SENATE FINANCE COMMITTEE HEARING ON BIG OIL COMPANIES 1100
Senate Finance Committee hearing on Oil and Gas Tax Incentives and Rising Energy Prices with John Watson, chairman and CEO of Chevron, Marvin Odum, US President of Shell, H. Lamar McKay, Chairman and President of BP, James Mulva, Chairman and CEO of ConocoPhillips and Rex Tillerson, chairman and CEO of Exxon Mobil
11:00:02 SEN. JAY ROCKEFELLER: AND TALK ABOUT HAVING TO MOVE OVERSEAS, ET CETERA.
11:00:05 HOW MUCH PROFIT ON A BARREL OF OIL DO YOU HAVE TO MAKE TO NOT
11:00:11 BE NEEDFUL OF THESE SUBSIDIES THAT WE THINK YOU DON'T NEED BUT
11:00:16 YOU SAY YOUR LIFE DEPENDS ON? AT SOME POINT, YOU KNOW, YOU
11:00:26 WOULDN'T NEED THE SUBSIDIES. I THINK YOU'RE THERE ALREADY.
11:00:29 BUT YOU DON'T. SO AT WHAT POINT DO YOU THINK
11:00:31 YOU DON'T NEED THESE SUBSIDIES? AS WE'VE DESCRIBED, WE DON'T
11:00:36 RECEIVE SUBSIDIES, SENATOR. WHAT WE DO REQUIRE IS A
11:00:39 REASONABLE RETURN ON OUR INVESTED CAPITAL.
11:00:41 AND I WOULD TELL YOU THAT I DON'T THINK THE AMERICAN PEOPLE
11:00:43 WANT SHARED SACRIFICE. I THINK THEY WANT SHARED
11:00:45 PROSPERITY. AND WHAT WE HAVE TO --
11:00:49 OH -- WHAT WE HAVE TO OFFER --
11:00:50 LOVELY STATEMENT. BUT DO YOU UNDERSTAND HOW OUT OF
11:00:54 TOUCH THAT IS? WE DON'T GET TO SHARED
11:00:58 PROSPERITY UNTIL WE GET TO SHARED SACRIFICE.
11:01:01 UNABLE TO WORK TODAY BECAUSE WE CAN'T RECEIVE DRILLING
11:01:05 PERMITS OR THERE ARE LEASES NOT BEING MADE AVAILABLE.
11:01:07 THEY FEEL THAT. WHAT ABOUT THE FACT THAT IN
11:01:10 THE CASE OF EXXON MOBIL THAT YOUR EFFECTIVE FEDERAL TAX RATE
11:01:18 IS 3% LOWER THAN WHAT THE AVERAGE INDIVIDUAL FEDERAL TAX
11:01:23 RATE IS? DOES THAT MEAN ANYTHING TO YOU?
11:01:26 WELL, FIRST, SENATOR, I WANT TO ASSURE YOU, I'M NOT OUT OF
11:01:30 TOUCH, AT ALL. AND WE DO UNDERSTAND THE BIG
11:01:32 PICTURE, AND WE UNDERSTAND THE ENORMOUS CHALLENGES CONFRONTING
11:01:36 THE AMERICAN PEOPLE WITH RESPECT TO THIS ENORMOUS DEFICIT THAT
11:01:40 HAS TO BE DEALT WITH. AND ULTIMATELY IT'S GOT TO BE
11:01:42 DEALT WITH IN A VERY LARGE WAY. AND SO I'LL JUST ACKNOWLEDGE
11:01:46 THAT WE ARE WELL AWARE OF THAT. MY EFFECTIVE UNITED STATES
11:01:52 INCOME TAX RATE ON MY UNITED STATES INCOME FROM 2005 TO 2010
11:01:56 WAS 32%. NOW, IF YOU LOOK AT ANY
11:02:02 INDIVIDUAL YEAR, IT COULD BE AS LOW AS A SINGLE DIGIT, AS HIGH
11:02:05 AS 38% TO 39%. BECAUSE WE DON'T SETTLE OUR
11:02:09 TAXES IN -- FOR THAT YEAR IN THAT YEAR.
11:02:12 WE HAVE TAX FILINGS THAT ARE OPEN FOR MULTIPLE YEARS.
11:02:16 AS WE RESOLVE ISSUES WITH THE IRS, THEY ARE RECOGNIZED IN THE
11:02:20 YEAR WE FILE. SOME IN SOME AREAS WHEN OUR
11:02:23 TAXES APPEAR LOW, WE HAVE RECOGNIZED CLOSING OF ISSUES
11:02:27 WHERE WE OVERPAY. AND I UNDERSTAND.
11:02:30 BUT STILL YOU UNDERSTAND THE AVERAGE AMERICAN'S FEELING THAT
11:02:35 OVER BETWEEN 2008 AND 2010, YOUR EFFECTIVE TAX RATE WAS ABOUT
11:02:42 17%. AND THEIRS WAS ABOUT 20%?
11:02:45 FROM 2005 TO 2010, OUR EFFECTIVE TAX RATE IS RIGHT AT
11:02:48 32%. THAT LEADS ME TO THE NEXT
11:02:52 ROUND OF QUESTIONS. WE HAVE THOSE.
11:02:56 THANK YOU, SENATOR. SENATOR?
11:03:05 THANK YOU, CHAIRMAN. THIS REALLY IS ABOUT OUR
11:03:08 PRIORITIES AS A COUNTRY. AND IN A TIME OF TREMENDOUS
11:03:12 CHALLENGES AND DEFICITS, WE HAVE A RESPONSIBILITY TO REVIEW
11:03:15 EVERYTHING. AND TAXPAYERS ARE EXPECTING US
11:03:21 TO ASK TOUGH QUESTIONS AND DETERMINE PRIORITIES AND LOOK AT
11:03:24 WHAT'S NEEDED AND NOT NEEDED. WORK, DOESN'T WORK.
11:03:27 THAT'S OUR JOB. AND WHEN WE LOOK AT THE FACT
11:03:31 THAT IT WAS 1916 WHEN ONE OF THESE TAX SUBSIDIES THAT WE'RE
11:03:35 TALKING ABOUT REPEALING WAS PUT INTO PLACE.
11:03:38 DEDUCTION FOR INTANGIBLE DRILLING AND DEVELOPMENT COSTS
11:03:42 AND IT WAS ROUGHLY $15 TO $17 A BARREL FOR OIL AT THAT TIME.
11:03:47 I'M SURE YOU WOULD AGREE THAT THINGS HAVE CHANGED SINCE THEN.
11:03:51 AND IT'S VERY APPROPRIATE TO LOOK AT WHETHER OR NOT WHEN WE
11:03:54 WERE DEVELOPING THEN AND CREATING THE INDUSTRIAL
11:03:57 REVOLUTION, WHICH WE'RE VERY PROUD TO HAVE LED IN MICHIGAN.
11:04:01 WHETHER OR NOT NOW WHEN YOU FAST FORWARD IT'S NOT $17 IT'S $100
11:04:05 OR MORE AND WE'RE IN A VERY DIFFERENT POSITION IN TERMS OF
11:04:10 SUCCESS IN CORPORATE PROFITS. DOES IT MAKES SENSE FOR
11:04:14 TAXPAYERS TO SUBSIDIZE WHAT YOU'RE DOING?
