* Backers say bill would save taxpayers $21 bln in decade
* Reid hopes for Senate vote on bill next week
* Republicans say measure would push up gasoline prices
* Big oil company executives to testify on tax breaks
(Adds oil company executives to testify at Senate hearing)
By Timothy Gardner and Deborah Charles
WASHINGTON, May 10 Democratic U.S. Senators
introduced a bill on Tuesday that would repeal tax breaks
enjoyed by the five biggest oil companies, freeing up $21
billion over a decade to ease the budget deficit.
Reducing tax breaks for oil and natural gas companies is
also a goal of President Barack Obama, who has been keen to
tack the blame for soaring gasoline prices on oil companies as
he gears up for the 2012 election.
Senators Robert Menendez, Sherrod Brown and Claire
McCaskill, who face tight races in next year's elections,
introduced the bill as U.S. gasoline prices hovered just under
$4 a gallon, about 14 cents off a record hit in 2008.
Senate Majority Leader Harry Reid said he hoped the measure
would come to a vote in the full chamber next week.
The bill will likely draw opposition among Republicans, who
have said such measures will send gasoline prices even higher.
But the bill's sponsors said it would save taxpayers about
$2 billion a year, noting that oil companies have made $1
trillion in profits over the last decade.
"If we can't end subsidies to the five biggest, most
profitable corporations in the history of the planet ... then I
don't think anybody should take us seriously about deficit
reduction," McCaskill told reporters.
The federal deficit is forecast to reach $1.4 trillion this
year and stay in the trillion-dollar range for several more
years as the economy recovers slowly from a deep recession.
Reid said ending tax breaks is a better way of easing the
deficit than cutting government programs such as Medicare for
the elderly. "Putting seniors ahead of oil companies should be
a no-brainer," Reid told reporters.
Exxon Mobil Corp (XOM.N) and Chevron Corp (CVX.N) the
biggest of the Big 5, have profited as oil trades at more than
$100 a barrel. Exxon posted a profit for the first quarter of
$10.65 billion and Chevron posted a $6.2 billion profit. BP Plc
(BP.L) reported $5.5 billion in profits despite setbacks from
last year's massive oil spill in the Gulf of Mexico.
The Menendez bill, which calls for all savings from the tax
break repeal to go toward reducing the deficit, is a departure
from a plan aired by Senator Max Baucus, who would have used
some of the savings to promote renewable energy.
It would modify foreign tax credit rules that companies use
to lower their U.S. tax payments. It would also limit
deductions of income attributable to oil and natural gas
production, and eliminate domestic manufacturing tax deductions
for the companies.
Executives from the five biggest oil companies agreed to
come to Capitol Hill to testify on Thursday at a Senate Finance
Committee hearing on ending oil industry tax breaks.
The executives testifying are Exxon Mobil Chairman Rex
Tillerson, Shell Oil Co. (RDSa.L) U.S. President Marvin Odum,
BP America Chairman Lamar McKay, Chevron Chairman John Watson
and ConocoPhillips (COP.N) Chairman James Mulva.
Republicans, who control the House of Representatives, have
opposed curbing the tax breaks, saying this would increase
costs for oil companies that would be passed on to consumers in
the form of higher gasoline prices.
The bill also will have to win over several Democrats in
the Senate, such as Energy Committee chair Jeff Bingaman, who
recently voted down a similar bill. Even if the bill passed in
the Senate, it would likely be blocked in the House where many
lawmakers prefer shrinking the federal deficit by cutting
The oil industry said the bill unfairly targets the five
biggest companies leaving other big industries alone.
"Is it a noble cause to penalize one individual segment of
an industry?" said Charles Drevna, president of the National
Petrochemical & Refiners Association. "If you are going to
tackle deficit spending the entire tax code needs to be
Analysts said the bill has slim chances of passing but
signals a wider discontent from both parties with big oil
company profits that could grow as high gas prices persist.
"The bill in its own right isn't necessarily a viable
proposal, but it's a real signal of a real prospect -- the five
largest companies are in the crosshairs," of politicians
hearing from consumers angry over prices, said Kevin Book, an
analyst at ClearView Energy Partners.
(Reporting by Timothy Gardner and Deborah Charles, editing by
David Lawder and Lisa Shumaker)