The U.S. Senate voted Monday evening to move toward possibly eliminating billions of dollars in government subsidies for the five biggest oil companies in the world.
The 92-4 vote will allow debate to begin on a bill sponsored by Sen. Robert Menendez, a New Jersey Democrat, that calls for ending about $24 billion in benefits over the next decade for BP PLC (NYSE: BP), Exxon Mobil Corp. (NYSE: XOM), Royal Dutch Shell PLC (NYSE: RDS.A), Chevron Corp. (NYSE: CVX) and ConocoPhillips (NYSE: COP) . The subsidies cover the oil giants' work on exploration and drilling projects, in areas including surveying, ground-clearing, salaries, maintenance and repairs.
Despite Monday's overwhelmingly bipartisan vote, Republicans are likely to kill the bill later this week if, as expected, they're not allowed by the Senate's Democratic leadership to propose amendments.
Earlier Monday, top Senate Repulicans conceded their gambit, driven by hopes of scoring political points against Democrats on energy at a time rising gasoline prices are eating into Americans' spending money.
Republicans plan to support moving forward on a debate on the legislation, because frankly, we think it is a debate that Americans deserve, Minority Leader Mitch McConnell, a Republican from Kentucky, said on the Senate floor.
Once debate is underway this week, the party is likely to seek votes on measures to open up more of the United States to oil and natural gas exploratory drilling and speeding approval for construction of the northern leg of the Keystone XL pipeline from Canada.
Senate Democrats, on the other hand, believe that opposing elimination of subsidies will make their Republican rivals appear to be coddling Big Oil by fattening the industry's profit-bloated coffers even as the companies pass on the high cost of gasoline to American consumers. Instead, Democrats favor using savings from the subsidy cuts to pay for renewal of lapsed tax credits to the renewable-energy industry and pay down the budget deficit.
People I talk to in New Jersey want to know why they're stuck paying close to $4 for a gallon of gasoline while these companies rake in billions of dollars in subsidies and record profits, Menendez said last week. And they want to know why these oil companies should continue to enjoy billions of dollars in subsidies when we could be using that savings to invest in alternatives to oil and lower the deficit.
Monday's vote restricts Senate debate on the bill to 30 hours, Menendez spokeswoman Tricia Enright said. After that, another cloture measure would have to pass before the Senate could vote on the bill itself. Even if Menendez's bill manages to clear the Senate, it is likely to die in the Republican-controlled House of Representatives, where opposition to President Barack Obama's energy agenda is fierce.
The American Petroleum Institute, the U.S. oil industry's chief trade group, slammed the bill in its existing form, saying it's a Trojan horse that will hurt the nation's economy.
Obama's fiscal 2013 budget calls for eliminating 12 tax breaks for oil, natural gas and coal companies.
Every time you fill up the pump, they're making money. They are doing just fine. They're not having any problems, the president said in a speech last week.
The country's average retail price for gasoline was $3.89 per gallon Monday, a penny higher than last week and 32 cents more than a year ago, the American Automotive Association said.
Crude oil settled at $107.803 per barrel Monday on the New York Mercantile Exchange.