ENERGY Making Big Oil Pay The consequences of oil company malfeasance and our nation's broader addiction to fossil fuels became starkly apparent with the _disastrous explosion_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=50686&elq=183e492e17544f6bbc5ce205a49faaaa) and _resulting spill_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51969&elq=183e492e17544f6bbc5ce20 5a49faaaa) at the Deepwater Horizon oil rig in the Gulf of Mexico. The cost of the Gulf Coast disaster could be as high as _$14 billion_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51970&elq=183e492e17544f6 bbc5ce205a49faaaa) , and many fear that the American taxpayers will ultimately pick up the tab. However, if the right policies are enacted, Big Oil could be made to pay the costs for its own disasters, and taxpayers would be spared another bailout. By increasing the cap on oil industry liability for disasters and ending wasteful taxpayer subsidies of the oil industry, oil companies like BP and ExxonMobil will finally have to pay their fair share for the "_costs_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51677&elq=183e492e17544f6bbc5ce205a49faaaa) of the health, safety, and environmental damages they cause." The only thing that stands in the way are industry-friendly members of Congress who put the profits of Big Oil above the welfare of average Americans.
AVOIDING RESPONSIBILITY: The oil industry has a history of _skirting responsibility_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51677&elq=183e492e17544f6bbc5ce205a49faaaa) for its economic and environmental disasters. During the Exxon Valdez disaster in 1989, almost 11 million gallons of oil poured into Alaska's Prince William Sound. After the spill, a court set punitive damages at $5 billion. Exxon litigated against the decision for nearly 20 years until 2005, w hen the Supreme Court reduced the company's damages to only $500 million. Exxon paid about $300 million after taking its tax deduction for punitive damages. The company's profits that same year totaled _$36.1 billion_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51971&elq=183e492e17544f6bbc5ce205a49faaaa) . Unfortunately, Exxon's case is not unique, as other oil companies have also done everything they can to keep from paying for their disasters. Transocean, a contractor involved in the Deepwater Horizon incident, has already petitioned a court to limit its liability to $27 million dollars, _citing_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51972&elq=183e492e17544f6bb c5ce205a49faaaa) a law passed in 1851. _An investigation by ProPublica_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51973&elq=183e 492e17544f6bbc5ce205a49faaaa) finds that the average penalty paid for violations by offshore dri llers over the past 12 years was only $45,000. Meanwhile, daily profit for the first quarter of 2010 was a whopping _$62 million_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51974&elq=183e492e17544f6bbc5ce205a49faaaa) . When breaking the law involves so little risk, companies have little incentive to follow it in the first place. Additionally, oil companies take advantage of the current tax code to shirk their tax responsibilities. ExxonMobil, for example, "_uses 122 foreign subsidiaries_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51333&elq=183e492e17544f6bbc5ce205a49faaaa) , including 32 countries that are officially labeled tax havens to dodge U.S. taxes," including in the Bahamas, Cayman Islands, Hong Kong, and Singapore. ENDING OIL WELFARE: In "_The Bi g Oil Discount_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51677&elq=183e492e17544f6bbc5ce205a49fa aaa) ," Center for American Progress Senior Policy Analyst Sima J. Gandhi offers a few ways to encourage oil companies to "act responsibly" and bear the costs of their own bad behavior. First, the Big Oil Bailout Prevent Act, which has been proposed by Sens. Robert Menendez (D-NJ), Frank Lautenberg (D-NJ), and Bill Nelson (D-FL), would retroactively replace the $75 million oil company liability cap for damages resulting from spills with a $10 billion cap. In addition, "not only is liability capped on compensatory damages from oil spills, but payment of punitive damages _is also tax deductible_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51677&elq=183e492e17544f6bbc5ce205a49faaaa) ." While courts can impose punitive damages, the current tax code allows companies to offset their losses by "decreas[ing] their taxes when they pay punitive damages." A third step Congress could take would be to eliminate billions of dollars of special subsi dies and tax loopholes that the oil industry receives. Currently, a 1995 law provides royalty relief for companies that drill in parts of federal waters off the Gulf of Mexico. Government Accountability Office testimony indicates that these forgone royalties from leases issued between 1996 and 2000 could be as a high as _$80 billion_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51975&elq=183e492e17544f6bbc5ce205a49faaaa) . Additionally, the oil industry receives large subsides via tax expenditures, which are "special deductions, credits, exclusions, rates, exemptions, and deferrals that are delivered through the tax code." Obama's _fiscal year 2011 budget proposes_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51678&elq=183e492e17544f6bbc5ce205a49faaaa) ending nine such expenditures that primarily benefit oil companies. If Congress follows through with Obama's request, it would save roughly $45 billion over the next ten y ears. CAP President and CEO John Podesta and environmental blogger Joseph Romm also suggest that BP should put its "first-quarter profit of $5.6 billion...in _an escrow account for compensation_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51976&elq=183e492e17544f6bbc5ce205a49faaaa) " for those whose livelihoods are damaged by the spill. BIG OIL'S FRIENDS: Unfortunately, Big Oil has friends in the U.S. Congress who are determined to stop these reforms and keep taxpayers on the hook for the industry's malfeasance. Last Thursday, when Menendez tried to pass his liability cap legislation by unanimous consent, Sen. Lisa Murkowski (R-AK) _objected_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51774&elq=183e492e17544f6bbc5ce205a49faaaa) and prevented it. Murkowski explained that Congress still needs to "understand a little bit better as to how much we might need to _look at raising the limit_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51977&elq=183e492e17544f6bbc5ce205a 49faaaa) ." As the Washington Independent's Mike Lillis notes, "To no one's surprise, she didn't mention the _$426,000_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51977&elq=183e492e17544f6bbc5ce205a49faaaa) she's accepted f rom the oil industry in her eight-year tenure on the Hill." The Center for Responsive Politics points out that "individuals and political action committees affiliated with oil and gas companies have donated $238.7 million to candidates and parties since the 1990 election cycle, _75 percent_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51978&elq=183e492e17544f6bbc5ce205a49faaaa) of which has gone to Republicans." Meanwhile, Senate Minority Leader Mitch McConnell (R-KY) told Meet the Press host David Gregory yesterday is that the "danger...is that if you raise the cap too high, there will be no competition in the Gulf. And you'll leave all the business to _the big guys like BP_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51979&elq=183e492e17544f6bbc5ce205a49faaaa ) ." While battling the oil industry's political clout will no doubt be difficult, it is a fight worth taking on. As Gandhi writes, "It's time for oil companies t o _pay their fair share_ (http://app.mx3.americanprogressaction.org/e/er.aspx?s=785&lid=51677&elq=183e492e17544f6bbc5ce205a49faaaa) ." -- Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more.
