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Big Oil Subsidies Targeted In Bill As Senate Debates Gas Prices

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WASHINGTON -- With Republicans relentlessly blaming President Barack Obama for high gas prices, Democrats tried a different tactic Monday, offering legislation to cut federal subsidies for the oil companies that have reaped record profits from the pain Americans feel at the pump.

Under a bill sponsored by Sen. Bob Menendez (D-N.J.), the Senate would end more than $20 billion of subsidies for the five largest oil companies over the next 10 years. The money would be used to cut the deficit and invest in green energy technology.

Menendez cast the measure as cutting a giveaway to oil companies that are already swimming in cash.

"I think the American people are sick and tired of paying ridiculously high gasoline prices ... at the pump and then paying big oil again with our collective taxpayer subsidies, which they get," Menendez said. "I think that money is better spent keeping our economy going and developing alternatives that will create competition in the marketplace and help to reduce gas prices."

Democrats have admitted the bill will do little in the short term to cut gas prices, echoing the opinions of oil analysts and scientists who say there is very little that Congress or the White House can do to have a quick impact. Many agree, however, that reducing consumption and improving energy efficiency can help lower prices in the long run.

Democrats also noted that oil companies can afford to let go of federal support.

"Exxon boasts in its Securities and Exchange Commission filings that for every dollar increase in the price of oil, their profits rise by $375 million," said Menendez. "For every dollar the price of oil goes up, they boast in their filings that their profits -- not proceeds, profits -- rise by $375 million. The American driver's pain is big oil's profit."

But Republicans saw the debate over gas prices as a winner, and voted with Democrats Monday evening to move to debate in a procedural motion that passed 92 to 4.

“This is the Democrat response to high gas prices," Senate Minority Leader Mitch McConnell (R-Ky.) said before the vote. "Frankly, I can’t think of a better way to illustrate how completely out of touch they are on this issue. And that’s why Republicans plan to support moving forward on a debate over this legislation, because it’s a debate the country deserves.

“We’re going to use this opportunity to explain how out of touch Democrats are on high gas prices, and put a spotlight on the common-sense ideas Republicans have been urging for years -- ideas that reflect our genuine commitment to the kind of all-of-the-above approach the President claims to support but doesn’t," McConnell said.

The GOP answer has been to push for more drilling and to support building the Canada-to-Texas Keystone XL oil pipeline faster, insisting these moves will lower gas prices -- even though experts and outside analyses say such actions would also have little to no impact.

The office of House Speaker John Boehner (R-Ohio) repeated that argument Monday, and McConnell echoed it in his remarks.

“In response to record-high gas prices, Democrats in Congress want to raise taxes on the very people who produce it," McConnell said. "Meanwhile, the president is blocking a pipeline that would decrease our dependence on Middle East oil and create thousands of American jobs."

But President Obama, who has proposed eliminating even more subsidies than Menendez has, hailed the bill, with his administration releasing a statement in support of it.

"The nation’s outdated tax laws currently provide the oil and gas industry billions of dollars per year in these subsidies, even though the industry is reporting outsized profits," the statement said. "Furthermore, heads of the major oil companies have in the past made it clear that high oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks. In making the tough choices necessary for deficit reduction, the Nation simply cannot afford these wasteful subsidies."

Michael McAuliff covers politics and Congress for The Huffington Post. Talk to him on Facebook.

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