Earlier this month, Exxon-Mobil once again announced record profits. These record profits, $40.7 billion to be exact, have been labeled “outlandish,” “unjustifiable,” “appalling” and “ruthless” by many in Congress. They believe that such profits gouge the American consumer and are consequently immoral.
Yet what many people do not realize is that record profits result in record tax collection. Exxon-Mobil will pay close to $30 billion in taxes for its success. Unfortunately, not one of my Democratic colleagues has called upon Congress to give American taxpayers back the federal government’s share of Exxon’s “immoral” profits.
In fact, the Democratic majority in the House is once again foolishly proposing to increase the taxes on the oil and gas industry. New proposals pit a promising, but still unestablished, renewable energy industry against the robust oil and gas industry that has long provided for the energy needs of our country. Both Democrats and Republicans agree that diversifying our energy supply is critical to our long-term security, but we shouldn’t punish one energy industry to promote another.
High energy costs are driven by a number of factors, the most important of which is a dramatic increase in worldwide demand. Oil is traded on a global market, and as China and India continue to industrialize, there will be more buyers for the same amount of oil, driving prices higher. We must increase supplies of oil to lower the price. Despite these basic economic principles, we have not built a single new power plant or refinery in decades, and Congress continues to refuse to open federal lands like the Arctic National Wildlife Refuge and the Outer Continental Shelf to environmentally responsible drilling.
Democrats continue to believe that lowering our energy prices means increasing taxes on the companies that provide us with energy.
One way or another, the costs of these new taxes will be passed on to the American consumer. The costs may be passed straight to the consumer in the form of higher pump prices, or the increased taxes may rob an energy company of the funds to diversify and expand their supply. Either way, hard-working Americans lose. The vast majority of profits go directly back into finding additional resources and research — something that we should be encouraging, not taxing.
In the past six years, the profits of the major oil companies have soared by 250 percent, yet during that same time these companies have increased their capital investments by more than 270 percent. These investments reduce our energy costs by expanding our supply.
If only it were so simple to solve our energy crisis with a tax. In reality, alternative energy sources are billions of dollars and years of research away from reducing our dependence on crude oil. A real energy plan needs to have three parts: investment in renewable energy sources, promotion of conservation and increased domestic production of oil and natural gas.
We cannot wave a wand and replace our carbon economy overnight. However, if we maintain a steady focus on long-term investment, conservation and production, we can solve our energy problems. But by increasing taxes, Democrats are reducing our supply and ultimately driving up our energy costs even more.
America must not fail on this issue. We all need to step back, consider the burden additional taxes place on the American consumer and recognize the need to have a truly comprehensive energy plan in the not-so-distant future.
Rep. Mike Conaway, a Republican, represents the 11th Congressional District of Texas, consisting of 36 counties in Central and West Texas.