Repeal Big Oil Tax Subsidies Act - Motion to Proceed

Floor Speech

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Mr. CORNYN. Mr. President, I come to the floor today to express concerns about the rising cost of gasoline and the Obama administration's efforts to further increase the American consumers' pain at the pump.

As we all know, the average price of gasoline has now more than doubled since the first week of the President's inauguration in January 2009, from $1.84 a gallon to $3.86. Furthermore, the Associated Press has reported the typical American household spends about $4,155 a year filling up at the pump--an all-time high--and 8.4 percent of the median household income, the highest percentage spent for gasoline since 1981 when oil prices soared due to the crisis in the Middle East.

The Energy Information Administration estimates that 72 percent of the price of a gallon of gasoline is made up from the cost of crude oil, which is a globally traded commodity. Although some would like to distract from the fundamentals, Congress cannot repeal the law of supply and demand.

Indeed, President Obama used to agree with us. Last March, for example, he said ``producing more oil in America will help lower oil prices.'' However, his administration has adopted policies that directly conflict with our goal of lowering gasoline prices. To add insult to injury, with the public outcry, the President is out to further confuse the facts and actually take credit for increasing production when those increases have been on private lands outside of his control, and while opposing greater exploration on Federal lands under his purview. At the same time he is even seeking now to push prices even higher by raising taxes in his fiscal year 2013 budget.

This week the Senate will be debating a bill by Senator Menendez of New Jersey to increase taxes on oil producers. I don't know of anyone who could reach any other conclusion than that by raising taxes on the people who produce oil and gas, it will raise, not lower, the cost of oil, thus the refined petroleum product known as gasoline. So, actually, by punitively and in a discriminatory sort of way raising prices on an unpopular sector of the economy, we will actually make matters worse, not better.

The Tax Code supports the energy sector by providing a number of targeted tax incentives--or tax incentives only available to the energy industry. In addition to targeted tax incentives, there are a number of broader tax provisions that are available for energy- and nonenergy-related industries. For example, the section 199 domestic production deduction incentive is available to most domestic manufacturers with income derived from production property that was manufactured, produced, grown, or extracted within the United States.

So this section 199 provision applies to a whole host of American businesses, not just the oil and gas business. Yet

the Menendez bill and the Obama administration continue to single out oil producers for tax increases, even though oil-related activities are already limited from claiming the deduction compared to other industries.

Analysis by the Congressional Research Service for the energy targeted tax incentives shows that while the majority of U.S. primary energy production comes from fossil fuels, the majority of energy tax-related revenue losses are associated with provisions designed to support renewables.

During 2009, 77.9 percent of U.S. primary energy production could be attributed to fossil fuels--77.9 percent in 2009. Of the Federal tax support targeted to energy in 2009, an estimated 12.6 percent went toward fossil fuels. In contrast, in that same year, more than 10 percent of U.S. primary energy sources came from renewable fuels.

In other words, just to repeat: 10.6 percent from renewable, 77.9 in that same year from oil and gas, but notwithstanding the fact only 10 percent of energy produced came from renewable fuels, 77.4 percent of energy targeted Federal tax support went toward supporting renewable fuels.

If we want to put all these tax provisions on the table, I think we should do that. As a matter of fact, the Simpson-Bowles study identified more than $1 trillion of tax expenditures. But let's not just pick out one sector of the economy and, in the process, raise taxes and increase the price of gasoline at the pump as an unintended but clearly likely outcome.

We know the Menendez bill is not about tax reform. This is about mixing the message and trying to drive a wedge between the American people and the people who actually create jobs. Unfortunately for the administration, raising taxes will, in fact, translate into higher prices.

It is a fair question to ask whether this administration can defend its policies, such as their budget proposal to raise taxes where they argued these tax provisions should be repealed because they ``encourage overproduction of oil'' and are thereby ``detrimental to long-term energy security.''

I am not sure most Americans understand that the official policy of this administration is that tax deductions should be removed because they encourage overproduction of oil in America. I thought the goal--one of our goals--was to produce more at home so we would depend less on imported energy from abroad.

Then there is the Keystone Pipeline, which is well-known. The President is the primary obstacle to the completion of that pipeline which will create more than 20,000 new jobs and produce 700,000 barrels of oil at refineries in the United States from a safe and friendly source--the nation of Canada. Because the President is blocking completion of the Keystone XL Pipeline, they are looking for alternative customers. Indeed, the Prime Minister of Canada has visited China to prospect that potential purchase.

What is worse, it is not just that the President hasn't acted, it is that the President has actually lobbied in the Senate to defeat efforts to bypass his obstruction to the completion of the Keystone XL Pipeline.

Well, the President must be feeling the heat because he showed up in Cushing, OK, to celebrate and to say he would expedite about one-third of the pipeline, which, ironically, doesn't require him to do anything. It certainly doesn't turn on the spigot in Canada to get the oil in that pipeline to come from Canada down to the United States.

So we can see our Nation has no coherent energy policy. We see that not only is this an area that has been neglected to the detriment of the American consumer, but actually the sorts of policies being pursued by the administration--particularly with regard to the Keystone XL Pipeline and raising taxes on domestic oil producers--are designed to make matters worse for American consumers at a time when they are struggling to recover from this recession, with historically high rates of unemployment and too few jobs.

Looking at all the evidence on energy prices, it is hard to come to any conclusion other than that high energy prices are part of President Obama's plan. The policies he has put in place have intentionally elevated the price of gasoline, much to the detriment of the American people.

Mr. President, I yield the floor.

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