WASHINGTON — The hearing was for verbally flogging oil company CEOs, and no senator bothered to pretend it was about making gasoline prices more affordable or helping the economy recover. Utah Sen. Orrin Hatch set the tone Thursday when he opened with a portrait of a dog sitting on a pony.
Sen. Charles Schumer countered with a reference to a unicorn. Sen. Pat Roberts suggested a rhinoceros. It was a fit opening for a show where the oil executives served as props for politicians needing to show voters that they, too, are angry about $4 a gallon gasoline.
“This is not going to change the price at the gas pump,” Finance Committee Chairman Max Baucus admitted as he gaveled the proceedings to a close.
“I grant you,” the Montana Democrat added, “we’ve got to develop an energy policy in this country.”
The hearing didn’t get Congress any closer to doing that. But it did provide Senate Democrats a televised chance to challenge the nation’s five largest oil companies to defend their generous tax breaks amid huge profits. At issue, Democrats said, was a bill by Sen. Robert Menendez, D-N.J., to repeal the tax breaks granted to the five companies testifying.
Sen. Ron Wyden of Oregon played a video of a 2005 congressional hearing in which oil company executives said they didn’t need generous tax breaks because oil was then selling at $55 a barrel. As the hearing commenced, the price per barrel hovered just below $100.
“You all said you didn’t need them in 2005,” Wyden said. “You seem to be telling a different story today.”
Chevron Corp. chairman and CEO John Watson said the companies don’t want special tax benefits — just the benefits that other industries get.
ConocoPhillips chairman Jim Mulva said a tax increase on oil companies would cost jobs, discourage investment and lead to even higher gas prices. But several of his fellow CEOs weren’t as willing to make a direct link between eliminating the tax breaks and higher fuel costs.
“It’s hard to make definitive statements around prices because part of the conversation today was around all of the elements that go into the volatility of prices,” Marvin Odum, president of Shell Oil Co., said after the hearing. “There’s so many factors you can’t say a definitive impact.”
What the oil company chiefs had to say was not the focus for majority Democrats eager to demonstrate before the 2012 election that they stand with consumers against big oil companies — and those Republicans who support them. Republicans weren’t will to make it that easy, however.
“All this hearing is about is providing a justification for tax increases,” said Hatch, framed by the dog-and-pony portrait behind him.
“For the president and some of my colleagues,” the Republican said, “the answer is always raise taxes. Government spends too much? Raise some taxes. Health care too expensive? Raise some taxes. Gas prices too expensive? I’ve got it … let’s raise some taxes.”
Schumer said that saying a hugely profitable industry should continue taking billions of dollars in tax breaks is as credible as the suggestion that “a unicorn just flew into this hearing room.”
It’s “very difficult to follow the unicorn from New York. Who has a very sharp horn,” said the next senator to speak, Roberts, R-Kan. Sometimes, he said, a unicorn can morph into a rhinoceros. “And you don’t want to mess with a rhinoceros.”
The elephant in the hearing room was the role that rising gas prices are playing as a pocketbook issue in the early stages of the 2012 elections. House Republicans on Thursday were holding votes on a string of bills to speed up and expand offshore drilling to lessen the country’s dependence on foreign oil. President Barack Obama has called for eliminating tax breaks for all oil and gas companies, raising about $44 billion over the next decade.
Lawmakers, including Democrats from oil-producing states, complained that Obama’s proposal would raise taxes on many small and medium-sized businesses involved in oil production. The Menendez bill, which would raise about $21 billion over the same period, targets only the five largest oil companies.
Thursday’s marquee hearing featured the CEOs of Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp., which together booked profits totaling $36 billion during the first quarter. The Democrats say that with profits that high, the big oil companies wouldn’t miss tax breaks that average $2 billion a year.
“My guess is you will be able to protect yourselves. …You’re used to prevailing,” said Sen. Jay Rockefeller, D-W.Va. Oil companies, he added, are “deeply and profoundly committed to sharing nothing.”
Gasoline prices are above $4 a gallon in much of the country. The national average is about $3.96 for regular unleaded, up from $2.90 a gallon a year ago, according to AAA.
The nonpartisan Congressional Research Service concluded that eliminating the tax breaks would be unlikely to result in higher gasoline prices, which are influenced by a host of factors. The report, released Wednesday, said eliminating the tax breaks would raise about $1.2 billion in 2012. By comparison, the five oil companies had combined revenues of $1.5 trillion last year.
Menendez’s bill has a dubious future beyond a talking point.
Republicans, who now control the House and have enough votes to block legislation in the Senate, oppose tax increases. They are joined on this issue by a handful of Democrats, mainly from oil-producing states. Seven Senate Democrats teamed with Republicans to defeat a tax proposal similar to Obama’s in February.
“Why are we here?” Hatch said at one point.