Call On Senate Colleagues To Join Effort To Close Tax Loopholes And End Unneeded Subsidies For Big Oil Companies That Rake In Record Profits While Hiking Prices Money Saved By Revoking Handouts Will Go Towards Reducing The Deficit

May 4, 2011

Washington, DC—Nevada Senator Harry Reid and New Jersey Senator Robert Menendez today urged Senate colleagues to join them in ending wasteful taxpayer handouts to big oil companies making record profits while American families make sacrifices to afford rising prices at the pump, and use the savings to reduce the deficit.

Over the last decade, the nation’s five largest oil companies have taken home nearly $1 trillion in profits and tens of billions of dollars in taxpayer subsidies. Every year, taxpayers are giving away more than $4 billion to oil companies in the form of tax deductions, subsidies and royalty relief, the letter says. Meanwhile, they’ve hiked gas prices to $4.00 a gallon in some states.

And CEOs from the Big 5 oil companies have testified that they do not need incentives for oil exploration. And even Speaker John Boehner and Rep. Paul Ryan have said it is time to look at cutting oil subsidies.

“Every one of us is hearing from families back home who are struggling with rising gas prices. At the same time, we’re reading this week about the record-breaking profits that the major oil companies are raking in-- more than $30 billion in profits for the first quarter of 2011 alone. Something just doesn’t add up.  Now that the five biggest oil companies have become some of the most profitable companies in the world, taxpayers shouldering $4 a gallon gas prices should not have to foot the bill for tens of billions of outdated, unnecessary subsidies that go straight into the pockets of oil industry executives particularly in light of our increasing deficit. Just as we ask families to do their part to help reduce the deficit, Big oil companies need to step up to the plate and share in the sacrifice.”

The senators believe it is time to work on a bipartisan basis to ask oil companies to pay their fair share and help us lower the deficit.

“By working together to end these wasteful giveaways to oil companies, we will not only make the tax code more fair, but we will decrease the federal deficit by tens of billions of dollars over the next ten years,” they wrote. “To a family struggling to pay rising gas prices, this is not a partisan or political issue – this is an economic issue. In the nature of bipartisanship, let’s work together to put the needs of middle-class families over the whims of the most profitable industry in the world.”

Full text of the letter is below:

Dear Colleague,

Every one of us is hearing from families back home who are struggling with rising gas prices. At the same time, we’re reading this week about the record-breaking profits that the major oil companies are raking in-- more than $30 billion in profits for the first quarter of 2011 alone. Something just doesn’t add up.  Now that the five biggest oil companies have become some of the most profitable companies in the world, taxpayers shouldering $4 a gallon gas prices should not have to foot the bill for tens of billions of outdated, unnecessary subsidies that go straight into the pockets of oil industry executives particularly in light of our increasing deficit. Just as we ask families to do their part to help reduce the deficit, Big oil companies need to step up to the plate and share in the sacrifice. 
 
Every year, taxpayers are giving away more than $4 billion to oil companies in the form of tax deductions, subsidies and royalty relief. It has always been questionable whether or not these subsidies for oil companies do anything to encourage new production, and it is especially questionable at a time when oil companies are reporting record profits.  The fact is, oil companies will continue to drill and produce oil with or without these subsidies. Testifying before the Senate in 2005, every CEO of the five biggest oil companies acknowledged that they do not need incentives to explore for oil and gas. And just this year, the former CEO of Shell Oil said “subsidies are not necessary.”
 
Last week, we were encouraged to hear some of our Republican colleagues, including Speaker Boehner, say that big oil companies “ought to be paying their fair share.” We could not agree more. Closing these loopholes will not raise gas prices for American consumers. Historically, gas prices have risen even as the major oil companies reap billions in tax subsidies that have outlived their usefulness, and there is scant evidence that ending these subsidies will have any effect on how oil and gas are priced in the global market.
 
In the Senate, we will act imminently to close these loopholes. Given the unprecedented number of lawmakers who have stepped forward in support of this idea for the first time, we believe this new push to end oil subsidies has a strong chance to succeed where previous efforts have failed. We invite ideas from both sides of the aisle about how best to bring these wasteful giveaways to an end. We intend to proceed with a bill that maximizes our chances of garnering bipartisan appeal.
 
By working together to end these wasteful giveaways to oil companies, we will not only make the tax code more fair, but we will decrease the federal deficit by tens of billions of dollars over the next ten years.
 
To a family struggling to pay rising gas prices, this is not a partisan or political issue – this is an economic issue. In the nature of bipartisanship, let’s work together to put the needs of middle-class families over the whims of the most profitable industry in the world.

Sincerely,
Senate Majority Leader Harry Reid
Senator Robert Menendez

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