Big Oil execs appeared on Capitol Hill yesterday and told members of the Senate Finance Committee, in so many words, "Don't fuck with us."
That’s nothing new, of course. But yesterday’s hearing was a particularly revealing example of how cocky Big Oil is feeling right now, with gas prices high, summer driving season on the way, and a still-sluggish economy that allows Big Oil to throw its weight around in Washington like sumo wrestlers in a room full of ballerinas.
The subject of yesterday’s hearing was a Democratic proposal to cut $21 billion in oil industry subsidies over the next decade and use it to pay down the deficit (the original plan had been to use the money to fund clean-energy research, but that was DOA with fossil-fuel friendly politicans of both parties). The revised proposal has a certain populist appeal: if Republicans want to make deficit reduction the number one political priority in America, why not start by cutting pay-outs to one of the biggest, oldest, and richest industries in the world? It’s not like Big Oil needs the cash. The Big Five oil companies -- Exxon Mobil, BP, Shell, Chevron, and ConocoPhillips – made $34 billion in profits in the first three months of 2011, up more than 40 percent from a year ago. If they were smart, Big Oil could have supported the proposal as a patriotic gesture, a sign that, in America, during hard times, we all have to pull together and give up a little something.
But of course that is not how it played out. Instead, we witnessed a parade of greed and political body-checking that was remarkable even by Congressional standards.
Exxon Mobil CEO Rex Tillerson, who earns roughly $21 million a year, called the attempt to roll back the subsidies "misinformed and discriminatory." Then he threatened to abandon America all together: "You give me a different tax burden," he said, "I'm going to take my capital then, since the U.S. isn't attractive, I've got to go somewhere else."
John Watson, CEO of Chevron, a perennial favorite on lists of “least reputable” companies in America and a master at sucking crude oil and cash out of Third World nations, argued that the oil men were just old-fashioned American capitalists who had pulled themselves up by their bootstraps and were now enjoying their just rewards. "Don't punish our industry for doing its job well," he said piously.
But the most shameless – and in a weird way, revealing – argument came from ConocoPhillips CEO James Mulva. On Wednesday, ConocoPhillips had released a statement calling the Democrat’s proposal to cut subsidies "un-American." During the hearing, Mulva was grilled by New York Senator Charles Schumer about the comment, but Mulva refused to walk it back. And why should he? Mulva understands as well as anyone that when you give as much money to Congress as Big Oil does -- in the 2010 election cycle, Big Oil and Gas gave over $10 million to federal candidates, about three-quarters of which went to Republicans – it’s downright un-American not to get your way with lawmakers.
Of course, all this was just political theater. The Democrats’ proposal is unlikely to pass in the Senate, much less the House, where Republicans are pushing hard to expand off-shore drilling. But it was further evidence of a basic rule of American energy politics: the more desperate we get for cheap oil and gas, the more delusional we become. “You'd be likelier to see a unicorn in this hearing room than have Americans believe you need these subsidies,” Schumer said to the oil execs during the hearing. Welcome to Never-Never Land, Senator.