Fact-Checking the Democrats’ Gas Price Distraction

Rather Than Support More American-Made Energy, Democrats Push for More Taxes That Destroy Jobs and Hurt Middle Class Families

As House Republicans offer a plan Thursday afternoon to create more American-made energy in order to lower gas prices, Democrats have chosen to create a new bogeyman to distract from their anti-energy policies:

HOUSE DEMS VOTE ON “BIG OIL” TAX CREDITS: “But if Dems are going down, they are planning to do it loudly. The minority is planning a procedural maneuver to force a vote on a key tax credit for the five biggest private oil companies.” (Patrick Reis, “Morning Energy,” Politico, 5/5/2011)

OBAMA: NO MORE “TAX BREAKS FOR BIG OIL.” “Obama has called for an end to tax breaks for Big Oil, opened a probe of market speculators and urged world producers to raise output.” (Matt Spetalnick, “Obama Vows Relief on Gas Prices,”Reuters, 5/2/2011)

Although Democrats may think their latest bogeyman will provide them with political cover, the Democrats’ own policies tell the real story. Far from lowering gas prices, the Democrats’ plan would destroy American jobs, reduce domestic energy production and hurt the middle class.

The Democrat plan, evident in H.R. 1689, offers a blueprint for how to destroy jobs, raise taxes and hurt middle class retirement savings:

SIX MILLION PEOPLE ARE EMPLOYED BY THE OIL AND GAS INDUSTRY DIRECTLY OR INDIRECTLY: “The oil and gas industry says it has an even larger employment footprint. ‘The industry itself is about 1.8 million including all aspects from the well head to the service station,’ says John Felmy, chief economist for the American Petroleum Institute in Washington. ‘But, according to Price Waterhouse [an accounting firm], if you add the indirect workforce you add another 4 million people so the total is close to 6 million.'”(Ron Scherer, “Report: ‘Green’ jobs outpacing traditional ones,” The Christian Science Monitor, 6/10/2009)

TAX HIKES WOULD SEND JOBS OVERSEAS: “Increasing the production costs of oil and gas via new taxes and fees place American jobs in jeopardy as small and large firms alike look to reduce operating expenses or shift to lower cost overseas production opportunities. Already we are seeing cutbacks in spending programs, particularly in the U.S. Further increasing production costs will likely result in the shedding of American jobs, at the same time the government is spending hundreds of billions of taxpayer dollars to create and retain jobs.” (“Taxing Our Way to Energy Insecurity Again,” U.S. Chamber of Commerce, June 2009)

NEARLY 70 PERCENT OF THE OWNERSHIP OF U.S. OIL COMPANIES IS COMPRISED OF MIDDLE CLASS HOUSEHOLDS: “Our analysis of SEC data on the ownership of U.S. oil and natural gas companies demonstrates that company insiders – corporate officers, senior executives and board members – have very small holdings in the companies they manage. Nearly 70 percent of the shares of these companies are held by institutional investors, especially asset management companies, and predominantly on behalf middle-class American households who own shares through mutual funds, pension funds and retirement accounts. Individual investors who manage their own portfolios and are not company insiders account for almost 30 percent of all industry ownership, which again includes significant numbers of middle-class households holding IRA and other personal retirement accounts.” (Robert Shaprio and Nam Pham, “The Distribution of Ownership of U.S. Oil and Natural Gas Companies,” Sonecon, llc., Sept. 2007)

Democrats are choosing to engage in political theater rather than provide American workers and families relief from rising gas prices by creating more American-made energy. Instead of threatening energy companies with job-killing, price-raising tax hikes, why don’t Democrats instead get serious and support a pro-energy development agenda?:

“BIG OIL” TAX EXEMPTIONS BEING TARGETED ARE OFFERED TO ALL DOMESTIC MANUFACTURERS: “For the administration to argue that it is unjust for oil companies to benefit from a generally available tax provision is no more valid than to argue that because people don’t like lawyers, it is somehow ‘unjust’ when a lawyer takes advantage of the mortgage interest deduction. When these generally available provisions are subtracted from the administration’s figures, their estimate of the ‘tax subsidies’ benefiting the oil industry is cut by roughly half.” (Scott Hodge, “Who Benefits Most from Targeted Corporate Tax Incentives?”, The Tax Foundation, 7/27/2010)

AFTER OIL AND GAS, WILL DEMS TARGET THE REST OF THE ECONOMY NEXT? “Exxon’s profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

“If that’s what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery — both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau’s industry rankings.” (Editorial Board, “What Is A ‘Windfall’ Profit?”, The Wall Street Journal, 8/4/2008)