Former Shell Oil CEO John Hofmeister earlier this month broke ranks with the rest of his Big Oil brethren and admitted that oil companies do not need the billions in taxpayer subsidies that they receive every year. “In the face of sustained high oil prices it was not an issue — for large companies — of needing the subsidies to entice us into looking for and producing more oil,” Hofmeister said.
Since the Obama administration came into office, it has been proposing to strip Big Oil subsidies. But Republicans (joined by quite a few Democrats) have time and again objected, ensuring that the hugely profitable oil industry continues to receive federal largesse. In fact, when Sen. Bernie Sanders (I-VT) proposed cutting $35 billion in oil subsidies last year, every Republican voted against it. But today, on C-Span’s Washington Journal, Sen. Mark Kirk (R-IL) broke with his party and called for cutting Big Oil’s subsidies, explaining that oil companies are “doing just fine on their own”:
Q: Why can’t we start collecting royalties, finally, from the oil companies? Or do something about the subsidies that these very wealthy corporations have? Why can’t we get rid of these tax havens? Why can’t we talk about those things? Why can’t we put those on the table as well?
KIRK: I think we should. In the House of Representatives, I voted to wipe out many of the oil company subsidies. They’re doing just fine on their own. I think that many of the corporate welfare programs are misplaced.
To say that oil companies are doing “just fine” is an understatement, to say the least. In fact, “The big five oil companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — made a total profit of nearly $1 trillion over the past decade.” ExxonMobil, of course, has broken and then rebroken the record for most profitable year in history. And the current unrest in the Middle East is going to drive these profits even higher.
Republicans assert that removing the subsidies will cause job loss and an increase in oil prices. However, according to the Office of Economic Policy at the Department of Treasury, cutting the subsidies would affect domestic oil production by less than .5 percent. In fact, the United States produces about the same amount of oil now that it produced in the 1950s, despite billions in subsidies that have been handed out over the years. Such a small change in production is also unlikely to cause significant job loss.
Kirk should be applauded for taking a stand when the rest of his party has been bowing to Big Oil’s influence. However, he is not a strident opponent of all corporate welfare, as he is in favor of giving banks senseless subsidies to originate student loans.