Sen. Franken's Statement in Support of Removing Federal Subsidies to Big Oil Companies
(As Prepared For Delivery)
M. President, I rise today in strong support of Senator Menendez's bill to eliminate subsidies to big oil companies. At a time when we have to make tough choices to address our budget deficit, when we are cutting cancer research, at a time when Minnesotans are paying $4 a gallon at the pump, and at a time when oil companies are raking in record profits, we have to stand up and say: enough is enough. It's time to end the subsidies, and that's why I'm a proud cosponsor of this bill.
We've had to make a lot of tough choices, and there are plenty still to come. To avert a government shutdown, Congress enacted billions of dollars in cuts. Some were pretty hard for me to swallow - cuts like $182 million dollars from job training, $650 million
from community development funds that help communities provide basic services like roads, sewers, and affordable housing. Even Pell grants for summer school.
These are cuts that will be felt by working families and people who are still struggling to find jobs and make ends meet. I voted for the spending bill that contained those cuts, not because they'd be the cuts that I'd choose to make, but because it was important to keep the government open. Addressing our budget deficits will take compromise, and it will take shared sacrifice from everyone. That includes big oil companies that are making record profits because the world price of oil is now $100 a barrel.
The bill before us would end $1.2 billion dollars in subsidies to the five largest oil companies in fiscal year 2012, and $21 billion over the next ten years. These companies make up three of the top five Fortune 500 companies and have had nearly a trillion dollars in profit over the last decade. While high oil prices are gouging the pocketbooks of American families, these companies are on pace for a record setting year. In the first quarter alone, these companies collectively made about $35 billion dollars in profits.
I would like to ask my colleagues, how high do oil prices have to go - how big do the oil industry's profits have to be - before we can talk about doing away with their handouts? These companies have legacy wells that pump oil at a cost of $10 a barrel. On average, oil production costs them $15 a barrel. When exactly don't they need these subsidies anymore? They're making record profits! Now, at $100 a barrel, why do they need the subsidies? If oil goes up to $102 a barrel, or $110, or $150 - can they give us the subsidies back then? There is absolutely no rationale for these subsidies. None at all. How much money do these companies have to make before they don't need the government's help anymore?
Well to me, those don't sound like companies that need to be subsidized by taxpayers. President George W. Bush thought so too. In 2005, he said, and I quote, "with 55 dollar oil, we don't need incentives to oil and gas companies to explore. There are plenty of incentives." When testifying before Congress in 2005, one oil executive stated that removing many of these tax breaks would have no effect on his company's production activity. Today, with oil prices close to $100 dollars a barrel, it's doubly true.
And let me say something about House Speaker Boehner's statement on the debt limit last week. The speaker told us that in terms of dealing with the deficit, everything is on the table. Everything except for revenues. How can we not look at billions of dollars in handouts to some of the most profitable companies in America?
You know, it's sort of like a family that can't pay its bills. They can't pay for food, and heat, and electricity, and medical bills, and the mortgage all at the same time. And then they come together and say, "to make ends meet, everything's on the table for paying for this stuff, except for one of us getting an extra job, working more hours, or somehow bringing in more money. Can't do that." The son says "Gee, Dad, I could do more hours at TGI Fridays." "No, son, that's off the table. No more medicine for Grandma." Revenues off the table. That just doesn't make any sense, and it tells me that some of us aren't really serious about fixing the budget deficit.
A recent report from the Joint Economic Committee concluded that, and I quote, "[r]epealing or modifying the tax incentives discussed in this report ... would have little or no impact on consumer energy prices in the immediate future."
In 2010, 60 percent of the big five oil companies' profits went to stock buybacks and dividends to their shareholders, not to exploration. So even if they had fewer taxpayer subsidies and could only use, say, 58% of their record profits for buybacks and dividends this year, I'm pretty sure they could get by just fine.
Now some of my colleagues on the other side of the aisle think we've got the wrong approach and don't want us touching big oil's government handouts. Instead, they're pushing an alternative bill that would require the government to approve or reject a drilling permit in 60 days-or it would be deemed automatically approved. This is a very dangerous idea. Just this morning, I asked Director Bromwich, who heads the agency in charge of offshore permitting, what he thought about the idea, and he said we'd all be at greater risk from such a proposal.
This just shows that some of my colleagues have not learned the lessons of the BP oil spill, where a shoddy approval process and numerous industry errors led to a disaster in the gulf. This disaster brought economic hardship for thousands and cost 11 workers their lives. Let's not forget that.
Offshore drilling is becoming an increasingly complex industry. To insist on a one-size-fits-all permit process ignores the increasing technical challenges that offshore drilling presents. The Republican bill is reckless and irresponsible, and I urge my colleagues to reject it.
So instead of ending handouts to wildly profitable companies, my friends on the other side of the aisle are suggesting we throw caution and safety to the wind-and continue to dole out these subsidies. They want to make cuts to job training programs, Pell grants, and cancer research. They've proposed converting Medicare into a voucher program, which would end the long-standing guarantee that our seniors will have access to health care when they need it-it would end Medicare as we know it. But when we talk about touching one penny of big oil's subsidies, they say "it's off the table."
I believe Americans come together in tough times and make sacrifices. We're all not going to get everything we want, and that includes big oil executives. At a time when almost 14 million Americans are unemployed, at a time when job training and other assistance programs are being cut, it's unconscionable for companies making record profits to refuse to do their part. It's unconscionable for them to refuse to give up even one penny of subsidies that they don't need.
M. President, I urge my colleagues to get serious about the deficit, support Senator Menendez's bill, and to end these wasteful handouts. I yield the floor.