The mantra from the right seems to be “We don’t have a revenue problem, we have a spending problem.” Not. So. Fast. We’d do well not to be diverted or deflected from options to decrease our budget deficits and national level of indebtedness by quick sloganeering. We do have a revenue problem. We are deliberately refusing revenue which should be available to meet national needs because we are subsidizing profitable corporations. It’s called Corporate Welfare, and there are some Queen sized companies taking advantage of the situation.
Let’s take the classic example, the energy giants. Are they profitable? As the chart below indicates they are doing quite nicely thank you very much.
The best practice at this point would be to ignore the wailing of Wall Street denizens who speak in terms of stock prices. Oh, Dear, the earnings of Gigantus Maximus Corp. missed “analysts expectations,” and their stock price is down by some ticks. This doesn’t tell us anything about the current value of the corporation, all it does tell us is that speculators are predicting the value of the stock (not necessarily the value of the company, the products, or anything else) might go up or down. Manic Mr. Market is obsessed with stock prices not gas prices. Mr. Market certainly isn’t all that concerned that the profit margin at the pump averages about $0.154 per gallon at the local convenience store/gas station. [NACS]
So, what kinds of “breaks” are the energy giants getting from the government? Take a look at this list from the “Green Scissors Report,” compliments of Taxpayers for Common Sense.
What we have here is the ten year price tag for the subsidies we give away to the fossil fuel corporations. Do we dare ask what could possibly justify the “oil royalty relief” for an industry making the kinds of profits listed in the first table?
Once upon a time, back in 1995, the Outer Continental Shelf Deep Water Royalty Relief Act of 1995 (DWRRA) included price thresholds, or the royalty relief would only apply if oil and gas prices were below a certain level. Then the GAO reported on the situation in 2007:
“Because oil and natural gas prices have risen significantly in recent years, the omission of price thresholds on the leases issued in 1998 and 1999 has resulted in significant foregone royalties to the federal government. In an effort to recoup some of these royalties, Interior is currently negotiating with some of the oil and gas companies that own these leases. Congress has also been considering legislative actions to recoup foregone royalty revenues on these leases or to encourage companies to negotiate with MMS. In addition to the foregone royalties on the 1998 and 1999 leases, one company, Kerr-McGee, is currently pursuing a legal challenge to the Interior’s authority to place price thresholds on any deep water leases issued between 1996 and 2000 under the DWRRA.” [GAO]
Not to put too fine a point to it, but the oil companies were asking for royalty relief without agreeing to give anything up on their side of the ledger. The GAO summarized:
“The absence of price thresholds in leases issued in 1998 and 1999 has already cost the government about $1 billion and MMS’ most recent estimate in February 2007 indicates a range of future foregone royalties of between $6.4 billion and $9.8 billion over the lives of the leases.” [GAO]
On October 30, 2007 a federal district court in Louisiana ruled in favor of Kerr-McGee [source], and the fight continues on with S. 307, “Close Big Oil Tax Loopholes Act” assigned to the Senate Finance committee. H.R. 2956, the End Welfare for Big Oil Act of 2013 hasn’t gotten much further. Last August it was referred to the House Subcommittee on Energy and Mineral Resources…not to be seen again. H.R. 601 Permanent Repeal of Oil Subsidies Act hasn’t gone anywhere either, nor has End Big Oil Tax Subsidies Act of 2013 H.R. 609.
Here’s the sorry point — if we can’t get bills out of Congressional committees to remove the Something For Nothing the oil companies get for the privilege of drilling on our public lands, then how can we expect to make any changes in their impressively creative accounting tactics, and their depletion allowances which mean that the cost of defending the oil company operations here and abroad, and the cost of maintaining the infrastructure they use for transportation and communications, therefore must be carried by the American taxpayer?
Interestingly enough, the right wing is continual perturbed by the “Takers,” but for the oil companies to TAKE their royalty relief and then refuse to offer the American public anything in return makes a mockery of their talking point.