Oil company hearing could be fuel for debate

Oil company executives, from left, Chevron CEO John Watson; Shell Oil President Marvin Odum; BP America Chairman H. Lamar McKay; ConocoPhillips CEO James Mulva; and ExxonMobil CEO Rex Tillerson testify on Capitol Hill in Washington, Thursday, May 12, 2011, before the Senate Finance Committee. Top executives from the big oil companies discussed high gasoline prices and high profits amid a push by Democratic leaders to strip billions of dollars worth of industry tax breaks. (AP Photo/Alex Brandon)

May 12, 2011 6:32:18 PM PDT
As we pay more to fill up the tank, the big oil companies continue to get huge tax breaks. Thursday, a congressional committee grilled the oil company leaders about taking away those tax breaks because of huge profits and high gas prices. They're on track to make $200 billion in profits this year.

Exxon's profits jumped up 60 percent, Shell and Chevron both jumped up 22 percent in the first quarter alone. So will Congress deliver on this threat to cut the tax breaks? The answer -- no, not really. However, what happened Thursday in this Senate hearing wasn't just an exercise in beating up on big oil.

As American's pay $4 a gallon for gas, oil companies are on track to record $200 billion in profits. And the Senate Finance Committee wanted to know why the nation's top five oil companies should continue to receive $4.4 billion a year in tax breaks.

"You'd have an easier time convincing the American people that a unicorn just flew into this hearing room, than these big oil companies need taxpayer subsidies," said Sen. Charles Schumer, D-New York.

Democratic members are proposing a plan to cut the oil companies' subsidies in half, roughly $2 billion a year. The oil execs argued Thursday, that would be bad for the country.

"They would discourage future investments in energy projects in the United States," said Rex Tillerson, CEO of Exxon Mobil.

"It will make it more difficult for us to do business, raise the cost of doing business," said John Watson, CEO of Chevron.

Republicans for the most part stood by the oil companies, supporting the tax breaks, and calling the hearing a dog and pony show. ABC's political analyst Professor Bruce Cain, Ph.D., says there's little chance the tax subsidies for big oil will go away.

"You've got a Republican-controlled House, it's hard to imagine they're going to go for it," said Cain.

But Cain says there was more at stake in the hearing in Washington D.C. You could see that in a question from Schumer to the CEO of Conoco Phillips, James Mulva.

Schumer: "Do you think your subsidy is more important than the financial aid we give to students to go to college?
Mulva: "Well, that's a very difficult question for me, they're two totally different questions."
Schumer: "But we have to weigh those two things Mr. Mulva."

Democratic senators are using this hearing for purely political reasons to get on the record that Republicans oppose raising taxes, even on big oil.

"And so I see this as more relevant to the debate over taxes generally and more about the upcoming election than it is about the real prospects of getting something passed right now," said Cain.

So if you missed anything from this hearing?no worries. You can count on hearing bits and pieces of it again next year in political ads for Democratic candidates.

Also, ABC reporters on "World News With Diane Sawyer" put big oil to the test. The oil CEOs claim their profits go into exploration, research, and development, but is that where the money actually goes? Or is big oil just trying to avoid paying its fair share of taxes?

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