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It is Time to Put the American People Ahead of Oil Companies
House of Representatives - April 26, 2006

McDermott, on behalf of the Democrats, launches initiative on the floor of the House of Representatives to close tax loopholes existing for oil companies, and to stop an extension of a tax holiday for the super wealthy.

Mr. Speaker, I rise on behalf of my Democratic colleagues to offer a motion to instruct the House conferees who are negotiating with Senators in a conference committee to work out differences on H.R. 4297, Tax Cut Reconciliation.

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We have an opportunity to stand up for America's middle class, and I urge every Member to support the two key provisions in our Democratic motion: one, closing tax loopholes for oil companies; and, two, dropping the provision to extend tax holidays for the super rich beyond 2008.

The timing of this conference committee could not be more urgent. And the time has come for this House to prove to the American people that they, and not the oil companies, come first.

All across this country, Americans are looking for a pump that has gasoline in it for under $3 a gallon, and nothing has happened here. The time has come for the Republicans to stop being the party of the 1 percent and to govern on behalf of all the American people.

Today's gas prices are so high, you almost need a space shuttle to see the top. We are getting near $4 in some parts of this country, and by all indications, the oil companies fully intend to keep raising prices at the pump. Record-shattering quarterly profits, one after another, but underinvestigating in new refinery capacity quarter after quarter. This crisis is not about supply and demand. It is about a handful of oil companies refusing to supply the demand in order to drive up the prices.

This Nation needs more than energy independence from the Middle East. It needs energy independence from oil companies who are willing to crush the American middle class. Today, oil prices are forcing American families to choose between basic necessities or more debt to pay the oilman. And how we have paid, and paid, and paid.

Net income of oil companies has nearly tripled in the last 4 years. Earnings per share are up 50 percent, but the dividends are only up 10 percent. And oil companies on average have doubled their purchases of U.S. Treasury bonds. They are financing the Federal budget deficit even as it soars higher because of energy prices. That is the definition in my book of a double dip.

Now, the Senate wants oil companies to pay their fair share in corporate taxes, nothing more, nothing less. Republicans, however, in the House want the oil companies to continue to cook their books, using perfectly legal but completely immoral loopholes their lobbyists have fed the Republicans in the House. The Senate is right, and the House should stop defending oil companies and start protecting the American people. It is also a time to represent all the American people, not just the top 1 percent.

We have a war we cannot pay for. We have a deficit we cannot control. We have a growing number of Americans going into poverty, cuts in student loans and cuts for needy families. And the Republicans think the answer is to extend tax holidays for the wealthy in capital gains and dividend cuts.

Over half of this benefit goes to people earning over $1 million a year, most of whom drive into the gas station and they do not even look at the pump to see what it costs. They have extended their wealth while America has expanded its debt. This is not sound fiscal policy for the American people. It is reckless profiteering Republicans are providing the wealthy in this country.

The tax holiday continues for another 2 years, but the Republicans want to reward the rich by adding another 2 years; 2008 is not enough, they want to go out to 2010.

Now, the American middle class is struggling to make ends meet, and House Republicans are scrambling to reward their friends just months ahead of the election. In today's Washington Post, the majority leader of the House, Republican, says we will stop any attempt to deal with the oil companies and control their profits.

It is time to put the American people first, ahead of oil companies, ahead of special interests, ahead of the super rich. This motion to instruct is a call to restore the American middle class to its rightful place in the center of domestic policy. And I urge every Member to make America the only special interest we care about.

Madam Speaker, I will enter into the Congressional Record at this point an article from the Wall Street Journal dated January 31 that talks about Exxon's excess profits, and also the one from The New York Times from April 13 about the Exxon chairman's retirement package of $398 million. (both articles below)

Madam Speaker, it is always interesting to listen to my good friend from Louisiana defend the Republican Party. It is the party of 1 percent that he is over there defending. As I listen to him, I was reminded of a remark that President Reagan was often fond of saying. He would say, well, there you go again. If he were here today, he would say exactly that, and he would be absolutely right.

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The Republicans are running a do-nothing Congress. It is not even a do-nothing, it is they cannot do anything. They come out here and admit that with gas prices where they are, they can't do a thing about it. Can't do a thing about it. It is hopeless.

