Center for American Progress

Unbearable Cost of Oil: Record Prices Require Senate Action

Unbearable Cost of Oil: Record Prices Require Senate Action

We can't count on OPEC or Big Oil to give up their record profits, so we must urgently diversify our energy sources, writes Daniel J. Weiss.

Forget about the Organization of Petroleum Exporting Countries boosting oil exports to any meaningful levels at OPEC’s production meeting in Vienna tomorrow. Don’t believe a word President Bush says tomorrow about his commitment to boost renewable energy or reduce global warming in the United States. And definitely don’t count on Big Oil to consider reducing its record profits by one cent to help American consumers and the U.S. economy cope with the incredible costs of record high oil prices and anticipated gasoline prices of $4 a gallon this coming summer.

The American people instead need to count on themselves and their elected officials in Congress to tackle the threats to our economy and our prosperity by urging the Senate to extend and create incentives to invest in wind, solar, biofuels, efficiency, and other clean energy sources, paid for with the repeal of a $1.3 billion annual tax loophole for Big Oil. The House of Representatives has already acted. The Senate can accomplish this with its passage of H.R. 5351.

The Senate considered similar legislation several times in 2007, and every time a majority of senators supported it. Unfortunately, enough conservative senators opposed this common sense move by voting to “filibuster” the proposal to talk it to death. A super majority of 60 votes necessary to end debate and pass a clean energy tax package has proven to be an elusive goal.

On December 13, this effort to adopt a clean energy tax package failed by 59-40, with Sen. John McCain (R-AZ) absent. His vote could have made the difference. His spokesperson said that “he would not have supported breaking the filibuster.” In other words, he would have voted against renewable energy and for Big Oil

With oil prices and oil company profits breaking records, the big five oil companies—BP plc, Chevron Corp, ConoccoPhillips Inc, ExxonMobil Corp., and Royal Dutch Shell Group—could easily afford to give up this tax loophole. It is a paltry amount compared to the $123 billion in profits they made last year—nearly $230,000 in profits per minute. And when oil is over $100 per barrel, they shouldn’t need any incentives to drill for more.

Nearly three years ago, President Bush said, “With $55 oil we don’t need incentives to oil and gas companies to explore. There are plenty of incentives.” He was right. Yet the president continues to defend tax loopholes for the big five oil companies even though oil hit a record high yesterday, and could remain around $100 per barrel. After all, OPEC has no incentive to increase production to lower prices when it’s raking in record piles of dollars. One way to loosen OPEC’s choke hold and reduce fossil fuel energy dependence is for 60 senators—only one more than in December—to vote for the Renewable Energy and Energy Conservation Tax Act, H.R. 5351.

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Daniel J. Weiss

Senior Fellow

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