11:04:16 NOT THAT WE DON'T WANT YOU TO BE SUCCESSFUL.
11:04:19 DOES IT MAKE SENSE FOR TAXPAYERS TO SUBSIDIZE WHAT YOU'RE DOING.
11:04:21 AND ESSENTIALLY FOLKS IN MICHIGAN FEEL LIKE THEY'RE
11:04:24 GETTING HIT TWICE. PAYING THE HIGH PRICE AT THE
11:04:27 PUMP, THERE'S NOT ENOUGH COMPETITION WHERE THEY CAN
11:04:30 CHOOSE NOT TO PAY YOUR PRICES. AND AT THE SAME TIME, THEY'RE
11:04:32 TURNING AROUND AND PAYING OUT OF POCKET, AS WELL.
11:04:34 AND SO PEOPLE ARE EXTREMELY CONCERNED WHEN WE HAVE TO MAKE
11:04:40 CHOICES ABOUT WHETHER OR NOT THESE SUBSIDIES ARE WORKING
11:04:44 RIGHT NOW. AND SO THE QUESTION I WOULD HAVE
11:04:46 WHEN WE LOOK AT THE FACT THAT -- YOU JUST LOOK AT THE LAST THREE
11:04:49 MONTHS AND THE CORPORATE PROFITS TOGETHER THAT ALL OF YOU HAVE
11:04:55 MADE, THE HIGHEST CORPORATE PROFITS I THINK EVER, AND THE
11:04:58 FACT THAT THE TAXPAYER SUBSIDIES ARE 1% TO 2% OF THAT PROFIT.
11:05:06 AND THAT'S THE REALITY. IT'S 1% TO 2% OF ALL YOUR
11:05:10 PROFITS. AND YOU'RE NOW SAYING IN LIGHT
11:05:12 OF MASSIVE DEFICITS, AND YOU HAVE MASSIVE PROFITS, THAT
11:05:15 TAXPAYERS SHOULD KEEP PROVIDING 1% TO 2% OF YOUR PROFITS OR
11:05:21 YOU'RE GOING TO RAISE GAS PRICES AGAIN.
11:05:23 SO MY QUESTION IS THE OPPOSITE. AND I'D LIKE EACH OF YOU TO
11:05:28 ANSWER. WHAT WOULD IT TAKE IN LEVEL OF
11:05:31 TAXPAYER SUBSIDIES FOR YOU TO BRING OUR GAS PRICES DOWN?
11:05:37 WELL, FIRST, IT'S NOT A SUBSIDY, IT'S A LEGITIMATE TAX
11:05:41 DEDUCTION. AND I THINK, AGAIN, IMPORTANT
11:05:42 QUESTION IS WHAT IS NECESSARY TO DEVELOP ADDITIONAL SUPPLY IN
11:05:50 THIS COUNTRY? WHAT WOULD IT TAKE?
11:05:53 IT'S 1% TO 2% RIGHT NOW. WHAT DO WE HAVE TO PAY YOU --
11:05:58 THE DRILLING COST STRUCTURE IS STRUCTURED TO INCENTIVIZE AND
11:06:02 HELP PEOPLE GO OUT AND INVEST IN THE NEXT INCREMENTAL BARREL OF
11:06:05 SUPPLY. AND IN THIS COUNTRY, TODAY THAT
11:06:08 IS LARGELY COMING FROM THE SHALE RESOURCES.
11:06:13 I APPRECIATE THAT. WELL, I'M TRYING TO ANSWER
11:06:15 YOUR QUESTION. IF YOU DON'T WANT THE
11:06:20 INCREMENTAL SUPPLY, YOU MAKE THE TAX STRUCTURE HIGHER AND IT
11:06:23 DOESN'T GET DEVELOPED. THE 1% TO 2% WE'RE TALKING
11:06:26 ABOUT -- IT'S A BIG DEAL FOR TAXPAYERS, BY THE WAY.
11:06:29 WHEN WE'RE LOOKING AT A COLLEAGUE -- WANTING TO
11:06:34 ELIMINATE MEDICARE AS WE KNOW IT.
11:06:37 AND WE HAVE TO MAKE CHOICES HERE.
11:06:39 CERTAINLY NOT GOING TO SUPPORT THAT.
11:06:40 THE QUESTION IS, WHAT'S EFFECTIVE?
11:06:41 WHAT WORKS? IT'S REALLY NOT CREDIBLE TO SAY
11:06:48 THAT YOU'RE GOING TO RAISE GAS PRICES SIMPLY BECAUSE WE ARE
11:06:52 ASKING YOU TO FORGO 1% TO 2% OF YOUR PROFIT.
11:06:57 BUT IF YOU ARE SAYING THAT, AND YOU'RE GOING TO RAISE OUR
11:07:00 PRICES, AND RIGHT NOW THERE'S NOT ENOUGH COMPETITION, WE'RE
11:07:04 HELD HOSTAGE. NOT ENOUGH COMPETITION FOR US TO
11:07:06 DEAL WITH THAT. WE TAKE AWAY 1% OR 2% OF YOUR
11:07:11 PROFITS. AND YOU'RE SAYING THAT WILL
11:07:13 CAUSE US TO RAISE OUR PRICES AGAIN.
11:07:15 WHAT WILL GET YOU TO LOWER IN TERMS OF THE SUBSIDY.
11:07:18 IF TAKING AWAY 1% TO 2% WILL CAUSE YOU TO RAISE PRICES, GIVE
11:07:23 YOU 4%, 5%? HOW MUCH MORE DO WE HAVE TO GIVE
11:07:26 YOU? WE DID NOT -- I DID NOT SAY
11:07:29 WE WOULD BE RAISING PRICES AT THE PUMP.
11:07:35 I DIDN'T REALLY HEAR ANYONE ELSE --
11:07:37 THERE WAS A -- IT REALLY IS ABOUT -- IF WE
11:07:41 WANT TO SOLVE THE PROBLEM BY GETTING SOME MORE SUPPLY
11:07:43 DEVELOPED, WHICH ALSO IN THIS COUNTRY WILL GENERATE ADDITIONAL
11:07:47 REVENUES FOR THE FEDERAL GOVERNMENT AND WILL RELIEVE THE
11:07:52 PRICE PRESSURE IN THE YEAR TO COME.
11:07:54 THAT'S THE ROLE THAT THE TAX STRUCTURE PLAYS.
11:07:56 I UNDERSTAND THAT, AND BEFORE MY TIME RUNS OUT.
11:08:00 I'M NOT BEING DISRESPECTFUL, BUT LET ME JUST SAY, WE HAVE TO
11:08:04 DECIDE WHERE IS THE MOST EFFECTIVE PLACE TO INVEST
11:08:08 TAXPAYER DOLLARS THAT ARE VERY HARD TO COME BY RIGHT NOW?
11:08:14 PEOPLE IN MY STATE WANT US TO STRETCH EVERY SINGLE DOLLAR AND
11:08:18 LOOK FOR THE MOST EFFECTIVE AND NEEDED SUPPORT IN SUBSIDY.
11:08:21 AND VERY QUICKLY, WHAT, YOU KNOW, HOW MUCH DO WE HAVE TO
11:08:26 GIVE YOU IN ADDITIONAL TAX SUBSIDIES IN ORDER TO BRING
11:08:28 PRICES DOWN? SENATOR, WE'RE NOT -- WE'RE
11:08:32 NOT ASKING FOR TAX SUBSIDIES OR INCENTIVES.
