* Democrat Baucus says oil prices set in world markets.
* Republican says hearing is a political dog and pony show
* Chevron boss: tax hikes on Big Oil will cost U.S. jobs
By Timothy Gardner and Tom Doggett
WASHINGTON, May 12 Repealing billions of
dollars in tax breaks for Big Oil won't raise U.S. fuel prices,
Senator Max Baucus said in an opening shot directed at top
petroleum executives summoned to Capitol Hill on Thursday to
defend their surging profits.
Oil prices are set on a world market and the U.S. share of
crude production is less than 10 percent, Baucus said before
the CEOs of some of the most powerful companies in the world.
"That makes it difficult -- if not impossible -- to pass on
the cost of losing these subsidies to consumers," Baucus, the
head of the Senate Finance Committee, told the hearing.
With gasoline prices soaring towards $4 a gallon, Democrats
hope to claw back $2 billion a year in breaks from Exxon Mobil
(XOM.N), Chevron (CVX.N), ConocoPhillips (COP.N), BP (BP.L) and
Royal Dutch Shell (RDSa.L) to help ease the deficit.
The companies made about $35 billion in profits after
posting double digit growth in the first quarter as energy
High gasoline prices are increasingly a big headache for
President Barack Obama as the Democrat gears up for next year's
The executives contend their corporations already pay high
taxes and ending their incentives would only drive them them to
look for oil abroad, costing American jobs. That would
eventually raise oil prices and fuel prices in turn, they
"Tax increases on the oil and gas industry... will hinder
development of energy supplies needed to moderate energy
prices," Chevron's chief John Watson said.
Rex Tillerson, the chief executive of Exxon, said the
company's tax rate from 2005 to 2010 averaged 32 percent.
"In some years when our taxes appear low it's because we
have recognized the closing of issues with the IRS where we
have overpaid," he said.
The Center for American Progress, a liberal think tank,
said in a analysis this week that Exxon's federal tax rate last
year was 17.2 percent after all the tax breaks and concessions
were accounted for, lower than what the average American pays.
DOG AND PONY
Senate Majority Leader Harry Reid said he wants to bring a
bill to the floor next week to repeal oil industry tax breaks,
to help ease the deficit by about $21 billion over 10 years.
Repealing the tax breaks the call among Democrats in the
Senate has grown louder as the oil price remains near $100 a
The bill's backers face a hurdle getting the 60 votes
needed for passage in the 100-member Senate because of staunch
opposition from Republicans and some Democrats from
But getting Republicans to go on record as supporting Big
Oil could be an arrow for Democrats to use in the election
campaigns if prices keep rising.
Senator Orrin Hatch, a Republican, said the hearing was
purely about politics.
"This hearing should not be used to score cheap political
points, but I'm afraid, with all due respect ... that is what
we will see today," he said while holding up a picture of a dog
and a pony, to underscore his point that's it's all for show.
(Editing by Russell Blinch and David Lawder)