Creating Long-Term Energy Alternatives For The Nation Act Of 2007--Continued

Floor Speech

CREATING LONG-TERM ENERGY ALTERNATIVES FOR THE NATION ACT OF 2007--Continued -- (Senate - June 20, 2007)

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Mr. SCHUMER. It is my lucky day, Mr. President.

I rise to speak against the amendment offered by my good friend from Arizona which will restore many of the tax breaks for big oil we voted to eliminate in the Finance Committee just yesterday.

After a wave of mergers in the industry over the past two decades, we now have an elite group of five very large integrated oil companies dominating our domestic petroleum market. These companies are price leadership. They all seem to set the same price. They don't get in a room and do it. One leads and the others follow. They wink at each other. It shouldn't be legal, but it is.

They have the power to block alternative fuels, such as E85, at their branded stations and, as we all know, they have the political power to secure billions of dollars in tax breaks they don't need and we can ill-afford.

It is time to get serious about our energy policy and stop giving away taxpayers' dollars that just end up in the pockets of big oil rather than going to renewable energy alternatives or curbing the cost of gasoline at the pump.

On the surface, it seems that big oil is pumping cash rather than pumping petrol. They don't try to find much new oil, and ExxonMobile alone bought back $29 billion of its stock in the last year. The bottom line is, if they have all this extra money to buy back their stock, why are we giving them tax breaks?

When the head of ExxonMobile, one of the big oil companies, came to us in the Judiciary Committee, he said he didn't believe in alternative fuels. I wouldn't either if I were the head of one of the five big oil companies that had an oligopolistic stranglehold on the market. I wouldn't want an alternative. So they are not going to do what most other businesses, where there was a semblance of competition, would do: find a new product because they know their old product is getting expensive and may run out someday.

So that is our job. We are taking back these taxes. We are not just putting them into the Treasury. It is not taxing for taxing sake. We are putting them into tax breaks for alternative fuels. Since the oil companies would not look at alternatives, we are going to take the money that we have given them in taxes, and never should have, and give it to other companies that will invest in alternative fuels.

This is a mature industry by any standard and no longer does it need tax breaks. I have actually introduced a bill to repeal every special tax break received by the major oil and gas companies.

The policy of giving them breaks has failed. Despite ever-increasing petroleum products and general Federal tax giveaways, the oil companies don't believe they need to compete. The oil companies believe they don't need to compete to create new domestic gasoline supply. We haven't had a new refinery built in 30 years. When they have merged, they have closed refineries. So it hasn't worked.

While ExxonMobile doled out $29 billion, or 60 percent of its cashflow, on stock buyback alone, their overall production has barely budged since the 1999 merger. Exxon never should have been allowed to merge with Mobile. On the Joint Economic Committee, we are looking it over, seeing if we can look into undoing some of those unfortunate mergers, which occurred, by the way, under both Democratic and Republican Presidents. But at the same time, we have to get moving on alternative fuels.

The Finance Committee chairman and ranking member--bipartisan--were right to scale back the tax breaks that go to this very profitable industry and instead target them to renewable energy in a way that ensures technology will succeed.

The finance amendment extends tax breaks for alternative fuels by several additional years. When we were at our issues conference in New York City, DPC, Democratic Policy Committee, we heard a brilliant presentation by an investment banker from Goldman Sachs who said we are great at developing new technologies, but we are not very good at commercializing them, implementing them. That is because the tax breaks we give go for a year, 2
years, and no business wants to invest when they are not sure these breaks will continue.

The proposal in the bill, which I was proud to cosponsor, says the tax breaks will be extended for 5 years and longer so that companies will know they do keep those tax breaks and have an incentive to invest. So it makes eminent sense. Take the money away from taxes for the oil companies which refuse to engage in finding alternatives and give them to new companies that will. It is a policy that makes sense for the good of the consumer because, in the long run, it will lower prices; for the good of our foreign policy because it will decrease our dependence on dictators and potentates we don't like, such as the heads of Iran and Venezuela; and it is good for our climate because as we move to alternative fuels, less CO2 will be put in the atmosphere.

For the first time in 6 years, this Congress is willing to stand up to the oil companies. I know many on the other side of the aisle aren't. The previous energy bills reflect what the Bush administration believes: What is good for the oil companies is good for our energy policy is good for America. They are wrong, as the price at the pump, as the increase of CO2 in our air reveals, and as our increasing imports of oil show. We are changing that policy.

I know others on the other side of the aisle are blocking us because of obeisance to big oil, but we will succeed because the American people are behind us, and our country needs no less.

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