11:08:34 WHAT WE'RE ASKING FOR IS ACCESS TO PUT OUR PEOPLE BACK TO WORK
11:08:39 WITH THE OPPORTUNITY TO START DRILLING ONSHORE AND OFFSHORE.
11:08:42 BY DRILLING, MORE DRILLING, WE WILL CREATE JOBS AND WE WILL
11:08:46 CREATE MORE SUPPLY. THAT'S THE BEST THING WE CAN DO.
11:08:49 I APPRECIATE THAT. AND WE'RE HOPING THAT THE 60
11:08:53 MILLION ACRES YOU'VE GOTTEN IN LEASE YOU'LL BE ABLE TO DO THAT
11:08:57 MORE. I'M SORRY, MR. CHAIRMAN, I KNOW
11:08:58 I'M OUT OF TIME. IF THE ANSWER COULD BE VERY
11:09:04 BRIEF. WE'RE NOT ASKING FOR
11:09:07 SUBSIDIES, ANY INCREASE IN TAXES WILL NOT BE CONSISTENT WITH
11:09:12 INCREASING INVESTMENT FOR ADDITIONAL SUPPLY.
11:09:15 THE CURRENT -- 15 SECONDS. 15.
11:09:22 THE CURRENT U.S. TAX STRUCTURE IS COMPETITIVE.
11:09:25 THAT'S A GOOD THING, CHANGING THAT WILL DRIVE INVESTMENT AWAY,
11:09:28 THAT'S A FACT. IF I COULD LEAVE ONE POINT IN
11:09:31 TIME POINT WITH THE ENTIRE COMMITTEE IT'S THAT TO LOOK
11:09:37 WITH -- TO CREATE THE ADDITIONAL REVENUE INTO THE FEDERAL
11:09:40 GOVERNMENT, WHICH WILL HELP WITH THE LONG-TERM DEFICIT ISSUE.
11:09:42 THAT'S THE REAL OPPORTUNITY. SENATOR NELSON?
11:09:47 GOOD MORNING, GENTLEMEN. THE AMERICAN CONSUMER NATURALLY
11:09:56 IS QUITE CONCERNED WHEN THEY GO TO THE PUMP AND PUMP GAS.
11:10:02 AND WHAT THEY'RE CONCERNED ABOUT IS THEY SEE THE PRICE OF THE
11:10:07 BARREL OF OIL GOING UP. AND SEE THE PRICE OF THE GALLON
11:10:15 OF GAS THEY'RE PUMPING GO UP. AND THEN WHEN THAT PRICE OF
11:10:18 BARREL OF OIL STARTS COMING DOWN, THEY DON'T SEE THE
11:10:29 LOWERING OF THAT PRICE THEY'RE PAYING PER GALLON AT THE PUMP.
11:10:34 AND SO THEY NOTICE THAT BACK IN 2008 THAT THE PRICE SHOT UP TO
11:10:44 $147 A BARREL AND WHILE THEY'RE PUMPING GAS, IT RAISES TO $4 A
11:10:52 GALLON, AND NOW THEY SEE THE PRICE AT AROUND $100 A BARREL,
11:10:59 AND THEY'RE STILL PAYING $4 AT THE PUMP.
11:11:06 SO I WANT TO ASK THAT QUESTION ON BEHALF OF THE AMERICAN PEOPLE
11:11:09 THAT ARE PUMPING GAS IN THEIR CARS.
11:11:19 WELL, IT'S A QUESTION OF THE SUPPLY CHAIN.
11:11:22 IT TAKES THE AVERAGE TIME FOR CRUDE OIL PRODUCED OVERSEAS TO
11:11:27 REACH AMERICAN REFINERIES SOMEWHERE BETWEEN 30 DAYS AND 45
11:11:32 DAYS, THAT'S TRANSIT TIME. YOU HAVE OIL IN THE REFINERY
11:11:35 ALREADY BOUGHT AND PAID FOR AT SOME PRICE, YOU HAVE GASOLINE
11:11:38 AND PRODUCTS THAT ARE IN INVENTORY THAT HAVE ALREADY BEEN
11:11:40 BOUGHT AND PAID FOR AT SOME PRICE, WHICH ULTIMATELY
11:11:44 DELIVERED OR THE YOUR LOCAL SERVICE STATION WHERE THE
11:11:46 CONSUMER PULLS UP TO THE PUMP AND BUYS IT.
11:11:48 SO WHEN THE PRICE CHANGES ON THAT RAW MATERIAL IN CRUDE OIL,
11:11:52 THAT PRICE HAS TO MAKE ITS WAY THROUGH THAT WHOLE SUPPLY CHAIN.
11:11:54 NOW, WHEN THE PRICE IS GOING UP, THE RETAILER WHO OWNS THE
11:11:59 STATION AND OPERATES ON A VERY, VERY THIN CASH FLOW, AND THE
11:12:05 VAST MAJORITY OF SERVICE STATIONS ARE NOT OWNED BY US,
11:12:08 INDIVIDUAL BUSINESS OWNERS OR DISTRIBUTORS.
11:12:10 THEY HAVE TO THINK ABOUT WHAT'S GOING TO HAPPEN TO MY CASH FLOW
11:12:13 AS THIS PRICE MOVES THROUGH. SO THEY DO BEGIN TO PRICE UP IN
11:12:17 ADVANCE OF THE ACTUAL HIGHER COST OF BARRELS GETTING TO THEM
11:12:20 IN ORDER TO ENSURE THEY'VE GOT SUFFICIENT CASH FLOW TO BUY THE
11:12:24 NEXT TANKER WAGON THAT HAS TO DELIVER.
11:12:27 SO THAT'S WHY GOING UP -- AS MOST BUSINESS PEOPLE DO, THEY'RE
11:12:31 GOING TO CHASE IT A LITTLE FASTER ON THE WAY UP.
11:12:36 AND COMING DOWN, THEY HAVE TO RECOVER WHAT THEY'VE SPENT.
11:12:41 UNTIL THOSE ACTUAL BARRELS MAKE THEIR WAY THROUGH THE SYSTEM,
11:12:44 THROUGH THE PUMP, THE CONSUMER'S NOT GOING TO SEE IT.
11:12:47 AND TYPICALLY, THAT MAY TAKE SOMEWHERE BETWEEN TWO OR THREE
11:12:52 WEEKS. I ANTICIPATED THAT THAT WOULD
11:12:55 BE THE ANSWER. AND I APPRECIATE THAT.
11:12:57 BUT THE PERSON THAT'S PUMPING THE GAS IS SAYING, WAIT A
11:13:01 MINUTE, TODAY I'M PAYING $4 FOR A GALLON OF GAS AND OIL IS
11:13:07 SELLING AT $100 A BARREL, BUT THREE YEARS AGO I WAS PAYING $4
11:13:12 FOR A GALLON OF GAS AND OIL WAS SELLING AT $147 A BARREL.
11:13:18 WHY? WELL, THE $147 PRICE DIDN'T
11:13:27 LAST VERY LONG. AND YOU REMEMBER WHAT HAPPENED
11:13:29 SHORTLY AFTER. IT PLUMMETED TO THE $30s.
11:13:35 THAT IS THE NATURE. IT IS THE NATURE OF THIS
11:13:38 COMMODITY WHICH HAS AN EXTREME AMOUNT OF VOLATILITY IN IT.
