Time to end oil subsidies

Scott Tong Apr 28, 2011
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Time to end oil subsidies

Scott Tong Apr 28, 2011
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Jeremy Hobson: Well we’ve got earnings this morning from Royal Dutch Shell. The oil giant made $7 billion in the first three months of the year. Exxon reports later today. And you can expect more big profits. Things are so swell for the oil companies right now, in fact that some in Washington want them to live without key tax breaks.

Marketplace’s Scott Tong reports on how that would affect them.


Scott Tong: They don’t set the high prices, but the oil companies sure enjoy them. Some think industry earnings this year could rival 2008. That’s when Exxon Mobil earned $45 billion — an all-time high for a listed U.S. company.

Now, the White House wants to end oil and gas tax breaks, and spend that money on clean energy. Thing is, repealing subsidies won’t hurt the big, bad multinationals so much as small independent drillers, says Charles Ebinger at the Brookings Institution.

Charles Ebinger: A lot of people don’t realize it’s not the big integrated companies that find most of the domestic oil in the United States — it’s the independents.

And for all the talk of obscene profits, they tend not to last. Three years ago, record crude prices freaked out consumers and demand collapsed. Barbara Shook at Energy Intelligence Group sees those signs again.

Barbara Shook: I think every one of these oil companies is concerned about demand destruction. They don’t want to see the consumer switch to a more efficient vehicle.

For now, though, it’s a great first quarter.

In Washington, I’m Scott Tong for Marketplace.

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