MEMO: Big Oil's Investment in Mitt Romney
TO: Interested Parties
FR: Bill Burton, Priorities USA Action
RE: Sunday Memo: Big Oil's Investment in Mitt Romney
Mitt Romney and the oil companies bankrolling his campaign are profiting from high gas prices politically and financially. This week, big oil began their general election effort to help Romney with $3.5 million in television ads across the country.
These ads represent a down payment on the oil industry’s investment in an election they view as a unique business opportunity. These are their terms for the 2012 election:
Revenue: As gas prices rise, oil companies see their revenue soar. While middle class families and many sectors of the economy struggle with the high cost of gasoline, oil companies benefit directly from high prices. The five largest oil companies set record profits the same year that oil and gasoline prices reached a record high.
Investment: With their newfound revenue from high gas prices, oil companies want to ensure their profits for the long term. Therefore they invest hundreds of millions in electing politicians like Mitt Romney, who have promised to protect their special tax breaks and subsidies while slashing investments in clean alternative energy. The billionaire oil barons Charles and David Koch alone have pledged $200 million to defeat President Obama.
Return on Investment: Helping Mitt Romney and Republicans in Congress would guarantee continued special tax breaks and subsidies that cost American taxpayers $4 billion a year. Oil companies would also benefit from further deregulation, allowing them to manipulate prices and gouge consumers.
Competitive Advantage: A Romney Administration would eliminate big oil’s main competitors. Romney would eliminate investments in clean energy technology of the future, leaving us dependent on fluctuating oil prices for the long-term.
While average Americans suffer every time they fill up, oil executives are toasting their record profits and unprecedented political spending to benefit politicians like Mitt Romney who will always put oil company profits ahead of middle class families.
Background
Charles and David Koch and their allies are tied to the $3.5 million dollar ad campaign criticizing the President on gas prices. According to Politico, “The group launching a $3.6 million ad campaign hitting President Barack Obama on gasoline prices has deep ties to the billionaire libertarian industrialists Charles and David Koch. The American Energy Alliance is the political arm of the Institute for Energy Research, and sources tell POLITICO that both groups are funded partly by the Koch brothers and their donor network. The groups are run by Tom Pyle, a former lobbyist for Koch Industries. Pyle regularly attends the mega-donor summits organized by the Koch brothers, including the 2012 winter summit in Indian Wells, Calif., where the Kochs raised more than $150 million to be directed to groups ahead of the general election.” [Politico, 3/29/12]
Oil Companies Profit From High Gas Prices. According to the Center for American Progress, “While higher oil prices are bad news for the economy and families, oil price increases over the past decade have helped grow profits for the big five oil companies: BP, Chevron, ConocoPhillips, ExxonMobil, and Shell. It's not a coincidence that these five oil companies set profit records in 2008, the same year that oil reached its all-time high of $147 per barrel. When oil prices crashed in 2009, so did profits.” [Center for American Progress, 2/28/12]
Higher gas prices increase oil companies’ profits. According to ExxonMobil, “Here’s a simple fact of economics that’s getting everyone in Washington pretty excited this week: When prices increase for a commodity like oil, companies that produce and sell that commodity earn more money.” [ExxonMobil Perspectives, 4/27/11]
Koch Brothers Have Pledged $200 Million Before Election to Defeat Obama and Democrats. According to Politico, "The billionaire industrialist brothers David and Charles Koch plan to steer more than $200 million — potentially much more — to conservative groups ahead of Election Day, POLITICO has learned… at the latest installment of the twice-a-year gatherings of major donors sponsored by the Koch brothers’ privately owned oil, chemical and consumer products company, Koch operatives signaled they “are going to focus a great deal on the presidential race,” according to someone who attended the meeting." [Politico, 10/10/11]
