Oil Company Windfall Profit Tax Offset

OIL COMPANY WINDFALL PROFIT TAX OFFSET -- (Senate - November 08, 2005)

Mr. REED. Mr. President, recently Senator Collins and I introduced an amendment to the proposed budget reconciliation bill to fund a $2.9 billion increase in the Low-Income Home Energy Assistance Program by placing a temporary 1-year windfall profit tax on big oil companies. I filed this amendment to the budget reconciliation bill to begin the dialog, and I intend to call for a vote on my amendment when the Senate debates the tax reconciliation bill in the next few days.

Last week, oil companies reported record profits for the third quarter on surging oil prices. Chevron posted profits of $3.6 billion. BP's profits rose to $6.5 billion. Royal Dutch/Shell profits grew to $9 billion. And ExxonMobil profits gushed up 75 percent to nearly $10 billion. According to BusinessWeek, that equals $150 million in profit for every working day in the past 3 months.

This year has been an exceptionally lucrative one for the oil industry and an exceptionally impoverishing one for American families and seniors. Profits going to big oil are money coming out of wallets of working families and seniors and wealth draining out of our communities.

Fully funding LIHEAP is a vital imperative. I believe the big oil companies should help shoulder the cost. Rising energy prices could financially wipe out working-class families and seniors this winter. Americans are experiencing extraordinarily high runups in energy prices that jeopardize the ability of many families to keep their homes warm during this coming winter season. Energy costs to the average family using heating oil are estimated to hit $1,500 this winter, an increase of almost $325 over last winter's heating season. For families using natural gas, prices could hit $1,000, an increase of $300.

For a family using propane, prices are projected to hit $1,300, an increase of $230. For families living in poverty, energy bills are now over 20 percent of their income, compared to 5 percent for other households. People who are living in poverty, many of whom are working, are paying 20 percent of their income for heating bills. That is compared to 5 percent for the rest of America's families.

Let me tell you what this amendment means. If we are successful, it would add $2.9 billion to the LIHEAP program to bring total funding to $5.1 billion this winter. With $5.1 billion, the National Energy Assistance Directors Association estimates that LIHEAP could serve 12 million families this year. This is double the number of families served last year but still only one-third of those eligible. Even with this increased funding, we would not reach all the families who qualify, but we would reach those families who are most in need, particularly in this very difficult winter heating season.

States could also increase the level of benefits to help these rising costs, in addition to enrolling more personnel in the program.

This amendment means that seniors will not have to choose between buying lifesaving medication and paying their natural gas bills. Working families will not have to decide between putting food on the table or putting heating oil in their tanks. And what is the cost of this amendment to big oil? It is about 10 percent of their profits from one quarter of 1 year, or in the case of ExxonMobil my amendment would represent just one-third of their profits for one quarter. This is a small price to pay to keep American families safe and warm this winter.

Two weeks ago, I wrote an open letter to the oil industry asking that they act as good corporate citizens and take this step voluntarily. I was pleased to hear that Senator Grassley, the distinguished chairman of the Finance Committee, reiterated my plea recently, and I hope that we will be able to work together on this effort. I also hope that Senator Gregg, the distinguished chairman of the Budget Committee, will join Senator Collins and me in our efforts to increase LIHEAP funding through this temporary windfall profits tax. I also hope the administration will join our bipartisan effort to help American families. Unfortunately, to date, the administration only appears able to say no to American families and seniors and yes to the oil industry.

Last month, Secretary Bodman said no, the administration would not seek additional funding for LIHEAP this winter. The supplemental appropriations request the administration sent to Congress last week did not include funding.

Recently, Secretary Bodman, answering questions on whether the administration would support oil companies voluntarily donating profits to LIHEAP, said, ``No, sir. I wouldn't support it. It is similar to a tax.''

In 1980, Congress enacted the Crude Oil Windfall Profits Tax Act. This legislation established LIHEAP. Twenty-five years later, with energy prices overwhelming workers' salaries and seniors' Social Security checks, it is time for Congress again to take action and tax windfall profits to aid in energy assistance.

I also want to mention it is my intention that when we consider the tax reconciliation bill this month, I will offer an amendment to provide a tax credit to working American families to help them pay for their energy bills this winter. Our Nation's priorities must be to help these families, and I hope working together with my colleagues we can provide that help and assistance.

Mr. President, I inquire how much time is remaining in morning business on the Democratic side?

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