April 27, 2006
Public Citizen Urges Congress, President to Repeal Oil Company Tax Breaks, Close Royalty Loopholes and Enact a Windfall Profits Tax
WASHINGTON, D.C. – As Congress debates the more than $90 billion supplemental appropriations bill to finance new spending for Iraq and Katrina relief, Public Citizen urges lawmakers to amend the supplemental appropriations bill to repeal tax breaks enjoyed by oil companies and enact a windfall profits tax to finance alternative energy for America’s future.
“The oil industry is making record profits and doesn’t need the tax breaks. This revenue must be used to finance sustainable energy solutions to America’s energy crisis,” said Joan Claybrook, president of Public Citizen. “This will protect consumers from irrational gasoline prices, strengthen national security by making America more energy self-sufficient and help the American economy by protecting it from oil price shock.”
Revoking the tax breaks that are enlarging already ballooning oil company profits and enacting a windfall profits tax will jump-start development of alternative energy sources. Oil companies are earning record profits at a time when consumers are paying record-high energy prices. For example, ExxonMobil, the industry leader that produces more oil than Kuwait, has earned $44.5 billion in profits since January 2005.
The industry enjoys huge tax breaks and loopholes, which allow it to escape paying royalties for drilling on public land. The Joint Committee on Taxation estimates that oil companies will benefit from $11 billion in energy tax breaks during the next five years (some included in the energy bill signed into law just months ago, along with a $1.5 billion spending program on deepwater drilling in the Gulf of Mexico); the U.S. Treasury will be denied billions of dollars in lost royalty payments by oil companies drilling on public land due to loopholes (again, some just enacted into law months ago); and oil companies will enjoy an additional $3.6 billion in relief from the domestic manufacturing tax bill passed in October 2004.
A windfall profits tax could raise money to address America’s energy crisis through alternative fuel research and development, development of infrastructure such as ethanol pipelines and mass transit, and energy efficiency measures. President Bush outlined several new spending initiatives this week to address the country’s energy crisis but failed to articulate how to pay for them or how much the key programs would receive. These amendments would provide the billions of dollars needed.
“It costs an oil company like ExxonMobil about $20 to extract a barrel of oil in Nigeria, Alaska or Texas, yet they are selling it to the American public for more than $70 a barrel,” said Tyson Slocum, acting director of Public Citizen’s energy program. “This windfall profit is robbing American consumers. It is only fair that a portion of these record profits go toward finding solutions to high prices. If we don’t act on this national emergency now, we will have the same disaster five to 10 years from now.”
For more information about Public Citizen’s energy program, click here.
For Public Citizen’s analysis of renewable energy, click here.