Sen. Rockefeller, Great Grandson of Oil Tycoon, Berates CEOs of Top U.S. Oil Companies
(CNSNews.com) – Sen. John D. Rockefeller IV (D-W.Va.), a great-grandson of oil tycoon John D. Rockefeller who once controlled 90 percent of U.S. oil production, criticized the CEOs of the top U.S. oil corporations for being “out of touch” and compared their business practices to Saudi Arabia at a hearing on Thursday of the Senate Finance Committee.
“I get the feeling that it’s almost like you’re -- the five of you are like -- Saudi Arabia,” Rockefeller said. “That you’re caught up in your profits, you’re highly defensive.”
“You yield on nothing,” he said. The hearing was held to discuss the tax breaks utilized by oil companies and current energy prices in the U.S. economy.
Rockefeller said that because of their lifestyles and profits Americans would not understand how the tax incentives Democrats in the Senate are trying to take away from U.S. oil companies could drive business overseas.
“So, I mean, I just want that on the record, I think you’re really out of touch,” Rockefeller said.
Rockefeller himself has an estimated worth of $85 million, according to his 2009 financial disclosure forms, making him the fourth wealthiest member of Congress. Rockefeller also owns a mansion near Rock Creek Park in Washington, D.C., another home in West Virginia, and a ranch in the Grand Teton National Park in Jackson Hole, Wyoming.
“You assume you’re going to prevail, which is part of what I think creates the distance between us and you and perhaps between you and the problems that this country faces,” Rockefeller told the oil company executives.
Rockefeller said the CEOs were “deeply and profoundly committed to sharing nothing” and had to answer to stockholders if they “give up something.”
When he asked the panelists when they would make enough profit not to need subsidies from the government, John Watson, CEO and Chairman of the Board of Chevron Corporation, disagreed with Rockefeller.
“As we've described, we don't receive subsidies, Senator,” said Watson. “What we do require is a reasonable return on our invested capital. And I would tell you that I don't think the American people want shared sacrifice. I think they want shared prosperity.”
During the second round of questioning, Rockefeller had an exchange with Rex Tillerson, Chairman and CEO of Exxon Mobil Corporation, accusing the oil company of paying less taxes than other Americans.
Rockefeller: “What about the fact that, in the case of ExxonMobil, that your effective federal tax rate is substantially 3 percent lower than what the average individual federal tax rate is? Does that mean anything to you?”
Tillerson: “Well first, Senator, I want to assure you I'm not out of touch at all. And we do understand the big picture. We understand the enormous challenges confronting the American people with respect to this enormous deficit that has to be dealt with. And ultimately, it's got to be dealt with in a very large way. And so, I just want to acknowledge that we are well aware of that.”
Rockefeller: “Okay, so what do you – ”?
Tillerson: “My effective United States income tax rate on my United States income from 2005 to 2010 was 32 percent. Now, if you look at any individual year, it could be as low as a single digit. It can be as high as 38 to 39 percent, because we don't settle our taxes in -- for that year in that year. We have tax filings that are open for multiple years, as we resolve issues with the IRS, they are recognized in the year we file. So in some years when our taxes appear low, it's because we have recognized closing of issues with the IRS where we overpaid.”
Rockefeller: “And I understand. But still, do you understand the American -- the average American's feeling -- that over between 2008 and 2010 your effective tax rate was about 20, about 17 percent, and theirs was about 20 percent?
Tillerson: “From 2005 to 2010 our effective tax rate is right at 32 percent.”
Rockefeller: “Yes. Well then, that leads me to the next round of questions, if we have those.”
Rockefeller then repeated his charge that the oil company executives were “out of touch” because they “never lost.”
“But I think the main reason that you're out of touch, particularly with respect to Americans and the sacrifices that we're having to look at here in terms of trying to balance, or come even close to balancing a budget, is that you never lose,” Rockefeller said.
“You've never lost,” Rockefeller said. “You always prevail. You always prevail in the halls of Congress and you do that for a whole variety of reasons, because of your lobbyists, because of friends who -- because of all the places where you do business.”
“And I don't really know any other business that never loses, that always fails to do as well as you do,” Rockefeller said.
The other panelists testifying included Marvin Odum, U.S. president of Shell Oil Company; H. Lamar McKay, chairman and president of BP America, Inc.; and James Mulva, chairman and CEO of ConocoPhillips.
Ranking Member Sen. Orrin Hatch (R-Utah) said the Democrats were trying to “exploit high gas prices for political gain” and that they have “no energy policy whatsoever.”
Calling the hearing a dog and pony show, Hatch said lawmakers were headed down a “dangerous road” of penalizing American businesses because they are profitable.
“Are we to increase taxes any time a company sees an increase in quarterly profits due to high demand of a commodity?” Hatch said. “What if Walmart's profits increased due to a spike in global demand for cotton? What if an increase in demand for coffee results in Starbucks reporting record profits?”
“What if the Hollywood studios hit a few homeruns with some new films and record profits result?” said Hatch.
“Well I'm not going to hold my breath waiting for Democrats to haul George Clooney up here to justify -- to justify his income,” Hatch said. “I do not believe we really want to go down the dangerous road of deterring American businesses from becoming too profitable.”
Concerning Hatch’s question to panelists about whether the legislation Democrats are pushing would reduce gas prices at the pump for American consumers, the oil and gas executives all said, “No.”
The Democrats’ plan would end about $21 billion in tax breaks for the top five oil firms in the United States. Senators Harry Reid (D-Nev.) and Robert Menendez (D-N.J.) said in a May 4 letter that the five largest oil companies should “share in the sacrifice” now that they are making large profits.
According to the Federal Highway Administration, the government (federal and state) takes an average of 48 cents on every gallon of gasoline sold in the United States.
For ExxonMobil, in the first quarter of 2011, it generated $2.6 billion in earnings in the United States but it also paid $3.1 billion in government taxes, according to its public revenue filings. Between 2005 and 2009, ExxonMobil paid $63 billion in U.S. taxes. Its worldwide taxes in 2009 totaled $81 billion.
Furthermore, according to the American Petroleum Institute, U.S. oil companies paid nearly $150 billion in income taxes to the federal government between 2004 and 2008. The API also reports on its Web site that the oil and gas industry in America supports 9.2 million jobs throughout the economy and contributes 7 percent of total GDP.
Thomas J. Pyle, president of the American Energy Alliance, reported on Wednesday that “in 2010, the oil and gas sector kept 5.7 cents for every sales dollar. That’s 3.8 cents less than the average U.S. manufacturer -- meaning oil companies made less off sales than other American industries. For example, the food industry pockets the same amount per sales dollar, while pharmaceuticals and medicines make 19.4 cents, and the beverage and tobacco industries keep 21.7 cents of their earnings.”
“The president’s six-month moratorium and continued ‘permitorium’ in the Gulf of Mexico following the Macondo [oil rig] explosion has killed 19,000 jobs and cost $1 billion in worker wages,” said Pyle. “Meanwhile, on the president's watch, the dollar's value has fallen more than 15 percent. … Domestic oil and gas production is a key growth engine for our economy; directly and indirectly the industry employs more than 9 million Americans. Instead of engaging in political tomfoolery, the Senate should instruct the administration to develop our vast domestic energy resources.”