11:13:42 WHY IT MOVES IN THAT WIDE OF RANGE, WE COULD HAVE AN ENTIRE
11:13:45 HEARING ON THAT SUBJECT. AND I WOULD SAY THAT THERE'S
11:13:50 A PART TO THE SPECULATION THAT ADDS TO THAT OF PEOPLE WHO DON'T
11:13:55 USE THE OIL. BUT MR. McKAY, LET ME REGISTER A
11:14:03 DIFFERENCE OF OPINION WITH BP. YOU ALL IN YOUR FINANCIAL REPORT
11:14:09 IN THE FOURTH QUARTER OF LAST YEAR ANNOUNCED THAT THE GULF OIL
11:14:14 SPILL RESPONSE COSTS WERE GOING TO BE APPROXIMATELY $41 BILLION,
11:14:19 AND THAT YOU REPORTED A TAX CREDIT OF ALMOST $12 BILLION.
11:14:29 NOW, FOR ACTIVITIES THAT CAUSED SUCH HARM, DOES IT NOT SEEM
11:14:37 WRONG THAT YOU WOULD TAKE AS A TAX CREDIT, LESSENING YOUR
11:14:43 TAXES, DOLLAR FOR DOLLAR ON THE PAYMENTS THAT YOU'RE PAYING OUT
11:14:46 TO MAKE PEOPLE'S LIVES RIGHT? LET ME FIRST JUST COMMENT
11:14:55 THAT WE PLEDGED ALL ALONG TO MEET EVERY COMMITMENT UNDER THE
11:14:59 LAW WITH THE ACCIDENT AND THE ECONOMIC IMPACTS OF THE
11:15:04 ACCIDENT. THE $41 BILLION IS A FINANCIAL
11:15:08 CHARGE. WE DID NOT TAKE A $12 BILLION
11:15:10 CREDIT. WE WILL BE FOLLOWING THE LAW,
11:15:15 FOLLOWING THE TAX CODE IN TERMS OF WRITING ALL STANDARD BUSINESS
11:15:19 EXPENSES AS THEY OCCUR. SO YOU CONSIDER THESE A
11:15:23 STANDARD BUSINESS, EXPENSES THAT YOU THINK THAT MORALLY YOU'RE
11:15:26 ENTITLED TO TAKE AS A TAX CREDIT?
11:15:28 THE ONES THAT ARE UNDER THE TAX CODE AS STANDARD BUSINESS
11:15:34 EXPENSES, YES. AND WE WILL NOT WRITE ALL THINGS
11:15:36 THAT ARE NOT UNDER THE STANDARD BUSINESS EXPENSES.
11:15:39 YOU KNOW, IT'S INTERESTING THAT THE BOEING COMPANY, WHEN
11:15:41 THEY HAD THOSE KIND OF PAYMENTS, THEY DIDN'T TAKE THEM AS A TAX
11:15:45 CREDIT. IT WAS ALSO WHAT WAS THE OTHER
11:15:52 COMPANY? GOLDMAN SACHS?
11:15:54 SAME THING. THEY DID NOT BECAUSE OF THE
11:15:59 SENSITIVITY, THE WRONG DOING THAT OCCURRED.
11:16:03 SURELY THE GULF OIL SPILL WAS AS A RESULT OF WRONG DOING.
11:16:09 AND YET YOU WANT TO CLAIM THAT AS A TAX CREDIT.
11:16:11 NOW, I JUST WANT YOU TO KNOW THAT I RESPECTFULLY DISAGREE
11:16:14 WITH YOUR POSITION. AND I WOULD URGE THE CHAIRMAN
11:16:18 AND THE RANKING REMEMBER TO CONSIDER AS WE -- HE MAY BE
11:16:23 ENTITLED THIS UNDER THE LAW. BUT THAT DOESN'T MAKE IT RIGHT.
11:16:29 AND I WOULD ASK RESPECTIVELY TO THE CHAIRMAN THAT WE CONSIDER
11:16:33 CHANGING THE LAW TO FOLLOW THE EXAMPLE SET BY BOEING AND
11:16:37 GOLDMAN SACHS. WELL, SENATOR, WE CERTAINLY
11:16:45 WILL CONSIDER IT. ANY REQUEST MADE.
11:16:54 YES, THANK YOU VERY MUCH. GENTLEMEN, THANK YOU FOR JOINING
11:16:56 US TODAY. ABOUT A MONTH AGO SITTING RIGHT
11:17:02 IN THE MIDDLE THERE, THE MAN WHO USED TO BE THE CHAIRMAN OF THE
11:17:08 FEDERAL RESERVE. WE WERE TALKING ABOUT DEFICIT
11:17:12 REDUCTION AND ASKING A GROUP OF REALLY SMART PEOPLE WHAT THEY
11:17:15 THOUGHT WE OUGHT TO BE DOING. AND I THINK IT WAS HIM WHO SAID
11:17:20 THE GORILLA IN THE ROOM ARE HEALTH CARE COSTS.
11:17:28 HE SAID THAT'S THE 800-POUND GORILLA IN THE ROOM.
11:17:31 AND I FOLLOWED UP HIS COMMENT BY SAYING, WELL, WITH RESPECT TO
11:17:35 HEALTH CARE COSTS, CONTAINMENT, AND GETTING THE BETTER RESULT OF
11:17:38 LESS MONEY, WHAT'S YOUR ADVICE? AND I DON'T KNOW MUCH ABOUT
11:17:41 THAT. BUT HE SAID AS A LAYPERSON, I
11:17:43 WOULD JUST SAY THIS, FIND OUT WHAT WORKS AND DO MORE OF THAT.
11:17:48 THAT'S WHAT HE SAID. FIND OUT WHAT WORKS, DO MORE OF
11:17:52 THAT. DEMOCRATIC SENATORS OVER AT THE
11:17:55 WHITE HOUSE YESTERDAY WITH THE REPUBLICANS AND THE PRESIDENT.
11:18:01 AND I SHARED WITH HIM THE COMMENTS, WHICH I THINK ARE NOT
11:18:05 ONLY APPROPRIATE FOR HEALTH CARE, BUT REALLY FOR THE WAY WE
11:18:09 SPEND MONEY ALL THROUGHOUT THE GOVERNMENT.
11:18:11 AND MY OWN VIEW IS -- AND I SHARED THIS.
11:18:16 I SAID I THINK WE NEED TO LOOK IN EVERY NOOK AND CRANNY OF THE
11:18:22 FEDERAL GOVERNMENT. ALL OUR DOMESTIC PROGRAMS,
11:18:24 DEFENSE PROGRAMS, ENTITLEMENT PROGRAMS, TAX EXPENDITURES AND
11:18:28 REALLY ASK THIS QUESTION. THERE'S A WAY TO GET BETTER
11:18:30 RESULTS FOR LESS MONEY OR BETTER RESULTS FOR MAYBE THE SAME
11:18:34 AMOUNT OF MONEY. AND WE NEED TO CHANGE OUR
11:18:37 CULTURE AND GOVERNMENT. AND THAT IS TO FOCUS ON A
11:18:43 CULTURE -- FROM SPENDTHRIFT TO A CULTURE OF THRIFT.
