Execs from the Big Five -- Exxon, Chevron, BP, Shell and ConocoPhillips -- will appear before the Senate Finance Committee this morning to try and explain why oil companies deserve billions in tax breaks as their profits soar and consumers suffer from rising gas prices. Forget the tired assertions that ending tax breaks will kill the economy and hurt energy security. Here's a more honest -- and audacious -- argument: Tell Congress they'd be better off ending subsidies for ethanol.
Of course, Big Oil could never get away with that argument -- even though it's got some serious merit to it.
Senate Democrats, hoping to ride the wave of consumer angst into the next election, introduced legislation this week that would end $21 billion in tax breaks to these five oil companies over the next decade and put those savings toward the deficit. That's a little more than $2 billion a year in tax breaks.
Given GOP control of the House, though, the Close Big Oil Tax Loopholes Act has no real chance of passing. Even if it did, it wouldn't have a significant impact on the deficit. That of course hasn't stopped these lawmakers from wasting everyone's time. A better use would have been a proposal to take the $2 billion in annual tax savings and put it towards energy research and development. But to the deficit? Hmm, looks like somebody wants to impress the Tea Party.
Taking on Big Ethanol instead
So, what would happen if Congress tackled ethanol subsidies instead? First off, triple the savings -- to $6 billion a year. Sens. Tom Coburn, R-OK, and Dianne Feinstein, D-CA, have introduced legislation that would end the Volumetric Ethanol Excise Tax Credit (VEETC), a 45-cent tax credit given to U.S. refiners for every gallon of ethanol blended into gasoline. The legislation also would repeal the import tariff on foreign ethanol.
Lest we forget, the federal government already mandates that ethanol is blended in gasoline. Surely that's subsidy enough.
Photo from Flickr user haydnseek, CC 2.0