Offshore Production and Safety Act of 2011 - Motion to Proceed
Floor Speech
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Ms. MURKOWSKI. Thank you, Mr. President.
I have also come to the floor today to speak about the proposal to raise taxes on the five largest domestic energy producers. I think it is important we remember we are speaking about five energy producers, five oil companies. We are not talking about a tax proposal that is broad and wide and encompassing. We are talking about a proposal to raise taxes on the five largest domestic energy producers.
I have to admit, I had some hesitation about even engaging in this floor debate at all because I think we recognize that the words and the statements we are delivering here are just that; they are just talk, they are just words. This proposal is designed to fail. But in failing, it is designed to score some political points, and it seems as if that is where we are today. But as a Senator who represents a State--Alaska; an oil and gas producing State, a State that would clearly be hurt by this proposal--I am obliged, obligated to outline why I feel this is so deeply flawed.
I want to start by stating the obvious here. This legislation will not reduce energy prices, but, if anything, it will increase our energy prices. It will not substantially reduce our deficit or our debt, but, if anything, it will add to those burdens by shutting off production and forcing the government to forgo production revenues.
I think it is important we put this in context because people around the country--as they look at the price at the pump go up day after day--are saying: What are you doing in Congress to lower the prices? What are you doing to deal with the higher price of gasoline in this country?
I think it is important we recognize this legislation we have in front of us does nothing to reduce our energy prices. It is not just me who says that. The chairman of the Finance Committee has indicated that. We have heard several Members on both the Republican side of the aisle and the Democratic side of the aisle say this is not going to reduce our prices. So what exactly is it we are seeking to do, other than send a message?
This proposal, I think it is important to recognize, will hurt poor and working families across our country. We all know what the price of gas is in our respective States. I will remind my colleagues that as much as Alaska benefits from high prices of oil, as we are a producer, it is a fact that it kills us in our local communities in our economies because we are the State with the highest gas prices across the country right now.
There was a news story last week back home. In Kotzebue, which is the northwest region up in the State, they are paying $7.55 in Noorvik, $8.25 in Kobuk, and $8.95 in Ambler. I was in Fort Yukon a couple weeks ago. There they are at a $5, $6, $7 gas figure. But the spring barge, which will be coming in in about 4, 5 weeks now, will be delivering fuel at prices that were set some weeks ago, and people have been alerted that on the day the barge delivers the fuel, the price will go up at the pump one additional dollar. We are not talking cents here; we are talking an additional dollar paid by the people in Fort Yukon.
So we know very well what high prices mean to us, and our constituents are asking us to do something about it: What can you do to lower those prices, to develop a coherent energy policy that starts to work now, and then yields progress over time? Our constituents are not asking us to make this problem worse. Yet that is precisely what these proposed tax increases will do.
I heard my colleague here say that, no, this is not designed to increase the prices that are out there. Well, it might not be designed to do that, but that is what we can expect if, in fact, these tax increases do go into play.
It has been a few years since I got my degree in economics, but even though it was more than a few years ago, I do remember some of these very early entry level classes I took. I remember learning that raising taxes on something is going to tend to make it more expensive. And I remember learning that when you tax something, you tend to wind up with less of it. That is just basic economics.
I think there is at least some understanding of these concepts around here because I do not see anyone who is proposing to raise taxes on solar panels or raise taxes on wind turbines to bring down their costs.
The reality is, this proposal--and I believe the point is conceded by its supporters--this proposal will not cause gasoline prices to drop. Instead, it could very well cause them to rise. I understand a memo from the Congressional Research Service suggests that no significant impact on prices will be seen in the short run. But that is the key phrase here: in the short run. Because what we need to be doing is looking longer term than next week or next month.
Whenever corporations face increased costs, they have a responsibility to their investors to recover those costs wherever possible, and usually what happens is, they pass them on to the consumers. To the extent the costs of this proposal cannot be passed on, and these companies will simply have less to invest in new projects.
That is talking about what does not happen with the price of gas. But this proposal is also not about reducing the debt either. I think it is important to put that in context. At best, it may be a drop in the bucket. According to the CBO, the President's budget for fiscal years 2012 through 2021 would result in nearly $9.5 trillion in new debt. This proposal, assuming it has no negative economic impact, would raise $21 billion, or about 0.2 percent of that debt. We would still need something like 450 times more revenue to break even, never mind the $14 trillion debt we have already incurred. We all know we hit the debt ceiling yesterday, so it does cause you to wonder: Is this the best we can do when we are talking about balancing the Federal budget?