11:18:46 WHEN IT COMES TO TAX EXPENDITURES, WE NEED TO DO THE
11:18:49 SAME THING. AND THERE IS A STRONG BELIEF IN
11:18:54 THIS COUNTRY. YOU'VE CERTAINLY HEARD IT HERE
11:18:57 TODAY THAT SOME OF THE TAX EXPENDITURES THAT RELATE TO YOUR
11:19:00 INDUSTRY DON'T NECESSARILY GET THE BEST RESULT, THE AMOUNT OF
11:19:03 MONEY THAT'S BEING LOST TO THE TREASURY.
11:19:06 WE'RE GOING TO VOTE ON LEGISLATION, I THINK, AUTHORED
11:19:14 BY SENATOR MENENDEZ. BUT LATER THIS YEAR, WE'LL BE
11:19:18 VOTING ON AN EFFORT TO TRY TO TRIM THE BUDGET OVER THE NEXT
11:19:23 TEN YEARS AND LARGELY ON THE SPENDING SIDE.
11:19:25 MAYBE $3 OF SPENDING FOR EVERY $1 OF REVENUE.
11:19:30 ENTITLEMENTS WILL BE ON THE TABLE.
11:19:32 DEFENSE SPENDING, TAX EXPENDITURES ON THE TABLE.
11:19:36 AND I WOULD SAY TO YOU THAT WHEN THE VOTE OCCURS NEXT WEEK AND WE
11:19:41 DON'T GET 60 VOTES, THAT SHOULDN'T BE THE END OF THIS
11:19:44 CONVERSATION. AND WE SHOULD CONTINUE TO HAVE A
11:19:47 CONVERSATION SO WE CAN FIGURE OUT HOW DO WE GET A BETTER
11:19:50 RESULT FOR LESS MONEY? REALLY HOW DO WE GET A BETTER
11:19:52 BANG FOR THE TAXPAYER'S DOLLAR. AND YOUR INDUSTRY NEEDS TO BE
11:19:59 INVOLVED IN THAT, AS WELL. IF I WERE IN YOUR BUSINESS -- I
11:20:02 DON'T PRETEND TO BE OR UNDERSTAND IT ESPECIALLY WELL,
11:20:05 BUT I WOULDN'T CONSIDER MYSELF AN OIL COMPANY.
11:20:08 AND I WOULD CONSIDER MYSELF AN ENERGY COMPANY.
11:20:10 AND MY BELIEF IS THAT WHAT YOU DO, MOST OF YOU DO THAT.
11:20:13 AND I WOULD LIKE TO YOU TO TALK TO US ABOUT THE EFFORTS YOU'RE
11:20:19 UNDERTAKING IN YOUR COMPANIES TO MOVE US TOWARD SOURCES OF ENERGY
11:20:24 THAT IMPAIR HEALTH LESS THAN OIL DOES.
11:20:27 THAT ENABLE US TO COME UP WITH TWO TECHNOLOGIES THAT WE CAN
11:20:33 SELL AND MANUFACTURE AROUND THE WORLD.
11:20:35 GO DOWN THE LIST. AND DO YOU WANT TO GO FIRST AND
11:20:38 JUST TELL US WHAT YOU'RE DOING TO HELP US?
11:20:42 TO DEVELOP RENEWABLES, NONPOLLUTING FORMS OF ENERGY,
11:20:45 AND WHAT CAN WE DO TO HELP YOU THERE?
11:20:48 WELL, I AGREE WHOLE HEARTEDLY ON YOUR COMMENTS ON THE DEFICIT.
11:20:55 AND ALL OF THESE THINGS WE'RE TALKING ABOUT TODAY SHOULD BE ON
11:20:57 THE TABLE IN COMPREHENSIVE TAX REFORM.
11:21:01 AS TO WHAT WE'RE DOING IN DEVELOPING ALTERNATIVE FUELS.
11:21:05 AND WE HAVE CONCENTRATED PRINCIPALLY ON TRANSPORTATION
11:21:09 FUELS, THAT'S WHAT WE KNOW BEST. WE'RE NOT INTO WINDMILLS, WE'RE
11:21:14 NOT IN SOLAR, BUT WE ARE IN TRANSPORTATION FUELS BUSINESS.
11:21:17 AS WE'VE EVALUATED ALL THE VARIOUS TECHNOLOGIES AVAILABLE
11:21:20 OUT THERE FOR ALTERNATIVE TRANSPORTATION FUELS, THE ONE
11:21:23 THAT WE BELIEVE HAS THE MOST PROMISE, ALTHOUGH IT IS MANY
11:21:27 YEARS AWAY IS TO CAPTURE BIOFUELS FROM ALGAS.
11:21:35 AND WE HAVE COMMITTED $600 MILLION WITH A COMPANY, THEY
11:21:41 HAVE CONSIDERABLE EXPERTISE IN MAPPING GENOMES.
11:21:44 BECAUSE ULTIMATELY WE THINK WE'RE GOING TO HAVE TO
11:21:48 SYNTHESIZE THE TYPE OF ALGAE. WE'VE GOT TO TAKE THIS TO SCALE
11:21:54 AND DELIVERED AT A COST THAT THE CONSUMER CAN AFFORD.
11:21:58 SO WE THINK THERE'S A LOT OF PROMISE IN THE ALGAE SPACE, BUT
11:22:02 IT IS A LONG, LONG ROAD AHEAD OF US.
11:22:05 THANK YOU, PLEASE. THANK YOU.
11:22:07 WE CONTINUE TO RAMP UP OUR SPENDING ON RESEARCH AND
11:22:11 DEVELOPMENT FOR ALTERNATIVES. AND WE SIMILARLY HAVE A PROGRAM.
11:22:16 I WOULD SAY, THOUGH, FOSSIL FUELS HAS AND WILL CONTINUE TO
11:22:22 REPRESENT MORE THAN 80% OF THE ENERGY THAT'S REQUIRED AROUND
11:22:25 THE WORLD. ONE OF THE KEY THINGS THAT'S
11:22:28 VERY IMPORTANT FOR OUR COUNTRY IS NATURAL GAS.
11:22:32 IT'S BEEN OVER THE LAST SEVERAL YEARS, TECHNOLOGY DEVELOPMENTS
11:22:35 THAT WE'RE BLESSED WITH A GREAT DEAL OF NATURAL GAS.
11:22:41 WE ARE REALLY APPLYING A LOT OF RESEARCH AND DEVELOPMENT.
11:22:45 HOW WE CAN DEVELOP NATURAL GAS EVEN CLEANER AND MORE
11:22:50 EFFICIENTLY. AND WE THINK THE COUNTRY'S WELL
11:22:52 BLESSED WITH THESE RESOURCES. THANKS.
11:22:57 QUICKLY, WE THINK OF OIL AND GAS AS THE MAIN DRIVER IN OUR
11:23:02 BUSINESS, BUT ON TOP OF THAT, IN INCREMENTAL TO THAT, ALTERNATIVE
11:23:07 ENERGY. QUICK NUMBERS, WE'VE INVESTED $7
11:23:10 BILLION OVER THE LAST SEVERAL YEARS, MOST OF IT IN THE U.S.,
11:23:14 AROUND WIND, BIOFUELS, SOLAR, AND THEN CARBON SEQUESTRATION,
11:23:25 AND ITS BUSINESS. IT'S DIFFICULT, BUT IT'S
11:23:28 GROWING. YES, SIR?
