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Clean Energy Works Memo



TO: CEW Groups

FR: David Di Martino, CEW Communications

RE: The Big Oil Welfare Tax

DA: July 9, 2010

The coming weeks will be very important for supporters of comprehensive clean
energy and climate legislation. The opposition, in the form of API and Big
Oil lobbyists in Washington, are spending millions on smear campaigns and
calling on their cronies in the Senate to do everything they can to continue
America’s dependence on oil and prevent a new policy that moves us away from
oil and toward a clean energy economy.

The other side is on message and determined to defeat a new energy policy
with the tired old false attack that climate and energy legislation is a
―national energy tax.‖ What they don’t want anyone to know is that the
American people already have a national energy tax – The Big Oil Welfare Tax
- in the form of billions of dollars in subsidies to the wildly profitable
big oil companies. That’s right; American taxpayers SUBSIDIZE an industry
that earns hundreds of millions of dollars in profits each quarter, and turns
around and charges $3, $4 even $5 for a gallon of its subsidized gasoline.

CEW is planning to launch a targeted grassroots and media campaign to attack

Big Oil for profiting from the Big Oil Welfare Tax and highlight their
hypocrisy for calling investments in new technology and renewable sources of
energy an ―energy tax.‖ We will target activities in the same states where
API’s smear campaign ads are running. We will engage real people to call for
action on clean energy and climate and to demand that API and Big Oil stop
the smear campaign and get to work on solutions for America’s energy future.

We will distribute a tactical campaign plan in the coming days but in the
mean time we are providing (below) message guidance on the Big Oil Welfare
Tax. Please use this line of attack to fend off criticisms of climate and
energy legislation as a tax and use it to put opponents of clean energy and
climate legislation on their heels – defending taxpayer subsidies to Big Oil
– defending the Big Oil Welfare Tax.

By The Numbers: The Big Oil Welfare TAX

As Big Oil and their lobbyists work overtime to prevent being held
accountable for their actions and a change in our nation’s energy policy,
polluters benefit from generous energy tax provisions that effectively raise
taxes on average Americans. These provisions subsidize the oil industry with
$4 billion in tax breaks and loopholes every year.

Big Oil companies make record profits each year yet still benefit from this
Big Oil Welfare Tax Breaks that costs Americans dearly in both tax revenue
and continued dependence on oil.

The Republican Leadership in Congress opposes a new clean energy and climate
policy that will reduce our dependence on oil, create jobs, enhance our
national security and protect our environment. They apologize to BP, protect
big polluters, and want to preserve the big oil welfare tax policy that
supports oil companies that already make a killing.

Here are the tax provisions that constitute the Big Oil Welfare Tax on

$4 Billion Energy Tax Benefits Big Oil Every Year: A $4 Billion Self-Admitted
Welfare TAX subsidies to the Oil Industry. ―Oil industry officials say that
the tax breaks, which average about $4 billion a year according to various
government reports, are a bargain for taxpayers.‖ [New York Times, 7/6/10]

16 Percent Tax Break: Big Oil’s Overall Tax Rate Is 9 Percent – 16 Percent
LOWER Than The Overall Business Tax Rate. ―According to the most recent study
by the Congressional Budget Office, released in 2005, special treatment for
capital investments like oil field leases and drilling equipment mean that
oil companies are taxed at an effective rate of 9 percent, significantly
lower than the overall rate of 25 percent for businesses in general and lower
than virtually any other industry.‖ [New York Times, 7/6/10]

$1.8 Billion In Tax Loopholes: Transocean Has Saved $1.8 Billion With
Offshore Tax Loopholes. ―Transocean — which has approximately 18,000
employees worldwide, including 1,300 in Houston and about a dozen in Zug,
Switzerland — has saved $1.8 billion in taxes since moving overseas in 1999,
the study found.‖ [New York Times,7/6/10]

$2.6 Billion In Additional Tax Breaks: Bush Pushed Through $2.6 Billion In
Taxpayer Giveaways To Big Oil. ―Despite the public anger at the gulf spill,
it is far from certain that Congress will eliminate the tax breaks. As
recently as 2005, when windfall profits for energy companies prompted even
President George W. Bush — a former Texas oilman himself — to publicly call
for an end to incentives, the energy bill he and Congress enacted still
included $2.6 billion in oil subsidies. In 2007, after Democrats took control
of Congress, a move to end the tax breaks failed.‖ [New York Times, 7/6/10]

$340 Million To Protect Tax Loopholes: Since 2008, Big Oil Has Spent $340
Million In Federal Lobbying Fees. Since 2008, the oil and gas industry has
spent $340 million on federal lobbying fees. [New York Times, 7/6/10]

$18.6 Million For The Grand Oil Party: Senate Republicans Have Accepted At
Least $18.6 Million From Big Oil. Since 1989, members of the Senate
Republican Caucus for the 111th Congress have accepted at least $18,690,814
from the oil and gas industry. [Center for Responsive Politics, 6/4/10; CQ
MoneyLine, 6/7/10]