Shilling for big oil at a House Energy and Power Subcommittee hearing, Rep. John Shimkus (R-IL) declared that, just like “little mom and pop drillers,” multinational corporations deserve to write off billions in tax breaks if they don’t hit oil.
Shimkus defended the $4 billion annual tax breaks the industry receives, claiming the oil giants — that collected a combined $137 billion in profits last year — should write off some drilling as a “business expense”:
Just because you have a lease, it doesn’t mean there’s oil underneath there. You have to look for it. It takes capital expense … I’m tired, I’m really tired of this attack on drilling. Because my little mom and pop drillers, all they want to do is if they don’t hit the well, they want to record that as an expense. That’s all this tax break for big oil is. If they don’t hit, they don’t count it as an expense. You can write it off as a business expense if you drill and you don’t hit the oil. That’s all it is.
Now multiply that to a multinational corporation and it’s the same thing. If they go deepwater drilling and they don’t hit, should they not write that off as a business expense? Sure they should. Just like my mom and pop should do it locally.
What he doesn’t note is that the five oil giants have plenty of excess capital to spend on developing leases. At the end of 2011, they were sitting on $60 billion in cash reserves and spent $38 billion on stock buybacks. They could easily spend some of this $100 billion on exploration.
Not surprisingly, Shimkus’ donors include some of the same big polluters, like Exxon Mobil. Oil and gas is Shimkus’ fifth-largest donor this election cycle and he’s collected a $311,000 career total from the industry.
At a GOP-led hearing already stacked with oil and gas spokesmen like American Petroleum Institute President Jack Gerard and American Fuel and Petrochemical Manufacturers President Charles Drevna, the focus was less on gas prices and more on protecting oil subsidies.