11:23:29 WELL, WE DO ABSOLUTELY CONSIDER OURSELVES AN ENERGY
11:23:32 COMPANY. AND I WOULD TELL YOU AS A
11:23:34 COMPANY INTERNALLY, WE WANT TO BE THE MOST INNOVATIVE AND
11:23:37 COMPETITIVE ENERGY COMPANY IN THE WORLD.
11:23:40 THAT'S THE PERSPECTIVE WE TAKE. WE'VE BEEN IN ALL THE BUSINESSES
11:23:42 THAT HAVE BEEN MENTIONED WHEN SOLAR, HYDROGEN, AND OTHERS --
11:23:45 THE ONE THAT IS EMERGING FOR US IS BIOFUEL.
11:23:50 WE HAVE JUST RECENTLY FORMED A $12 BILLION JOINT VENTURE AROUND
11:23:55 CURRENT TECHNOLOGY FOR PRODUCING LARGE SCALE AMOUNTS OF BIOFUELS
11:23:59 AS WELL AS ADDING TO THAT THE INTENSE IS RESEARCH AND
11:24:03 DEVELOPMENT WE'VE BEEN DOING TO TAKE THAT TO THE NEXT LEVEL.
11:24:07 IT'S EXCITING STUFF, AND WE WERE TALKING ABOUT USING ENZYMES IN
11:24:16 ANOTHER TECHNOLOGY THAT GOES STRAIGHT FROM A BIO MASS TO A
11:24:20 GASOLINE OR DIESEL EQUIVALENT. SO IT'S AN EXCITING BUSINESS.
11:24:23 IN ADDITION TO SOME OF THE COMMENTS THAT HAVE BEEN MADE
11:24:26 HERE, WE'RE THE LARGEST PRODUCER OF RENEWABLES THANKS TO OUR
11:24:30 BUSINESS. AND WE TOO AREN'T MAKING
11:24:37 INVESTMENTS IN ADVANCE BIOFUELS. ONE OPPORTUNITY THAT I THINK IS
11:24:43 OUT THERE DURING THIS TRANSITION PHASE IS ENERGY EFFICIENCY AND
11:24:47 INVESTMENTS. WE HAVE AN ENERGY EFFICIENCY
11:24:49 COMPANY THAT GOES IN AND MAKES INVESTMENTS IN EDUCATIONAL
11:24:53 INSTITUTIONS AND ELSEWHERE TO REDUCE ENERGY CONSUMED.
11:24:57 I THINK THAT'S A BIG OPPORTUNITY.
11:24:58 AND IT'S A NEAR TERM OPPORTUNITY ACROSS THIS COUNTRY.
11:25:01 THANK YOU, SENATOR. THANK YOU VERY MUCH.
11:25:03 YEAH. A COUPLE OF US HAVE FOLLOW-UP
11:25:05 QUESTIONS HERE. YOU MENTIONED COMPREHENSIVE TAX
11:25:08 REFORM. THAT'S YOUR STRONGLY FAVORED TAX
11:25:14 REFORM. I DON'T THINK THERE'S ANYONE
11:25:15 HERE WHO DOESN'T DISAGREE WITH THAT.
11:25:18 BUT THAT'S EASY TO SAY. THE QUESTION IS, WHAT DO WE MEAN
11:25:20 BY COMPREHENSIVE TAX REFORM? AND BEFORE I ASK YOU WHAT YOU
11:25:28 MEAN, THE GENERAL FEELING IS THE LOWER THE RATE, BROADER THE BASE
11:25:33 BOTH IN CORPORATE AND INDIVIDUAL.
11:25:35 THAT STORY SEEMS TO BE A TREND. ON THE INDIVIDUAL SIDE, WHAT WE
11:25:39 DID IN 1986. AND THE CORPORATE SIDE, LOWERED
11:25:42 THE RATE, WE HAD THE HIGHEST CORPORATE RATE IN THE WORLD.
11:25:46 AND LOWER IT, BE MORE COMPETITIVE, BUT BROADEN THE
11:25:49 BASE, TRY TO FIND A WAY TO DO THIS IN A REVENUE NEUTRAL WAY.
11:25:53 BUT BY DEFINITION, IF WE'RE DOING THAT, LOWERING THE RATE
11:25:56 AND BROADENING THE BASE, WE'RE STARTING TO CUT BACK ON SOME
11:26:01 INCENTIVES. WHETHER IT'S BIOFUELS, SOLAR,
11:26:05 GEOTHERMAL, YOU NAME IT. OR SOME OF THE INCENTIVES YOU
11:26:09 HAVE. YOUR GENERAL ADVICE TO US, I'D
11:26:11 LIKE TO ASK ALL FIVE OF YOU. AS WE PURSUED TAX REFORM, DOES
11:26:16 THAT MEAN TO YOU THAT MAYBE WE SHOULD LOWER THE RATE, BUT ALSO
11:26:21 CUT BACK ON SOME OF THE CREDITS, E
11:26:27 EXCLUSIONS, DEDUCTIONS, SO-CALLED TAX EXPENDITURES.
11:26:31 BECAUSE BY DEFINITION YOU HAVE TO OTHERWISE YOU'RE GOING TO
11:26:33 LOSE A LOT OF REVENUE. AND THAT'S HARD TO DO IN THIS
11:26:38 BIG DEFICIT. WELL, SENATOR, I WOULD
11:26:41 SUPPORT ALL OF THAT. WHEN I SAID COMPREHENSIVE TAX
11:26:44 REFORM, I THINK EVERYTHING FOR EVERYBODY EVERYWHERE HAS TO BE
11:26:46 ON THE TABLE. AND SO IF YOU WANT TO TALK ABOUT
11:26:50 SECTION 199, REPEAL IT FOR EVERYBODY.
11:26:53 ACROSS THE BOARD, GONE. AND YOU'RE GOING TO BROADEN THE
11:26:55 TAX BASE. AND IF THAT'S COUPLED WITH THE
11:26:58 LOWERING OF THE INCOME TAX RATE, AND I JUST USED 199 BECAUSE
11:27:02 THERE'S A WHOLE HOST AS YOU WELL KNOW OF ELEMENTS TO OUR TAX CODE
11:27:05 THAT IS VERY COMPLEX I THINK SIMPLIFYING THE TAX CODE --
11:27:13 SOME DO, SOME DON'T. SOME DO, SOME DON'T.
11:27:17 AND WHEN THE GOVERNMENT WANTS -- WE'RE CREATING ADDITIONS TO THE
11:27:24 COUNTRY. WE'VE GOT TO GROW OUT OF THIS
11:27:26 DEFICIT PROBLEM. WE'VE GOT TO MAKE IT MORE
11:27:28 ATTRACTIVE FOR PEOPLE TO INVEST, CREATE REVENUES, BROADEN THAT
11:27:31 BASE. AND THAT'S WHERE THE LOWERING OF
11:27:33 GENERATES WOULD BE PRODUCTIVE. YOU GO ALONG WITH SCALING
11:27:37 BACK A LOT OF THE TAX EXPENDITURES --
11:27:40 ACROSS ALL BUSINESSES. NOT JUST OURS.
11:27:42 AND IN THE FOREIGN TAX CODE, IT NEEDS AN OVERHAUL, AS WELL.
