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Report: Oil Companies are “Poster Child” for Corporate Welfare

May 20, 2011

PRESCOTT, Ariz. - Oil and gas companies will enjoy more than $78 billion in federal tax breaks in the next five years, according to a new report from the non-partisan Taxpayers for Common Sense. The report says ending those subsidies is a good first step toward reducing government debt.

Michael Surrusco, an investigator with the group, told a Prescott news conference that if Congress is serious about the nation's debt crisis, federal corporate welfare must end.

"Many candidates in the last election campaigned on a message that they're going to cut wasteful government spending. This is wasteful government spending."

The oil industry says the tax incentives encourage exploration, and that the price of gasoline will go up if they're repealed. Surrusco notes that the five biggest oil companies made $36 billion in profits in the first quarter, and says $100-a-barrel oil is enough to drive production.

Oil and gas companies spent nearly $40 million lobbying Congress in the first quarter of this year, the report says. Surrusco adds that heavy industry spending on campaigns and lobbyists will make repealing the tax breaks more difficult.

"In 2010, they had almost 800 lobbyists. And the job of all of those lobbyists is to keep and extend these subsidies."

Surrusco says his group is really just using the oil and gas industry as the "poster child" for corporate welfare. He'd like to see the current debate lead to tax reform and lower tax rates for everyone.

"Most of the subsidies that the oil and gas companies get are through the tax code. What we want to see happen is something similar to what happened in 1986 when (President Ronald) Reagan did it, to clean up and overhaul the tax code."

Consensus exists among both Republican and Democratic leaders that we need to get rid of specialized tax breaks, Surrusco says, but politics get in the way.

The report, "Subsidy Gusher," is online at

Doug Ramsey, Public News Service - AZ