I understand this proposal is not all it will take, and no one is proposing that it do so. But I think it is important we be honest with the American people when we talk about what this would mean in terms of a reduction in the deficit. If we are being honest with each other, we are going to see this proposal for what it is. Essentially a ``yes'' vote tonight to raise taxes on oil and gas companies is simply a vote to try to take a pound of flesh from these five major companies that, yes, in fact, are making money, yes, in fact, are making a profit. A ``no'' vote on this proposal tonight is a vote to try--try--to keep our prices under control, and it is a vote to help preserve America's competitiveness within the global economy.
I also want to take a moment to kind of set the record straight on subsidies. There are no payments from the Federal Government to the major energy producers as some have implied. Past Congresses have decided that those companies--and most other companies in America, I might add--deserve certain tax reductions. This is a critical distinction because we have not decided the Federal Government should actually give more to these companies. What we have decided is, the Federal Government should take less from them.
If that is the same as a subsidy, then new homeowners are direct recipients of subsidies because we deduct mortgage interest payments, and that means almost every company in our country--whether it is a Hollywood studio or the New York Times, whoever it is--almost every company then is somehow or other subsidized.
If we are talking about leveling the playing field by eliminating all the incentives within our Tax Code, especially in the context of broader reform that makes our Tax Code simpler and more fair, I welcome that discussion, and I think many in this Chamber do. It would be a much different conversation if we were considering a reduction in the corporate tax rate. But, instead, we are here debating whether to give different tax treatment to essentially
punish a handful of companies in just one sector of our economy, and there is no policy justification for it other than they can afford it, they are making money, they can afford it.
I would ask my colleagues, is this the kind of business climate we want for the United States? I have to wonder, then, if the answer to that is yes, who the next target will be, if making large profits signals to Congress you should be taxed at a higher rate.
In reality, domestic energy producers are already amongst the most heavily taxed companies in this country. While the effective tax rates for all corporations averaged 26.5 percent last year, the oil and gas industry's tax rate was at a much higher 41 percent. Instead of being subsidized by the Federal Government, the industry is actually a very large taxpayer.
The Federal Government taxes gasoline at a rate of 18.4 cents a gallon. It also receives billions of dollars each year in nontax revenues from the industry. Producers must pay the government for the rights of each of their leases. They have to pay the annual ``rents'' to hang on to those leases. They pay the royalties on any production that ultimately results from them.
So in terms of what is paid out, according to one estimate, the oil and gas industry's total payments to the government amounted to $86 million per day--per day--in 2010.
I would also remind my colleagues that the President has established a goal of cutting oil imports by 3 million barrels a day by 2025. If we intend to achieve that goal, which is a good goal, raising taxes on domestic oil production defies logic. To reduce imports, we will need to increase our domestic production. That will not happen if we impose a hostile tax environment for the companies that operate here--companies that are already challenged to produce the oil and gas resources we know we have but we have not been allowed to explore.
Before I conclude, I want to mention an article that recently appeared in the Financial Times. It noted that in 2011--this year--OPEC nations stand to take in more than $1 trillion from exporting oil. Our Nation--the United States--will provide a pretty good share of that money, likely tens of billions of dollars. And what do we hear about it? Nothing from the people who are proposing these tax increases, nothing about the tremendous sums of money we send overseas each year for foreign oil--just the far smaller sums that could be collected from domestic companies through higher taxes. That is missing the forest here, to cut down the one tree that happens to be growing in our line of sight.
So here we are. Instead of doing everything we can to halt the hemorrhage of Americans dollars to foreign countries, the Senate is now focused on an effort to raise taxes on five companies that actually operate here. The day after we hit the debt ceiling, we are debating a measure that would hardly make a dent in our debt. We are on pace to spend trillions of dollars outside of our economy in the years ahead, and we are on pace to incur trillions in Federal debt, but so long as a few companies pay higher taxes, somehow or other it makes us all feel better. No wonder the American people have lost so much faith in the legislative process. No wonder so much blame for high energy prices is placed on the Federal Government.
The proposal before us today is not an answer for high gas prices or the Federal debt. It is more likely to raise our energy prices, reduce our Nation's oil production, and deepen our annual deficits. I had hoped we would have a good, substantive, reasoned debate and discussion about how we are going to solve all these problems. But instead we are left to debate a measure that is all but certain to fail.
I think the Senate can do better. We will have a debate tomorrow about the Republican alternative--a bill that while it is not perfect will increase production, generate revenues for the government, create new jobs, and improve the safety of our offshore operations. If we are looking for good policy, I think that is where we need to start.
We have a long way to go. But I think what we have before us today is unfortunate.
I yield the floor.
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