11:27:46 AND THE ONLY PRINCIPLES I TEND TO LIVE BY IS MAKE THE UNITED
11:27:51 STATES A MORE ATTRACTIVE PLACE FOR INVESTMENT, DO NOT HARM
11:27:55 AMERICAN COMPETITIVENESS OVERSEAS, BECAUSE THAT BRINGS
11:27:58 ENORMOUS BENEFITS AND WEALTH BACK TO THIS COUNTRY.
11:28:01 AND KEEP THE PLAYING FIELD LEVEL WITHIN INDUSTRIES.
11:28:04 SO THAT EVERYONE COMPETES. WE LOVE TO COMPETE.
11:28:08 I MEAN, THAT IS WHAT WE THRIVE ON IS COMPETITION.
11:28:16 COMPLETELY AGREE. MAKE IT SIMPLER, IN A WAY THAT'S
11:28:20 CONSISTENT FOR EVERYONE. AND CERTAINTY WILL PROMOTE
11:28:28 INVESTMENT. AND I THINK ADDITIONAL REVENUES
11:28:29 AND WILL CERTAINLY HELP WITH RESPECT TO APPOINTMENT.
11:28:34 DO YOU AGREE THAT CORPORATE TAX REFORMS WILL BE REVENUE
11:28:36 NEUTRAL? YES.
11:28:37 THANK YOU. I AGREE, AS WELL.
11:28:41 ANYTHING THAT CAN INCREASE COMPETITIVENESS FOR THE U.S. IN
11:28:45 TERMS OF INVESTMENT, I THINK WOULD BE GOOD, AND I AGREE WITH
11:28:48 ALL THE COMMENTS THAT HAVE BEEN MADE, THE SIMPLER, THE BETTER,
11:28:52 THE MORE PREDICTABLE, THE BETTER, AND THE JOB NUMBER ONE
11:28:55 IS TO GET INVESTMENT UP. BUT THE WAGE INCREASE
11:29:00 COMPETITIVENESS IN YOUR VIEW IS --
11:29:03 WELL, IS EXACTLY AS WE'VE BEEN SAYING.
11:29:06 IF THE OVERALL TAX RATE GOES DOWN AND IS BROADENED AND SOME
11:29:09 OF THE COMPLEXITY IS TAKEN OUT, THAT SHOULD AID.
11:29:16 AS YOU WELL KNOW, THE UNITED STATES, MUCH BUSINESS INCOME NOW
11:29:24 IS NO LONGER CORPORATE INCOME, BUT IT'S INDIVIDUAL INCOME
11:29:32 TAXES, WHICH HAVE TO BE LOOKED AT, NOT CORPORATE.
11:29:35 WHICH GREATLY COMPLICATES THIS QUESTION.
11:29:37 I MEAN, WE HAVE MORE PASS THROUGH BUSINESS INCOME IN THIS
11:29:43 COUNTRY I THINK ON A PROPORTIONATE BASIS BY FAR THAN
11:29:46 ANY OTHER COUNTRY. AND THAT'S A RECENT TREND.
11:29:48 YOU MIGHT WANT TO CONSIDER BEING FASTER, BUT AS I GO DOWN THE
11:29:54 LIST -- I'M GLAD THE TERM STABILITY
11:29:56 AND PREDICTABILITY CAME UP BECAUSE THAT'S VERY IMPORTANT.
11:29:58 SO I THINK COMPREHENSIVE REFORM WITH EVERYTHING ON THE TABLE,
11:30:01 YES, I AGREE WITH THE COMMENTS THAT HAVE BEEN MADE.
11:30:04 WITH THE DRIVING POLICY ELEMENT BEING INSURE U.S.
11:30:08 COMPETITIVENESS. I AGREE WITH THE COMMENTS
11:30:09 THAT HAVE BEEN MADE. I WOULD ONLY HOPE OVER TIME IT
11:30:12 WOULD RAISE MORE REVENUE BECAUSE IT'LL PROMOTE GROWTH AND I THINK
11:30:15 THAT'S WHAT WE'RE TRYING TO ACHIEVE.
11:30:18 JUST ON YOUR COMMENT ABOUT -- BECAUSE YOUR POINT ABOUT PASS
11:30:23 THROUGH AND SUBCHAPTER PARTNERSHIPS IS AN IMPORTANT
11:30:27 ONE. BECAUSE AS YOU POINT OUT, SO
11:30:30 MANY OF SMALL AND MEDIUM SIZE BUSINESSES ARE STRUCTURED UNDER
11:30:33 THE TAX CODES. AGAIN, IN COMPREHENSIVE TAX
11:30:37 REFORM, THE CORPORATE TAX CODE BUT ALSO THE INDIVIDUAL TAX CODE
11:30:40 WILL HAVE TO DEAL WITH THAT. AND ONCE THAT IS STRUCTURED,
11:30:44 THEN ALLOW THOSE ENTITIES TO CHECK THE BOX ON WHICH DO THEY
11:30:48 WANT TO FILE? THEY DON'T FILE UNDER THE
11:30:52 CORPORATE TAX CODE TODAY BECAUSE IT IS NOT ADVANTAGEOUS FOR THEM
11:30:54 TO DO SO. BUT IF THAT'S RESTRUCTURED, THEY
11:30:58 MAY FIND THE CORPORATE TAX CODE TO BE MORE BENEFICIAL THAN
11:31:01 HAVING TO FILE UNDER THE INDIVIDUAL TAX CODE.
11:31:03 MINOR POINT HERE. NOT SO MINOR.
11:31:09 YOUR PERSPECTIVE. I THINK YOU WOULD AGREE THAT
11:31:13 YOUR COMPANY -- ALL COMPANIES SHOULD GET A TAX CREDIT FOR --
11:31:22 FOREIGN TAXES PAID TO FOREIGN COUNTRIES.
11:31:25 AND THAT'S THE GENERAL RULE IN THE TAX CREDIT.
11:31:27 THE GENERAL RULE TOO IS THAT YOU DON'T GET A CREDIT FOR
11:31:29 ROYALTIES. IF YOUR INCOME TAX PAID IN THAT
11:31:33 COUNTRY BUT NOT ROYALTY. I THINK THE QUESTION HERE IS
11:31:41 CHARACTERIZING THAT PAYMENT. IS IT ROYALTY OR IS IT TAX
11:31:43 PAYMENT? AND I THINK THE GOAL HERE UNDER
11:31:51 DUAL CAPACITY IS TO MAKE SURE THAT THE COMPANY, YOUR COMPANY,
11:31:55 ANY COMPANY PROPERLY GETS THAT TAX CREDIT WHEN IT'S A PAYMENT
11:32:02 OF INCOME TAXES. BUT NOT AS A ROYALTY PAYMENT.
11:32:05 AND TRYING TO FIGURE OUT WHAT ACTUALLY IS ROYALTY AND ACTUALLY
11:32:10 INCOME TAXES. AND THAT MAY HAVE SOMETHING TO
11:32:12 DO WITH THE LAW, I DON'T KNOW. BUT ROYAL CONTRACT FOR
11:32:21 INDIVIDUAL, ALL COMPANIES THAT MIGHT MAKE A PROFIT.
11:32:23 SO WE'RE TRYING TO DO THE RIGHT THING BY SEPARATING WHAT IS A
11:32:28 ROYALTY FROM WHAT IS PROPERLY A TAX PAYMENT.
