Senate Floor Speech
Senator Kay Bailey Hutchison
November 17, 2005 -- Page: S13094

MRS. HUTCHISON. Mrs. HUTCHISON. Mr. President, I wish to speak today on an amendment that has been offered on this bill that I very much hope the Senate will not agree to.

The Dorgan amendment, which has been offered, would institute a windfall profits tax on the major oil and gas companies. There is the belief among many in this country that oil industry profits are excessive compared to profits of other companies that do business in our country. I do not believe that is the case.

In the second quarter of 2005, the oil industry earned 7.7 cents for every dollar of sales. The average profit for all U.S. industry in the second quarter was 7.9 cents for every dollar of sales. Thirteen U.S. industries earned higher profits in the second quarter than the oil and natural gas industry: banking, software and services, consumer services, and real estate.

The rate of return on oil sales for the third quarter of 2005 is slightly higher, at 8.1 cents for every dollar of sales. However, the damage to the oil industry caused by the hurricanes will eat into the bottom line in future quarters. British Petroleum has estimated it will take a $700 million hit to the company's energy production and infrastructure from Hurricane Katrina and Hurricane Rita. The Congressional Budget Office estimates capital losses from Hurricanes Katrina and Rita in the energy producing industries will range from $18 to $31 billion.

Reinvestment in infrastructure, both production and refining, is a critical issue. My good colleague from North Dakota and I would agree on that point. While I am sure his proposal is well intended, the impact would be contrary to the goals we all seek to achieve. His proposal takes a short-term approach to what is a long-term investment issue. Investments in infrastructure in the oil industry are over long-term windows.

What we must do is encourage the oil companies to take their profits and reinvest them back into exploration, production, and refineries. The oil companies seek to invest in refineries, but no one is investing in new refineries in America. In fact, there has been no new refinery built in America in over 20 years.

If we are going to have a bigger supply and bring the price of gasoline at the pump down, we must have more oil refineries and more production. We also need conservation. We also need renewable sources of energy. We need new sources of energy. We all agree on that.

This amendment seeks to single out oil companies, dub them ``excessively profitable,'' take their profit and give it to the Government to spend as it would, rather than letting the oil companies keep it and invest it in the infrastructure, production, and refinery capacity. That is what will get to the issue we are all trying to address; that is, bringing the price of oil down so the price at the pump will be lower.

Senator Schumer has discussed another potential amendment that hits at the big oil companies. I realize that is a political thing for him to do right now. We are not here to do the political hit and run. We are here to do the right thing for our country. We are here to try to build more reserves, more production capacity, and more refinery capacity to bring the price of gasoline down at the pump and to bring the price of energy down for the farmer who is trying to use natural gas. The price is rising such that our small farmers are in a tough position.

What Senator Schumer has discussed doing is instituting a double tax on any income made by a company overseas.

We are severely restricting the ability for an oil and gas company to drill in America today. You basically cannot drill off the East Coast or the West Coast, nor Florida. We can drill in the Gulf of Mexico, but it is very expensive and requires deep drilling. We hope we will be able to open ANWR--but right now we are very limited. We need to have a supply in our country, with American jobs and more production coming back to America. More and more production is going overseas.

I end by saying, the double taxation of one industry is unfair. If we have an oil company and a computer chip company doing business in Italy and they pay taxes in Italy, the computer chip company would get a credit for that tax paid when it files in America, but the oil company would not, thereby paying tax twice. Is that the way to have more oil coming into our country and to drive the price down at the pump? I don't think so. It is counterproductive.

I hope the Senate will do the right thing. It may not be the political thing, but it is the right thing if we are going to reach our goal, which is to bring down the cost of natural gas and gasoline at the pump for the consumers and the small business people of our country, keeping our economy strong and keeping jobs in America. The way to do this is not to single out the oil companies. We must invest in infrastructure, more production, and additional refineries. If we will help them with a regulatory system that does not penalize them and delay construction for 10 or 15 years, we can bring the price of oil down. It will be to the benefit of everyone in our country.

I urge my colleagues to vote against the Dorgan amendment and any potential Schumer amendment.