(CBS News) The president of Shell Oil said Friday that removing the tax subsidies and tax breaks received by oil and gas companies - which recorded some of the largest profits last year - is unfair because of the size of the companies. Instead, Marvin Odum said the government should be focused on broader tax reform.
"If you look at the unit profitability, if you will - how much we make on a unit or a dollar of revenue - it's actually lower than the average of manufacturing across this country," Odum said on "CBS This Morning." "So I think while I don't mind the attention on energy because it's such an important topic, I think the discussion around taxes and taking tax breaks away is the wrong discussion."
The U.S. Senate yesterday voted 51-47 against a bill that would have ended $4 billion in taxpayer subsidies of major oil and gas companies.
According to the Congressional Budget Office, in 2011 federal support for the development and production of fuels and energy technologies totaled an estimated $24 billion, given in tax preferences (special deductions, special tax rates, credits, and grants totaling $20.5 billion) and Department of Energy spending programs (which totaled $3.5 billion).
The top five oil companies collectively recorded profits of roughly $135 billion in 2011. (See table below). The administration has argued that with energy companies taking in record sums, government subsidies no longer make sense. However, Odum said the legislative focus should be on tax reforms.
"I think what we can do and what we should do in this country is take a very broad look at tax reform. The thing that's important to us as a business and as people competing within an industry is a level playing field. So, that's the discussion we'd like to have on the tax front."
Top five Oil & Gas company profits in 2011:
ExxonMobil: $41.1 billion (up 35 percent from 2010)
Shell: $30.9 billion (up 54 percent from 2010)
Chevron: $26.9 billion (up 41 percent from 2010)
BP: $23.9 billion (up from $4.9 billion loss in 2010)
ConocoPhillips: $12.4 billion (up 9 percent from 2010)
Total: $135.2 billionData based on company financial statements.
Rose asked, despite the failure in the Senate of the bill to end oil and gas subsidies, whether major oil companies should as an act of good faith say "we don't really need these subsidies now. Let's get together with the administration and the Congress and come up with a policy for the benefit of Americans and energy independence?"
"Let me give you a different twist on that story, Charlie, which is if we really want more dollars flowing into the federal government to help with the deficit and so forth, and if we want more income taxes flowing in, the way to do that is to produce more energy in this country," Odum replied. "And so the question that Congress and the president ought to be asking themselves is, how do we incentivize more production? Because you get the royalty payments off of that, all those jobs and income tax that comes with it. The tax deductions that we're talking about taking away pale in comparison."
"Nevertheless, a dollar's a dollar," said Rose. "How much have subsidies contributed to your bottom line at Shell Oil?"
"Well, first of all, we don't see these as subsidies," Odum said.
"You can make an accounting evaluation of how much they meant to you," Rose said.
"I don't have a number for you, Charlie, in terms of, you know, exactly how much in a gallon of gas the deductions that we take would be. But it's important to understand, these are the same deductions, manufacturing cost-type deductions, that are taken across all industries, not just the oil and gas industry."
Odum said there's "no immediate fix" energy costs, with the the number one determinant of the price of gas at the pump being the price of crude oil.
"It is a global system," he said. "We have to think about supply and demand on a global basis. The way that we can address that is to cut back and produce as many resources as we can in country. The economic benefits of this are more jobs in this country, better trade balance in this country, more secure supply of oil, and that's the biggest impact that we can have."
He agreed that there should be a discussion between energy companies and the government to develop an energy policy to make the United States more energy independent.
"We want that kind of discussion and cooperation between the government and industry," Odum said. "But the thing we have to keep in mind is, energy is a long-term business. And to change this massive system of energy supply takes time. So to sit down and have some strategic thinking about where do we want this to go in the future, particularly given that the population in the world is growing like crazy, we have to address that now."
To watch the complete interview with Marvin Odum click on the video player above.