Las Vegas Sun

April 17, 2014

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SUN EDITORIAL:

Who needs subsidies?

The oil company is making massive profits while Americans are suffering

In 2005, President George W. Bush said if oil prices were at $55 a barrel, the oil companies wouldn’t need the lucrative subsidies that the federal government gives them.

At the time, oil prices were around $50 a barrel, and in a hearing in the Senate, executives from the five largest oil companies were asked whether they agreed with the oilman-turned-president. They did.

Fast forward to 2011. Oil prices are hovering around $100 a barrel, so the Senate Finance Committee summoned executives from the same companies, and on Thursday asked them if they agree with Bush’s sentiment. They don’t.

ConocoPhillips CEO James Mulva, the only executive to testify this week and in 2005, said the oil companies still needed the subsidies because the price of doing business has gone up.

Before anyone pities the poor, poor oil companies, consider two other things that have gone up: gas prices and oil company profits.

An average gallon of unleaded gasoline is at a record high at $3.90 a gallon, up $1.03 from a year ago. The big five oil companies recorded more than $31 billion in profits for the first three months of this year. They are projected to make $125 billion this year.

Given all of that, the Senate is considering a bill that would repeal the subsidies those five companies receive. It would amount to about $2 billion, a small percentage of their profits. That money would help the government stave off some budget cuts.

But Republicans are taking the oil companies’ view. They say the bill wouldn’t lower the prices at the pump, but if that’s true, what’s the point of giving the subsidies? The Republicans also complain that the Democrats are trying to raise taxes, but Democrats just want them to pay their fair share.

During the hearing, Democratic senators talked about the country making “shared sacrifices” during the economic downturn. Chevron Corp. CEO John Watson said Americans don’t want that but instead want “shared prosperity.”

He was cut off by Democratic Sen. Jay Rockefeller, D-W.Va., a scion of the oil tycoon who founded Standard Oil — the company that spawned Chevron. “Lovely statement,” Rockefeller said, “but do you understand how out of touch that is?”

Unfortunately, the executives and the Republicans are blind to the fact that Americans’ prosperity is hampered by the gas prices. Instead, they offer a litany of spurious complaints:

• One executive complained the industry shouldn’t be “punished” because it’s successful. But if the companies are so successful, they don’t need the subsidies.

• Another executive said repealing the subsidies would “discourage” oil companies from investing in exploration. But no one will be discouraged when they can make the profits the oil companies do.

• In a news release issued before the hearing, ConocoPhillips complained that the plan to repeal the subsidies was “un-American.” That’s disgraceful. Doing your part is fundamentally American — it’s not paying your fair share that is un-American.

The fact is the oil industry can and should pay more. Congress should pass the bill. It’s disgusting that Republicans are letting the oil companies gorge themselves while average Americans get stuck with the bill.

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  1. Fat people and fat cars go together. Is the processed food lobby and the SUV lobby in cahots?

    We need a public option. At least one oil company should be run by the government. Mexico's gas price is under $3

  2. Dennis is correct. No one forced anyone to buy those ridiculous SUVs that populate our driveways and highways.

    The problem is not big oil, but the addiction of the US consumer to inefficient vehicles.

    Because oil markets are so tight (daily consumption and production are almost even these days), small increase in fuel efficiency would help the price of gas at the pump a lot. Visit your microeconomics 101 text for an explanation.

  3. What's disgusting is how the Democrat Party hacks that write editorials for this paper attack one party while the other party (their party) controls the White House and the senate. Why haven't they stopped subsidies to the oil companies? And rich fat cat Democrats like Rockefeller are the sleaziest of all. These obscenely rich Democrats have learned that if you play the populist game of pretending to stand up for the "little guy", the little guy won't notice how much money your shoving into your already overflowing pockets. Of course these kind of fat cats are A-okay for the shills that write for the LVSun.

  4. Great RHG! Wonder how the Democrats will respond to your statement: "These obscenely rich Democrats have learned that if you play the populist game of pretending to stand up for the "little guy", the little guy won't notice how much money your shoving into your already overflowing pockets." You know, the "little guys" depending on Big Brother for their welfare, food stamps, child credits and the other government handouts - the Democratic voting constituents... How does that affect the economy and unemployment figures FOR US ALL?

  5. One must at least remember that the government makes twice as much money from a gallon of gas as the oil companies that actually do all of the work to put that product to market. I am not a fan of the oil companies but their roi is not out of line considering the amount of capital that is required to put gas in our tanks. That said, I think it is time to remove the subsidies afforded the oil companies.

    RHG and INDY - I agree! It would appear that liberals do not work for the greedy corporations or invest any money because they think it is immoral to earn a profit. At least that is what many of them scream about. Without that profit margin, investment seem silly doesn't it?? Just saying...

  6. get rid of all subsidies for every industry. Period.

  7. Solar, Wind and Ethanol receive approx 130 billion in subsidies. If they cut the 4b from the oil companies, then lets cut the other subsidies too.

    A lot of our increase in food prices have come from the increase in corn prices subsidized for ethanol. The functionally illiterate moron attorney's in congress just recently figured this out.

    The Dems are famous for their bills that deliver "unintended consequences". They sold the feel-good Ethanol as a substitute fuel to the undereducated citizenry, most of who swooned over the idea. Now they are paying the price at the food stores.

    Morons...abject morons...and we give them the right to vote.