Senate: Oil and Gas Industry Tax Breaks Remain

As you know, anti-oil company sentiment is at its peak right now. A recent poll showed that 75% of Americans blame BP “a great deal” for the spill. So, it was no real surprise when the Senate failed to say no to $35 billion worth of tax breaks for the oil and gas industry. Senator Bernie Sanders (I-VT) introduced a provision that would have limited write offs for drilling expenses, eliminated a tax deduction for the capital costs of oil and gas wells and repealed a tax deduction for domestic production of oil and gas. He needed 59 additional votes. He got 34.

Why should such companies receive additional forms of tax relief when the average taxpayer enjoys hardly any at all. Let’s us not forget that we are in a deficit of $13 trillion dollars…yes, that’s with a “T”. So, with such a deficit, a stagnant national unemployment rate and a lingering recession, why are we looking to give tax breaks to oil companies? Especially when over the last decade, the five largest oil companies (Exxon Mobil, Chevron, ConocoPhillips, BP and Shell) made more than $750 billion in profits. This is a no-brainer; these companies simply don’t deserve tax relief.

What are your thoughts? Let me know @ronideutch on Twitter or on Facebook.

50% Hike in Gas Tax Pushed

From Philly.com:

A 50 percent increase in gasoline and diesel-fuel taxes is being urged by a federal commission to finance highway construction and repair until the government devises another way for motorists to pay for using public roads.

The National Commission on Surface Transportation Infrastructure Financing, a 15-member panel created by Congress, is the second group in a year to call for higher fuel taxes.

With motorists driving less and buying less fuel, the current 18.4-cent-a-gallon gas tax and 24.4-cent diesel tax are failing to raise enough to keep pace with the cost of road, bridge and transit programs.

In a report expected in late January, commission members say they will urge Congress to raise the gas tax 10 cents a gallon and the diesel-fuel tax 12 to 15 cents a gallon.

At the same time, the commission will recommend tying fuel-tax rates to inflation. It also will recommend that states raise their fuel taxes and make greater use of toll roads and fees for rush hour driving.

Such tax increases would be politically treacherous for Democratic leaders in Congress - a gas-tax increase was one of the reasons they lost control of the House and Senate in the 1994 elections.

President-elect Barack Obama has expressed concern about raising gas taxes in this economic climate. Commission members said the government must find the money somewhere.

"The reality is, our current gas tax doesn't pay for upkeep of the system we have now," said commission member Adrian Moore, vice president of the Reason Foundation, a libertarian think tank in Los Angeles. "We can either let the roads go to hell, or we can pay more."

Will Obama Raise Fuel Taxes?

From the Guardian:

China's decision on Friday to link domestic fuel prices to the international price of crude oil, but increase consumption taxes on gasoline and diesel sharply to spur more efficient use of energy in the medium term, raises the question whether the incoming Obama administration might be tempted to do the same.

China is taking advantage of a cyclical pull back in energy to push through a permanent structural increase in taxes and prices. The aim is to combine a short-term boost to the economy with longer-term and more consistent incentives for improving energy efficiency.

By consolidating a series of tolls and administrative charges into a single, easy to collect consumption tax, the government is simplifying the tax system, creating a new source of revenue, and ensuring the change will have no impact on the politically sensitive inflation rate.

More importantly, it creates a fairly simple mechanism for raising energy costs further in future to spur additional efficiency gains, irrespective of cyclical changes in the crude oil price.

Once short-term economic weakness is past, the government can easily raise the consumption tax progressively over the next few years.

In effect, the tax breaks the link between the government's energy efficiency program and short-term oil-market movements.

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Most States Not Raising Gas Taxes

According to Forbes.com only seven states raised their gas tax rates over the past year. With Washington having the highest increase with an addition 2-cent tax. While Iowa and Nebraska both saw their gas tax rates drop by fractions of a penny. However, most states haven't raised gas taxes in the past year.