Tax breaks for Oil companies will remain in place

The Senate Republicans on Thursday blocked a bill that would cut tax breaks worth billions of dollars for the big oil companies (Exxon Mobil Corp, BP Plc, ConocoPhillips, Chevron Corp and Royal Dutch Shell Plc.) in the U.S. The Democratic proponents of the bill feel that these tax breaks which are worth about $24 billion over a 10 year period are unnecessary for an industry that is raking in record profits.

Oil firms have been hugely profitable over the past decade and while consumers do feel the pinch of rising gas prices, the decrease in supply has not seemed to have affected the bottom line of big oil companies. Robert Menendez the Democrat who has sponsored this bill to cut the tax breaks explained his stance on the floor of the Senate by saying that “They took your money and they didn’t produce a drop more of oil,” about the fact that these companies produced less oil in 2011 than they did in 2010.

The rising cost of gas at the pump has become a hot topic of debate this electoral season, with gas prices rising another 30 cents, to a national average of about $3.92 in March. Polls show that over two thirds of Americans disapprove of President Obama’s handling of the issue though they do not blame him for the rising prices. The Republicans believe that an effective tax increase at this time will result in higher gas prices, and would like the President to increase supply through more drilling and increased production on government owned land and off shore. They would also like to see the Keystone XL extension of the oil pipeline from Canada approved quickly.

The President and most Democrats on the other hand are of the opinion that increasing oil production is not a long term solution to the increase in oil prices and a reduction in its supply; as they think that rather than dependence on this finite natural resource a better course of action is to find alternative and possibly greener fuel sources.

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