Like great migrations of whales in the oceans and wilder beasts atop the plains of the Serengeti, the annual summer increase of gasoline prices has returned to America’s pumps with a vengeance. And with that reappearance, so too returns the debate over continued subsidies to an industry that reaps billions of dollars in profits - weekly. In a world of skyrocketing deficits, federal bailouts and trillion dollar debts, this migration is actually quite small and usually has minimal political effect.
This year it is different: The impact is widespread and emotions profound. The anticipated multi-billion dollar quarterly profit reports by the big five oil companies (ExxonMobil, Shell, Chevron, BP and ConocoPhillips) have come at a time of American exhaustion. Deep Water Horizon, bailout fatigue, housing foreclosures, reduced home equity, double digit unemployment combined with a perception of corporate insensitivity and pomposity have forced republican industry supporters to do something they have never done – admit oil companies are partially to blame and congressional examination of their benefits is acceptable.
The Migration
On February 1, 2010, Reuters' Tom Doggett reported, “The Obama administration…asked Congress for a second time to end some $36.5 billion in subsidies for oil and gas companies…” but the industry rejected that request. Nearly four months after the president’s second appeal, congress presented a new appropriation bill (the first since 2005) – the antithesis of the request.
The revised law exceeded even oil supporters’ expectations including, among the standard subsidies, billions of dollars in new benefits to the industry. On May 25, 2010 journalists Geiger and Hamburger acknowledged that “Rep. Edward J. Markey (D-Mass)…saw just how much clout the oil industry had….’With all the money they are making,’ Markey said…’why does the government need to subsidize their work…?’ That point of view did not prevail” and the industry got their taxpayer cash.
Orwellian Double Speak
Fast forward a year and once again we hear chatter about subsidies for the oil and gas industry. Amid astronomical prices at the pump, proponents continue to bombard Americans with the industry's agenda and talking points. With only minor variations, the rhetoric remains unchanged.
- Remove environmental regulations
- Maintain industry tax breaks
- Issue more drilling permits
Do all three and pump prices will reduce.
Congressional conservatives have called for these reductions of environmental regulations and tax breaks in their Republican Plan. Using pure Orwellian logic (more is actually less) Republican House Speaker John Boehner bellyached, "Everybody wants to go after the oil companies…I think if we began to allow more permits [it]… would calm these prices down.”
The Corporate/Political Dilemma
The Sawyer/Karl report presented information difficult for oil industry supporters to ignore. “This week the five behemoths of the oil industry will announce first quarter profits, expected to be $35 billion,” Sawyer asserted. “…that is a whopping $390 million profits every single day.” This recent revelation, along with Representative Markey’s question from a year ago, “why does the government need to subsidize [the industry],” forces Republican examination of an issue they have long defended as necessary. "It's certainly something we should be looking at," Boehner lamented. "They ought to be paying their fair share."
Political Misdirection
However, while simultaneously acquiescing to the oil profit issue, Republicans are deflecting the subsidy question over to politics and the 2012 presidential election. The Speaker did not accuse the oil companies or the oil exporting nations for America’s high fuel prices; but placed the blame squarely on the President’s shoulders. Ignoring commodity speculators, refining capabilities or international instability, Speaker Boehner argued that the American people are “going to blame somebody, all right. And the fact is [President Obama] has done nothing to help the situation….and if gas prices are $5 or $6, he certainly isn't going to win" in 2012. [Sawyer/Karl]
Springtime normally brings higher fuel prices that intensify throughout the summer; however, this year the annual ritual, which amounts to hundreds of billions of dollars in revenue for the oil companies, has ignited a firestorm that may influence the 2012 elections. Forty-five billion dollars in subsidies has citizens in such an uproar oil industry supporters have consented to examine the issue. Nevertheless, investigation does not mean recognition or acceptance. Speaker Boehner said it best on ABC, "We’ll take a look [but]…I don't want to hear a bunch of political rhetoric.”
Sources
- Doggett, Tom. February 1, 2010. “Obama budget seeks to end oil, gas subsidies.” Reuters. 27 April 2011.
- Geiger, Kim and Hamburger, Tom. May 25, 2010. “Oil companies have a rich history of U.S. subsidies.” New York Times. 27 April 2011.
- Sawyer, Diane and Karl, Jonathan. April 25, 2011. “Boehner: Oil Companies Share Blame for Gas Prices, Open to Cutting Subsidies.” ABC World News with Diane Sawyer. 27 April 2011
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