Pawlenty Defends Big Oil: Cutting Oil Subsidies Is 'Ludicrous'

[one...two...tree 2,762]

Oil giant Exxon last week, on the same day that announced nearly $11 billion in first-quarter profits, publicly whined about the renewed push by Congressional Democrats and President Obama to cut the nearly $4 billion in subsidies that oil companies collect every year. “What they really mean is that they want to increase our taxes by taking away long-standing deductions for our industry,” griped Exxon’s vice president for public and government affairs Ken Cohen.

Echoing those sentiments, 2012 GOP presidential hopeful Tim Pawlenty said over the weekend that cutting oil subsidies would be “ludicrous,” and a “tax increase”:

“I think we should have a discussion about all subsidies,” Mr. Pawlenty told Washington Wire at a forum for 2012 GOP presidential hopefuls. “

But the Obama proposal is ludicrous. I mean the worst thing we could do is raise the cost burden on costs on energy and oil…What he’s proposing is a tax increase on energy at a time when the gas is $4 a gallon. It’s preposterous.

”

But as Sima Gandhi pointed out, contrary to Pawlenty’s pronouncement, oil subsidies don’t lower prices at the pump for American consumers:

A Joint Economic Committee report states, “the removal or modification of [one of these subsidies] is unlikely to have any effect on consumer prices for oil and gas.”

The committee found that subsidies do not affect production decisions in the near term. And in the long term the Energy Information Administration explains that the major factors affecting oil prices include the production limits set by the Organization of the Petroleum Exporting Countries and global disruptions in supply. Moreover,

the minimal impact of tax subsidies on domestic production (as discussed above) underscores that eliminating tax subsidies will have little, if any, effect on oil prices.

Meanwhile, Pawlenty’s preferred model for lowering gas prices — opening up more federal land for drilling — would have a negligible effect, as even the Republicans’ favorite economist, Douglas Holtz-Eakin, admitted.

Pawlenty’s also decrying subsidy cuts as a tax increase when oil companies are the most profitable companies in the history of the world and are paying very little in taxes. Exxon, for instance, paid nothing into the U.S. Treasury in 2009. The sky-high profits that oil companies have made over the last five years overwhelmingly went to lining the pockets of the companies’ executives.

Cross-posted on The Wonk Room.

[Obama 2012 1,714]

call it what you want tax wise, but it's not a subsidy.

I know it sounds 'cool' in attack mode to call it one, but it doesn't fit the definition at all.

Allowing one to keeps ones own money is not a subsidy.

[Zero Sum 305]

They can be taxed more and still be hugely profitable.

Maybe give them a tax break on showing significant contributions to alternate energy research and implementation. But in this economy there is no reason for them to whine about taxes while posting record profits.

[rika60607 215]

I am not so sure what part of big oil money is their own money...

Who does the oil belong to, the oil that they extract? Who sets the price of that oil (the price that oil companies are paying) and to whom are they paying?

What is environmental impact of oil production and are parties affected adequately compensated (usually not)?

To me, oil companies are service providers, rather than producers... so if some of them can't make enough profit, they are welcome to quit and if they are making a lot of profit, then we are overpaying for that oil

call it what you want tax wise, but it's not a subsidy.

I know it sounds 'cool' in attack mode to call it one, but it doesn't fit the definition at all.

Allowing one to keeps ones own money is not a subsidy.

[Mr. Big Dog 10,747]

Echoing those sentiments, 2012 GOP presidential hopeful Tim Pawlenty said over the weekend that cutting oil subsidies would be “ludicrous,” and a “tax increase”:

Very well, Tim. Very well. Mind the pledge...

[Bad_Daddy 2,209]

I am not so sure what part of big oil money is their own money...

Who does the oil belong to, the oil that they extract? Who sets the price of that oil (the price that oil companies are paying) and to whom are they paying?

What is environmental impact of oil production and are parties affected adequately compensated (usually not)?

To me, oil companies are service providers, rather than producers... so if some of them can't make enough profit, they are welcome to quit and if they are making a lot of profit, then we are overpaying for that oil