The Koch brothers control Koch Industries, an oil and gas business. According to the New Yorker, "With his brother Charles, who is seventy-four, David Koch owns virtually all of Koch Industries, a conglomerate, headquartered in Wichita, Kansas, whose annual revenues are estimated to be a hundred billion dollars. The company has grown spectacularly since their father, Fred, died, in 1967, and the brothers took charge. The Kochs operate oil refineries in Alaska, Texas, and Minnesota, and control some four thousand miles of pipeline." [New Yorker, 8/30/10]
Mitt Romney said he would sign the House budget authored by Paul Ryan. ABC News reported that “On health care, Romney responded ‘yes’ when asked if he would sign the plan written by Rep. Paul Ryan that would restructure Medicare if it reached his desk as President, but quickly added that he would be offering his own plan.” [ABC News, 6/2/11]
Romney Endorsed 2012 Version of Ryan Plan. Politco wrote, “To ensure the plan landed well nationally, Ryan personally reached out to presidential candidates to brief them on it. Romney endorsed the plan this week.” According to the Los Angeles Times, “Paul Ryan's new budget plan drew praise from GOP presidential front-runner Mitt Romney, and an attack from President Obama's reelection campaign Tuesday. The House Republicans' fiscal blueprint for 2013 would slash federal spending, lower tax rates and substantially overhaul Medicare in an effort to free the nation "from the crushing burden of debt," Ryan wrote in a document outlining the plan.” [Los Angeles Times, 3/20/12; Politico, 3/22/12]
Newsweek: 2011 Ryan Protects Tax Breaks for Oil, Gas and Mining While Cutting Medicare. According to an article by Newsweek’s White House Correspondent Daniel Stone, “When House Budget Committee Chairman Paul Ryan unveiled the GOP blueprint for cutting government spending, he asked Americans to make sacrifices on everything from Medicare to education, while preserving lucrative tax subsidies for the booming oil, mining and energy industries.” The article pointed out that Ryan could personally benefit from his continuation of tax breaks for oil and gas companies. [Newsweek/The Daily Beast, 6/17/11]
2012 Ryan Plan Protects Tax Breaks and Subsidies for Big Oil. According to the Center for American Progress, “American families have been plagued by higher oil and gasoline prices over the past several years despite a significant increase in domestic oil production and rigs, and decline in consumption. But while high prices threaten the economy and family budgets, they enrich American oil companies with huge profits. Yet it appears that House Budget Committee Chairman Paul Ryan’s (R-WI) proposed FY 2013 budget resolution would retain a decade’s worth of oil tax breaks worth $40 billion. And his budget would cut billions of dollars from investments to develop alternative fuels and clean energy technologies that would serve as substitutes for oil and help protect middle-class families from volatile energy prices as well as create jobs. In short, the Ryan budget compounds the cost of high oil and gasoline prices on the middle class.” [Center for American Progress, 3/20/12]
Oil tax breaks cost American taxpayers $4 billion a year. According to National Journal, “In fact, Republicans have long opposed President Obama’s call to roll back the $4 billion in tax breaks enjoyed annually by the oil industry, and Republicans frantically tried to scramble away from the remarks. Privately, Republican aides complained Boehner was painted into a corner by a question that rhetorically set up the tax breaks as indefensible.” [National Journal, 4/27/11]
Romney Opposed Proposal to End Oil Company Tax Breaks. According to the New York Times, "In a written response to questions about his energy positions, Romney said Friday, ''Now is not the right time to raise taxes on our oil companies.'' He expressed doubt about requirements to reduce carbon-dioxide emissions." [New York Times, 11/28/07]
In the same year that crude oil prices hit record highs, ExxonMobil set a record for profit earned by a U.S. company. According to CBS News, “Exxon Mobil Corp. on Friday reported a profit of $45.2 billion for 2008, breaking its own record for a U.S. company, even as its fourth-quarter earnings fell 33 percent from a year ago. The previous record for annual profit was $40.6 billion, which the world's largest publicly traded oil company set in 2007. The extraordinary full-year profit wasn't a surprise given crude's triple-digit price for much of 2008, peaking near an unheard of $150 a barrel in July. Since then, however, prices have fallen roughly 70 percent amid a deepening global economic crisis.” [CBS News, 2/11/09]