So the American people are stuck with the Republicans, and the people should remember that as the election comes, because the Republicans stood out here today and said they cannot do anything.

We went after the oil companies to get some of that money to do things with that this society needs, but the Republicans are only interested in the 1 percent. The other 99 percent are on their own luck. There has been a lot of energy here tonight telling us how big oil companies should continue to fleece the people at the pumps. But that is what big oil companies have a right to do, and we all should pay more. They want to be sure that we continue to have the American millionaires have 2 more years of a comfortable tax holiday.

Now, people can talk about numbers out here, but I want to talk about a couple of people, one of whom is the Exxon chairman who just retired. They gave him $398 million. This is a guy making $1.6 million every year, okay? I mean, that is just for starters.

Now, as he retired, they said we know you are going to play golf when you are retired; we will pick up your golf fees. They will pay his golf fees forever at $210,000 a year. I mean, they are going to let him use the corporate airplane for the rest of his life, and they are going to keep him on for a year at $1 million as a consultant.

Then there is Joe Public. He is at the pump tonight, or he is watching us talk about this, having just come from the pump, or Sally Public, either one of them has been to the pump today, and they have watched that thing go around at $3 a gallon and realized the average income in this country is $40,000. Forty thousand dollars.

Now, the Exxon president, or the executive that I just talked about, is going to get a $32,000 tax break from this bill that my friend says is going to somehow cripple the economy.

What is fair about that? The average person has to buy gasoline to get to work, take their kids to school, heat the house. If you live where I do, you do not need so much heat as you do in other parts of the country, and down where the gentleman from Louisiana lives, you do not need much heat. But other places they have to use a lot of heat in the wintertime. They are still paying 4 bucks a gallon for it, or are going to be paying 4 bucks a gallon.

The average person, you talk about these capital gains; oh, well, everybody gets capital gains, yes. The Exxon chief will take $32,000 in tax breaks away on average, and the average $40,000 person in this country is going to get 7 bucks. That is the average. That is 2 gallons of gas.

Now, is that fair? Is that what you think America is all about? Is that what the Republicans say? Well, you know, the gas prices are going up. I guess it is supply and demand. I don't know. I don't know how come the oil companies are making all this extra money. We shouldn't be able to cut down how much money they make. They should just be able to make more money. They are taking it out of the hides of the working people in this country.

Now, we don't want people on welfare, no, sir. We don't want people on welfare. You can't buy a house in many places or find a place to live in many cities because the prices are so high.

When I was in New Orleans just about 4 or 5 weeks ago, I asked the president of Tulane Medical School, if I could do one thing for you, what would it be? He said, do you know what it would be? Bring some housing downtown, because all my nurses have to live 70, 80 miles away and drive into work every day, and all the workers in the hospitality industry have to live out of town. They are all paying 4 bucks a gallon for gasoline, driving all the way from Baton Rouge all the way down.

That is not just in Louisiana. It is all over this country. You are sitting here telling us that we cannot do anything, that Big Oil has to be protected. Well, they will just go down in a pile.

Then the real interesting part is to come out here and blame the environmentalists. Here we have got global warming, absolutely clear, and everybody is tackling the environmentalists saying, oh, they are the ones who are creating the problem. We have got to get off oil.

The President, I got to say, occasionally the President is right. I don't say that very often on the floor, but I will say the President was right when he said we are addicted to oil. Boy, this Congress is addicted to oil. When we cannot close three loopholes and take back $5 billion that we could use for home heating oil or student loans or Medicare or Medicaid or all the things that this society needs, we can't take that and use it for the public good, there is something very wrong in this society.

And if the people are going to have a choice in November, they are going to say, well, Republicans stood by and watched the deficit go up out of sight, and they watched the oil prices go up out of sight, and they said, well, we don't know what to do. Nothing we can do about that. We have to keep passing tax breaks to the 1 percent in this society who are doing very well.

