Democrats running the Senate are seeking to strip the five biggest oil companies of tax breaks that pad their profits by $2 billion a year and instead use the money to help defray the spiraling budget deficit.
New legislation unveiled Tuesday by Sens. Robert Menendez, D-N.J., Claire McCaskill, D-Mo., and Sherrod Brown, D-Ohio, would cut off immensely profitable companies like Shell Oil and Exxon Mobil from subsidies such as a deduction originally aimed at boosting manufacturing. The bill would also close a loophole that effectively allows oil companies to shield themselves from taxes by deducting royalties paid to foreign governments.
The top five oil companies have booked profits of $36 billion in the first quarter of this year alone. The Democrats say that at those levels the big oil companies wouldn't miss the subsidies.
Republicans and a handful of oil state Democrats like Mary Landrieu of Louisiana are expected to filibuster the bill to death. An earlier version was opposed by seven Democrats on a filibuster vote in February, but Democratic leaders have now narrowed the legislation to permit smaller producers to continue to claim the subsidies.
The issue is back in the wake of comments last month by House Speaker John Boehner, R-Ohio, who said in a television interview that Congress "certainly ought to take a look at" eliminating the subsidies. He quickly backed away from the comments.
Democrats say getting rid of the subsidies is a no-brainer when the government is running deficits that require it to borrow more than 40 cents of every dollar it spends.
"If we can't do this. If we can't remove subsidies from these profitable big oil companies, then I don't know if we can ever get to the really difficult work that lies ahead," McCaskill said. "This ought to be the essence of low-hanging fruit."
Republican opponents say the companies would simply raise prices if the measure became law.
Menendez acknowledged that the legislation _ slated for a vote next week _ won't do anything about gas prices exceeding $4 a gallon in many places.
The measure would also eliminate the so-called oil depletion allowance for the five oil companies. That allowance permits producers a tax deduction comparable to the break given manufacturers for depreciation of the value of an investment in plants and equipment.
The other companies that would be affected by the legislation are BP, Chevron, and ConocoPhillips.
"It's a shame that this industry hasn't been appreciated for all of the good that it does," Landrieu said.