The country's top oil companies, like ExxonMobil and Chevron, are expected to announce high third-quarter profits this week. And to accompany the good news for the industry, congressional Republicans who back it can expect a whole round of political attacks, especially regarding the much-debated tax incentives for major producers.
But with a new report released Wednesday, it appears the industry is ready to fight back against the politics.
In an E-mail sent to the press this morning, the Democratic Senatorial Campaign Committee dug into Senate Republicans for defending "tax payer funded hand outs for Big Oil," which the committee argues, "comes at the expense of middle class families across the country." According to the DSCC, Republicans are benefitting from the oil and gas industry's campaign contributions in exchange for support for tax breaks. "Big Oil companies are raking in soaring profits and Republican Senate candidates still want to continue shoveling taxpayer money into industry coffers," said DSCC spokesman Matt Canter in the press release. "Republicans have long been in the pockets of their Big Oil campaign contributors, fighting at every turn to protect the industry's taxpayer funded subsidies, even trying to cut benefits for seniors and dismantle Medicare to pay for tax breaks for big oil."
However, according to a new report released today by the American Petroleum Institute, the industry's profits, which the disputed tax breaks have helped to grow, actually benefit the middle class more than Democrats would make it seem.
Public and private pension and retirement plans—like 401(k)'s and IRAs—hold nearly half the shares of U.S.-based oil and gas companies, the report says. Also, according to the report, another 20 percent of the shares are owned by individual investors, while corporate management, which includes companies' board members and CEOs, owns less than 3 percent of the industry. The report states that the oil and gas companies' broad ownership "promotes social progress by enabling large numbers of people to benefit from the strong returns."
"Policy proposals to increase taxes on U.S. oil and natural gas companies, or proposals that would not allow this industry to use the same business cost recovery provisions available to other industries through our tax code, can give the impression that if only a few rich companies or executives would pay more, the rest of America would have to pay less or even nothing at all. The reality is far different," Kyle Isakower, the American Petroleum Institute's vice president of regulatory and economic policy, told reporters Wednesday morning. "The owners America's oil and natural gas companies are largely retirees or middle-class Americans saving for retirement. The cost of extra taxes on this industry would be borne largely by them, not by CEOs."
Debunking Democrats' argument that Republican-support for the oil and gas industry hurt the middle class in favor of the rich, Robert Shapiro, chairman of economic advisory firm Sonecon and an author of the report, told the press that it's really "average American households" that benefit. There's also been a decline in the holdings of corporate managers, Shapiro said, as higher returns in recent years have attracted more institutional investors and asset management firms into the sector.