The President gets out there and tries to tell everybody that things are going well in this country economically, but the people don't believe it. You know why? Because it isn't going well for most people. They are stuck with $3- and $4-a-gallon gas. They have no way to avoid that. It is hard to ride your bike 70 miles into town to get to work. Now, you can do it, but it really takes a lot of effort. Most people aren't able to change from a car with a gasoline engine to a bicycle, so they are stuck. They can't walk to work. They are stuck in this society. In our city they are talking about raising the rates on the mass transit because of the cost of gasoline. So even those riding the bus are going to get socked by this.

When we come out here and offer a modest motion to something that the Republican Senate went along with, you know how bad it is. And that is the irony of ironies, to have me up here arguing for three amendments that have been approved by the Republican Senate. If I will go along with that, I will take anything to make it better for the American people. But not the Republicans in the House. Oh, no, no, no, must not touch the oil companies. Huh-uh. We can't take a single dime away from them or the whole thing will come unraveled.

And they want to be sure that America's millionaires are comfortable for at least two more years of tax holidays. Meanwhile, the rest of us get to pay for their fiscal recklessness.

They can't do anything about gasoline prices, and won't fight to make oil companies pay their fair share in taxes--fair share--like the rest of us do.

They can't do anything about the rise in poverty in America, where one in five children--1 in 5--lives in poverty today.

They can't do anything about helping Middle Class kids have access to student loans to pay for college.

They can't do anything about a prescription drug benefit that benefits the drug companies and confounds senior citizens.

They can't do anything about controlling special interests, because they are the Party of special interests. Republicans are the Party of One Percent.

If you're a fat cat, Republicans are inviting you to dinner, and they are serving the American Middle Class.

We have an opportunity to do something that benefits the American people, all of them. The oil companies ought to pay their taxes like everyone else. And millionaires will just have to manage with only two more years on tax holiday.

We have an opportunity to take a stand for the 99 percent of the American people who have been left out of a Republican nation. The American people should be first in line, not first to pay. It's time we do something about it.

Pass this Motion to Instruct. Make this the day we tell the oil companies to supply the demand, and stop demanding more tax subsidies to enrich only themselves.

I urge my colleagues to vote for this and do something for the American middle class.

Exxon Posts Another Record Profit
By Jeffrey Ball
Jan. 31, 2006
(Entered into the Congressional Record by Congressman McDermott)

Exxon Mobil Corp., the world's biggest publicly traded oil company by market value, racked up another record profit, saying its fourth-quarter earnings surpassed $10 billion, a result likely to intensify political heat on the energy industry.

Amid high oil, gasoline and natural-gas prices, Exxon said its net income surged to $10.71 billion, up 27% from $8.42 billion a year earlier and 8% above Exxon's third-quarter result of $9.92 billion, which itself was a company record. Exxon said fourth-quarter revenue was $99.66 billion, up 20% from $83.37 billion a year earlier.

The Exxon result amounted to a profit of about $80,842 per minute during the quarter. It was one of the biggest quarterly profits of any company in history. Though a handful of other companies have posted higher quarterly profits, those were largely accounting adjustments, while Exxon's result came mainly from operations.

Net income per share was $1.71, compared with $1.30 a share a year earlier. Exxon's results included a special gain of $390 million related to a lawsuit. The result surpassed the predictions of a Wall Street that expects boom times in the oil patch. At 4 p.m. in New York Stock Exchange composite trading, Exxon's shares rose $1.82, or 3%, to $63.11.

The biggest driver of Exxon's surging profit was high energy prices amid the world's increasing thirst for oil and natural gas. The company's "upstream" earnings--income from producing and selling crude oil and natural gas--rose 44% from a year earlier. Exxon's "downstream" earnings--what the company makes from refining crude oil into finished products like gasoline and heating oil and selling them--rose 2% from a year earlier. Higher prices for those products were partly offset by lower production volumes following the hurricanes that temporarily shut down a big chunk of the U.S. refining infrastructure.

Exxon, of Irving, Texas, was the latest major U.S. energy company to report roaring fourth-quarter results because of high energy prices. Exxon's profit soared even though the company produced less fossil fuel. Total oil-equivalent production in the fourth quarter fell 1% from a year earlier; the company said. Oil production rose 2.5% as increased output from West Africa, Azerbaijan and the North Sea offset declines from mature fields, continuing below-normal production in the Gulf of Mexico as a result of the hurricanes and other factors. Natural-gas production fell 5.8%.

