The Senate's most outspoken apologist for the oil industry is at it again. Sen. Mary Landrieu, D-La., recently took to the chamber floor to declare that eliminating federal subsidies to the wildly profitable major oil companies would be a gross injustice.
Think of it, the big oil companies being persecuted by way of losing their hefty subsidies, an action unlikely to make any dent in their record-breaking profits but one that would produce a significant reduction in the national budget deficit. Some of the revenue from the discontinued subsidies could even be used to restore cuts in important domestic social and infrastructure repair programs as well as promote clean renewable energy expansion.
Yet Senator Landrieu droned on about the oil industry's sorry plight in a lament that defies plausibility. Where could you find more improbable candidates for fiscal martyrdom than the five giant oil companies flush with cash?
Anticipating criticism for her pro-business bias, Landrieu insisted that she did not "coddle" the oil industry. Methinks she protested too loudly, not surprising when you consider oil barons have showered her with more than three million dollars in campaign contributions over the years. A prima facie case for political payback hits you squarely between the eyes.
The Democrats, led by Sen. Robert Menendez of New Jersey, want to eliminate $1.2 billion of the four billion dollars in annual federal energy subsidies received by the five major oil companies that earned $76 billion in 2010 after taxes.
Industry maintains that termination of its subsidies would force gasoline prices to rise and put it at a competitive disadvantage that would drive it overseas. These are a pair of nonsensical claims heartily endorsed by Senator Landrieu, who worries about Louisiana losing an oil production bonanza that still leaves her state 40th in the nation in per capita income.
An exhaustive analysis by the non-partisan Congressional Research Service concludes that elimination of the oil subsidies would have no impact on gasoline prices. Maybe that is because the actual fluctuation of prices at the pump is caused by speculators in the international markets.
The contention that removal of even a portion of their subsidies will put the big oil companies at a competitive disadvantage is pure poppycock. Petroleum enjoys a built-in market advantage over renewable energy sources since oil can be used immediately whereas technologies such as solar and wind have huge start-up costs and deferred payoffs. Shed no tears for big oil, whose capital investments are taxed at a far lower rate (nine percent) than most other industries (25 percent). And even with the Democrats' proposed subsidy cuts, the five majors would enjoy far more federal monetary incentives than wind and solar companies do at present.
Finally, even if they lose some of their subsidies, the big five are not going to flee this country for some overseas alternative. There are simply too many customers in the United States to abandon such a market.
Landrieu recognized that her stance on oil subsidies would irk many of her Democratic colleagues and ruefully expressed regrets at having to be "the skunk at the garden party."
Aptly said, Senator, aptly said.