Commentary: Oil industry tax breaks aren't warranted

In a scene reminiscent of the congressional hearing where tobacco company executives innocently denied that nicotine is addictive, oil company executives solemnly told Congress last week that their exorbitant profits are no big deal. One even suggested that closing big oil’s tax loopholes is somehow “un-American.”

Tell that to Americans struggling to make ends meet as they cope with $4-a-gallon gasoline and the economy gets hit with a sudden inflationary spike because of rising fuel prices. Meanwhile, oil companies report record earnings. To top it off BP acknowledges that taxpayers, in effect, are being asked to pick up part of the cost for BP’s oil spill in the Gulf of Mexico.

Under questioning from Florida Sen. Bill Nelson, BP America Chairman and President Lamar McKay defended as a “standard business expense” the decision to seek a tax write-off for the costs associated with the spill, which would generate $11.8 billion in tax savings. Considering that much of the cost involves compensation for victims and legal expenses associated with the spill, it’s wrong to ask taxpayers to pick up any of it. This is no ordinary cost of doing business like paying for insurance or the copy machine — there’s nothing “standard” about it.

“Surely, the Gulf oil spill was the result of wrongdoing, and yet you want to claim that as a tax credit,” Sen. Nelson said.

BP, he added “may be entitled to this under the law, but that doesn’t make it right . . .” Exactly.

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