The extraction and burning of fossil fuels pose significant problems for public lands, air, and water. Nonetheless, the federal government continues to give oil and gas companies billions of dollars in tax breaks, spending subsidies, and other handouts—at a time when the industry is reaping record gains. In the third quarter of 2005, for example, the five biggest oil companies reported a combined $32 billion in profits; at the same time, the oil and gas industry was eligible for nearly $10 billion in tax breaks, including $2.6 billion approved in the 2005 energy bill. These handouts tilt the playing field toward big companies and away from efficiency, conservation, and clean energy solutions.
Among the tax credits benefiting the biggest oil and gas companies is one allowing them to expense costs associated with exploration and development. While most other businesses have to recover such costs through depletion or depreciation, the oil and gas industry, under this credit, can deduct their costs in a single year—lowering their effective tax rate.
According to the Joint Committee on Taxation, the credit would cost taxpayers $2.4 billion over five years.
During floor debate of S. 2020, the tax reconciliation bill, Senator Dianne Feinstein (D-CA) introduced Senate Amendment 2609 to repeal this tax break for ExxonMobil and other major integrated oil companies. Opponents of the amendment argued that it wasn’t germane to the tax reconciliation bill and raised a point of order against it. This meant that the Feinstein amendment would have needed 60 votes to pass. On November 17, 2005, the Senate voted 48-51 against waiving the point of order, effectively killing the amendment (Senate roll call vote 332). YES is the pro-environment vote.