Exxon's record take is likely to ratchet up calls in Washington for a crackdown on energy-industry profits. President Bush today is to deliver his State of the Union address to a nation pinched by high energy costs. Sunday, the average U.S. price of regular unleaded gasoline averaged $2.34 a gallon. While that price was down from the peak after last year's hurricanes, it was up about 24% from a year earlier and up 6.6% from a month ago, according to AAA, the motoring club.

The Senate has passed two provisions that would effectively raise the tax bills of major oil companies. One would reduce their ability to trim tax bills through an inventory-accounting method known as "last-in, first-out," which ties the cost of goods sold to the cost of the most-recent purchases. The other would bar them from claiming credits against U.S. tax bills for the taxes they pay in some oil-rich countries. Oil-company officials say they consider the two a threat. Some analysts doubt the measures will pass the House.

Exxon has been trying to pre-empt a backlash. Exxon said it is boosting spending on finding and producing stores of oil and natural gas. Capital and exploration spending in the quarter was $5.3 billion, up 26% from a year earlier, a sizable rise by industry standards.

Exxon Chairman Got Retirement Package Worth at Least $398 Million
By Jad Mouawad
Apr. 13, 2006
(Entered into the Congressional Record by Congressman McDermott)

Last year's high oil prices not only helped Exxon Mobil report $36 billion in profit--the most ever for any corporation--they also allowed Lee R. Raymond to retire in style as chairman of Exxon Mobil.

Mr. Raymond received a compensation package worth about $140 million last year, including cash, stock, options and a pension plan. He is also still entitled to stock, options and long-term compensation worth at least another $258 million, according to a proxy statement filed by Exxon with the Securities and Exchange Commission yesterday.

The total sum for Mr. Raymond's golden years comes to at least $398 million, among the richest compensation packages ever. The record was the payout of $550 million to Michael D. Eisner, the former head of Walt Disney, in 1997.

Exxon's board also agreed to pick up Mr. Raymond's country club fees, allow him to use the company aircraft and pay him another $1 million to stay on as a consultant for another year. Mr. Raymond agreed to reimburse Exxon partly when he uses the company jet for personal travel. "It begs the old question again, When is enough, enough?" said Brian Foley, an executive compensation consultant in White Plains. "This looks like a spigot that you can't turn off."

Mr. Raymond, 67, spent 43 years at Exxon, including 12 as chairman. He orchestrated the merger between Exxon and Mobil in 1999, making it the largest oil company in the world as well as the most profitable. He was widely recognized for his financial acumen and focus on cost-cutting, whether in good times or bad. Some of the company's recent success, of course, can also be attributed to the doubling of oil prices over the last two years, higher refining margins and record high demand.

While Exxon showed record earnings, the total return to shareholders over the last five years averaged just under 8 percent a year, about the same as the industry average.

"The numbers reflect the long-term nature of Mr. Raymond's leadership at the corporation, and a long and distinguished career," Mark Boudreaux, a spokesman for Exxon, said. "The compensation committee considered his performance and the fact he guided the company to industry-leading earnings for multiple years."

Exxon's proxy filing also showed that Rex W. Tillerson, the current chairman and chief executive, received $13.4 million in 2005, about a third more than what he got the previous year. That includes $1.67 million in salary; a $1.25 million bonus, restricted shares worth $8.75 million, and an incentive payout of $1.73 million. He also realized $2.3 million by exercising stock options he held.

Mr. Raymond owns 3.26 million restricted shares worth a total of $183 million as of December 31.

Those shares produced a separate windfall of $3.1 million in cash dividends. Mr. Raymond also owns 4.15 million options that hold a potential value of $69.6 million.

Upon retiring at the end of last year, Mr. Raymond opted to collect his pension benefits as a one-time lump sum instead of receiving annuities. That amounted to $98.4 million.

The company also paid $210,800 for Mr. Raymond's country club fees, financial planning and tax assistance services. It also provided two years of protection for Mr. Raymond and his wife, including paying for a security system for his principal residence, security personnel, a car and a driver.