May 17 2011
Mr. President, every once in a while we have exchanges in this Senate that are revealing and stunning all at once.
Recently I had one of those moments when I had an opportunity to ask some questions of five executives from the largest oil and gas companies in the country.
With gas prices headed up beyond $4 a gallon, and many people spending close to $100 a week to gas up their cars, I was cautiously optimistic that we could have a real discussion about the challenges facing our country and how to solve them together.
I thought the oil executives might at least reveal a bit of unease on their part about how gas prices are standing like a dead weight on our economy, especially when they together earned $35.8 billion in profits in just the first 3 months of this year.
How wrong I was. They were eager only to defend the way big oil does business, defend their enormous salaries, defend the business model that puts control of gas supply in the hands of the few. One wouldn’t even answer when he was asked about his company’s claim that trying to reduce taxpayer subsidies given to this industry would be “un-American.”
As I said then -- put simply, these men are all out of touch. Deeply, profoundly out of touch with what the rest of the country is going through.
They are so caught up in their profits that they have lost sight of what is happening everywhere else – across our economy, in our schools, on Main Street and around the kitchen table.
Well, gentleman, here’s some of what you need to know.
For starters, the Congress is in the midst of a full throated debate about how to reduce our growing deficit without breaking the backs of working families, or leaving our seniors out in the cold, or reducing our support for the veterans who served our country and children who are its future.
We are debating proposals to cut back Social Security, the promise made to generations who worked and want to live their final years with dignity.
We are debating legislation that forces Medicare to be privatized, chopped up or made into optional grant programs, run by states and drastically scaled back.
This Congress is debating deep cuts to federal programs ranging from highways and airports to medical research, coal mine safety inspections and money for schools.
Quite simply, we are talking about making drastic cuts to programs that touch the lives of nearly every single person in this country.
And these slick executives seem blind to the real-world consequences of having made $950 billion in profits during the past decade, all the while collecting $4 billion a year in subsides courtesy of U.S. taxpayers – the same taxpayers who also are forced to pay oil companies more and more at the pump all the time just to be able to drive to school or work or church.
And the same oil executives who blanche if anyone questions their mega salaries – like the $29 million a year paid to the CEO of Exxon.
During my conversation with these executives last week, we talked a little about how the effective tax rate on their profits is significantly lower than what average workers make in my home state. Exxon paid a 17% effective tax rate over the past 3 years, while the average individual paid an effective rate of 20%. The effective rate is the amount of tax you are actually paying on income earned when factoring in deductions and credits.
It is a vast understatement to say that West Virginians, like many others all across the nation, are not having an easy time of it during this period of record oil company profits. And they understand perfectly well that there is no longer any justification for maintaining generous subsidies for this highly profitable industry – especially with so many other vital programs on the chopping block.
They know that without a willingness to stare down sacred cows like corporate subsidies, we won’t ever be able to make progress eliminating the massive federal deficit which is staring us in the face.
There is much at stake beyond just wanting this industry to carry a fair share.
The per capita income for West Virginia is almost $33,000 a year. West Virginians can’t afford another 10 years of handouts for big oil.
The current high gas prices are like a dark cloud. The working class in rural states like mine commute twenty-five miles or more each way, and high gas prices can eat heavily into their weekly paycheck. Things are worse in the summer, when families travel.
I hear often from constituents who are experiencing sticker shock at the pump. Police departments, schools, hospitals, and community organizations feel the pinch of rising fuel costs. Even the smallest increase can have a serious impact on family budgets and a business’s bottom line.
I do not mean to suggest that oil industry subsidies and profits are the sole culprit for rising gas prices – because talking with industry experts and economists has convinced me that a big factor in rising cost of energy is the role of speculators.
These speculative investors make a quick profit betting on future oil contracts, and they do so without taking on almost any real risk themselves. I am not alone in thinking these speculators are driving up oil prices and creating more price volatility. I have joined with other Senate colleagues in asking the Commodity Futures Trading Commission to look closely at the role of speculators in the oil futures markets and in pressing the CFTC to get moving and use their regulatory tools from the Wall Street Reform Act to rein this in. I have also written to the Federal Trade Commission asking them to investigate any potential fraud or market manipulation or the oil markets.
Ultimately, what’s needed in the big oil industry is a sense of fairness – when it comes to paying taxes and when it comes to prices at the pump. To me fairness has always meant shared sacrifice in tough times and shared success in good ones.
It’s a sense of giving something for the larger good. Not to stop being competitive or aggressive or even profitable – but at least to show for a minute that they see where we are today and that they have a responsibility to their fellow Americans that goes beyond higher profits for themselves.
What’s needed is a reminder that a lifetime of always beating their adversaries, of never losing or giving anything of yourself to the greater good, does not in fact lead to a prosperous cost or morally just society.
That’s not too much to ask, especially of big oil, and I’m not going to stop just because they don’t yet get it.