1998 and 1999.
At the same time, many oil and gas companies contend that Congress never authorized the Interior Department to set price thresholds for any deepwater leases awarded between 1996 and 2000.
The dispute has been simmering for months, with some industry executives warning the Bush administration that they would sue the government if it tried to demand royalties.
Last week, the fight broke out into the open. The Interior Department announced that 41 oil companies had improperly claimed more than $500 million in royalty relief for 2004.
Most of the companies agreed to pay up in January, but Kerr-McGee said it would fight the issue in court.
The fight is not simply about one company. Interior officials said last week that Kerr-McGee presented itself in December as a "test case" for the entire industry. It also offered a "compromise," but Interior officials rejected it and issued a formal order in January demanding that Kerr-McGee pay its back royalties.
On Feb. 6, according to administration officials, Kerr-McGee formally notified the Minerals Management Service that it would challenge its order in court.
Industry lawyers contend they have a strong case, because Congress never mentioned price thresholds when it authorized royalty relief for all deepwater leases awarded from 1996 through 2000.
"Congress offered those deepwater leases with royalty relief as an incentive," said Jonathan Hunter, a lawyer in New Orleans who represented oil companies in a similar lawsuit two years ago that knocked out another major federal restriction on royalty relief.
"The M.M.S. only has the authority that Congress gives it," Mr. Hunter said. "The legislation said that royalty relief for these leases is automatic."
If that view prevails, the government said it would lose a total of nearly $35 billion in royalties to taxpayers by 2011 — about the same amount that Mr. Bush is proposing to cut from Medicare, Medicaid and child support enforcement programs over the same period.
Unfortunately everyone is in bed with everyone else with our government and our corporate system. Even 4 dollar gas is subsidised. The government could give back thier own Windfall Taxes on the $4.00 gas if they wanted.
Exactly! Isn't it so convenient to simply pick our bad guy du jour instead of placing the our focus where it really belongs which is the broken system that continues to allow it?
Man is least himself when he talks in his own person. Give him a mask, and he will tell you the truth.
-Oscar Wilde
They are protected by law, so unless, Congress found a way to rewrite the law or the SEC or IRS found some type of loophole, we are at the whim of the credit card company policy.
There is no limit on the amount a credit card company can charge a cardholder for being even an hour late with a payment.
In 1996, the U.S. Supreme Court in Smiley vs. Citibank lifted the existing restrictions on late penalty fees. Back then, fees ran to $5 or $10, and usually did not exceed $15. After the Court's decision, fees soared, reaching upwards of $30. Since then, the amount of revenue the companies generate from fees (including late charges, over-the-limit fees, and charges for returned checks) has doubled. Duncan MacDonald, one of the lawyers who worked on the Smiley case, predicts penalty fees could rise to $50 in another year.
:rolleyes:
I will say it again my friends, PROFIT MARGIN. Absolutely nothing illegal is going on in the oil company camp. If there were, I'd be the first to speak out against it.
-Reagan
According to this:
"And at first blush, many would agree. Over the past 12 months, for example, ExxonMobil has made pre-tax profits of $164 billion on sales of $369.5 billion. That's a lot."
ref. http://www.investmentu.com/IUEL/2007/20070323.html
...
164 of 369.5 = 44%
.07 of 4.45 (cost at my local Chevron station this morning) = .016%
...
I don't think lower profits is a bad thing... profitable companies sell stocks.
But, let's be realisic... 44% of $4.45 is $1.96 per gallon, or $1.89 more than 7 cents.
Hail, Hail!!!
Congress won't decide to do a damn thing... until we demand better from them.
And as it stands now, we seem perfectly content to back Congressmen who voted down the credit card cap at 30% which would have still been better than the nothing we have now.
Man is least himself when he talks in his own person. Give him a mask, and he will tell you the truth.
-Oscar Wilde
You just made my head hurt.
I'll have to go rummaging through the Interwebs to find my source.
for the least they could possibly do
You may be thinking about what the retailers (gas station operators) make per gallon.
http://www.npr.org/templates/story/story.php?storyId=90453142
"A&M Shell, a gas station in Tucson, Ariz., owned by Arnold Mendez Jr. and his family, makes about 16 cents in profit for every gallon of gas sold. But that's before the station pays credit card companies for transaction fees. Those fees, which are based on the dollar amount of gas sold, translate to about 2 percent of each sale, says Mendez. So the more gas costs, the more the station pays in credit card fees.
These days, that means the Mendez family hands over about 7 cents per gallon of regular unleaded to credit card companies.
"So we're left then with 9 cents per gallon" in profit, Mendez says."
Hail, Hail!!!
and secondarily because of the higher cost of gas, the items they make the bulk of thier profitability on namely the instore items get sold more infrequently leading eventually to the demise of the station.
But at the same time, imagine all the people out of work, and all of the people who's retirement investments would be in the shitter if companies like Exxon shut down because their business was no longer profitable.