As Oil Concerns Mount, the Profits Roll In

Against the backdrop of consumer protests and rising tensions, Royal Dutch Shell and British Petroleum (BP), two of the world’s largest oil producers, announced record profits for their first-quarter earnings this past Tuesday. With oil currently priced at an unprecedented $120/barrel, the announcements underscored the clear division between consumer concerns and what many activists and environmentalists perceive as corporate exploitation. While company executives were no doubt basking in the good news, commercial truckers in both the U.S. and Europe staged vehement demonstrations, bringing traffic to a halt in some cities. Given the strife, BP’s 63% profit growth seems obscene, not to mention unlikely to hasten the move to clean and sustainable alternatives, and considerable handouts in the form of government subsidies further abet this inequity. According to the Center for American Progress, the big five oil companies - BP, Chevron, ConocoPhillips, ExxonMobile, and Royal Dutch Shell - received $1.3 billion in tax breaks last year despite $123 billion in profits.

Isn’t it time for such double-dipping to end? While these write-offs are a drop in the bucket compared to company earnings, they could go a long way to easing the burden on the average driver. H.R. 5351, recently passed in the House and now before the Senate, intends to set limits on tax credits for oil companies while at the same time increasing subsidies for renewables. Such subsidies are intended to spur growth in emerging industries seeking a foothold in a competitive market; needless to say, oil companies don’t fall into this category. Recent legislative developments are cause for guarded optimism, however; a similar proposal nearly became law back in December, falling one vote short of overcoming a tortuous fillibuster by conservative Senators that had killed previous reform bills. Notably, Republican presidential candidate John McCain didn’t show up for the vote, though a campaign spokesman has stated that “would not have supported breaking the fillibuster”.

The passage of H.R. 5351 is a necessity if we are to tip the balance away from fossil fuels. Click here and here to read more about oil subsidies.


Posted on Friday, May 2nd, 2008 at 1:00 pm | Tagged in Energy, Legislation, Transportation | posted by Bill

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