11:32:31 THAT'S THE GOAL HERE. WELL, AND I APPRECIATE THE
11:32:34 RECOGNITION OF THAT. AND DON'T DISAGREE WITH ANY OF
11:32:38 WHAT YOU SAID, SENATOR. AND IT IS THE COMPLEXITIES OF
11:32:41 DEALING WITH THE FOREIGN -- THE HOST COUNTRY'S TAX SYSTEM AND
11:32:45 HOW IS IT CHARACTERIZED, PAYMENTS THAT WE'RE REQUIRED TO
11:32:51 MAKE TO THEM AND HOW IT FITS UNDER THE U.S. TAX CODE.
11:32:53 IT IS A DIFFICULT TASK. BUT AS I SAID, IT'S ONE THAT WE
11:32:56 MUST PROVE TO THE IRS THAT, YOU KNOW, THEY ARE LEGITIMATE INCOME
11:33:02 TAXES, NOT ROYALTIES. SO I UNDERSTAND THE CHALLENGE.
11:33:04 THE ALTERNATIVE IS TO GO TO A DIFFERENT SYSTEM WHICH I KNOW WE
11:33:09 TALK WITH YOUR STAFF AND OTHERS HAVE TALKED ABOUT GOING TO A
11:33:12 SYSTEM OF FOREIGN TAX CODE THAT IS MORE IN LINE WITH WHAT MOST
11:33:16 OF THE REST OF THE WORLD HAS WHICH WOULD BE A TERRITORIAL
11:33:19 SYSTEM. AND THEN, AGAIN, IT'S GETTING
11:33:21 THAT SYSTEM STRUCTURED SO THAT IT DOESN'T VIOLATE THAT
11:33:26 PRINCIPLE OF MINE WHICH IS DON'T STRUCTURE IT SUCH THAT AMERICAN
11:33:29 COMPANIES ARE AT A DISADVANTAGE OF THEIR COMPETITORS OVERSEAS.
11:33:32 AND I THINK THAT IS ACHIEVABLE. AS WITH ALL THINGS, THE DEVIL'S
11:33:37 IN THE DETAILS. BUT WE HAVE -- I THINK WE HAVE A
11:33:40 WAY TO MOVE TO A SYSTEM LIKE THAT.
11:33:44 AND THAT SIMPLIFIES A LOT OF THE COMPLEXITIES THAT EXIST IN OUR
11:33:48 CURRENT TAX CODE. BEFORE I PASS ON, THIS IS
11:33:51 GOING TO BE INCREDIBLY DIFFICULT.
11:33:52 IT IS. WITHOUT QUESTION.
11:33:54 AND EVERYBODY INVOLVED. AND EFFORTS TO REDUCE OUR
11:34:02 DEFICITS, IT'S GOT TO BE SHARED. EVERYBODY'S GOING TO HAVE TO
11:34:06 GIVE IN A LITTLE BIT FOR THE GREATER GOOD.
11:34:09 SENATOR HATCH? WELL, THANK YOU, MR.
11:34:13 CHAIRMAN. MR. CHAIRMAN, YESTERDAY ON THE
11:34:17 FLOOR, SENATORS SPOKE ABOUT THE LEGISLATION THAT WAS QUITE
11:34:24 CRITICAL. SO I ASK THE STATEMENTS BE PUT
11:34:26 IN THE RECORD. NO OBJECTION.
11:34:28 I WOULD LIKE TO COMMENT ON A FEW ITEMS BEFORE I GO INTO THE
11:34:31 SECOND ROUND OF QUESTIONS. MY FRIEND IN NEW YORK IMPLIED
11:34:37 THAT THE TAX INCENTIVES WE'RE DISCUSSING TODAY WAS A KEY
11:34:40 FACTOR IN REDUCING OUR $1 TRILLION PLUS DEFICIT.
11:34:45 MY FRIEND FROM MARYLAND MADE A SIMILAR POINT.
11:34:50 NOBODY IS ARGUING THE NUMBER IS INSIGNIFICANT.
11:34:52 WHAT WE'RE WORRIED ABOUT IS THE REMOVAL OF THESE INCENTIVES,
11:35:00 WHAT THE EFFECT OF THAT WOULD BE.
11:35:04 THE TESTIMONY IS CLEAR. REMOVING THESE INCENTIVES IS
11:35:08 GOING TO DRIVE PRODUCTION OFFSHORE, IT'S THAT SIMPLE.
11:35:13 AND THAT'S WHAT'S BEEN SAID HERE TODAY.
11:35:16 BUT I'LL TELL YOU, THERE WERE SPENDING CUTS PROPOSED BY DR.
11:35:22 COBURN OF SIMILAR SIZE WHO IS A MEMBER OF OUR COMMITTEE THAT
11:35:25 WERE REJECTED OUT OF HAND BY MY FRIENDS ON THE OTHER SIDE.
11:35:29 THOSE SPENDING CUTS, ANOTHER VERSION OF SHARED SACRIFICE TO
11:35:33 USE YOUR TERMS DID NOT INVOLVE STUDENT LOANS, DIDN'T INVOLVE
11:35:37 LOW-INCOME FOLKS, THEY DIDN'T INVOLVE INFRASTRUCTURE
11:35:41 INVESTMENT. HERE'S AN EXAMPLE.
11:35:45 DR. COBURN PROPOSED SELLING FEDERAL BUILDINGS THAT ARE
11:35:50 VACANT. THAT PROPOSAL WAS DOGGEDLY
11:35:52 OPPOSED AS REASONABLE AS IT IS BY MY FRIENDS ON THE OTHER SIDE.
11:35:58 AND THAT PROPOSAL INVOLVED $80 BILLION.
11:36:02 SO LET'S MAKE NO BONES ABOUT IT. WE, YOU KNOW, THERE'S TWO SIDES
11:36:07 TO WHAT'S HAPPENING HERE. LET ME JUST ASK YOU THIS, MR.
11:36:14 TILLERSON. COMBINING ALL THE U.S. COMPANIES
11:36:16 INTO ONE LARGE COMPANY -- IF YOU TOOK ALL FIVE OF YOU AND ALL
11:36:19 U.S. COMPANIES, NOT JUST THE FIVE OF YOU, BUT ALL OF THEM
11:36:25 INTO ONE LARGE COMPANY AND COMBINED THEM ALL, THAT WOULD
11:36:28 GIVE THAT COMPANY CONTROL OVER ONLY 6% OF THE WORLD'S OIL, AS I
11:36:35 UNDERSTAND IT -- 6% OF THE GLOBAL OIL PRODUCTION, AND
11:36:39 CONTROL OVER LESS THAN 2% OF GLOBAL OIL RESERVES.
11:36:43 AND YES, WE REQUIRE THEM TO GO OUT INTO THE WORLD OF TITANIC
11:36:46 NATIONALLY OWNED OIL COMPANIES AND STILL PROVIDE US WITH A
11:36:53 CONTINUALLY LARGE SUPPLY OF OIL. LET ME SHOW YOU THIS CHART.
11:36:56 U.S. COMPANIES HAVE A WEE LITTLE SLIVER THERE.
11:37:00 THAT'S 1.4%. LOOK AT THE OPEC NATIONS.
11:37:05 BEGINNING WITH SAUDI ARABIA OIL COMPANY, IRAQ NATIONAL OIL
11:37:10 COMPANY, KUWAIT, RIGHT ON DOWN THE LINE.
11:37:12 HERE'S WHERE WE ARE. WE'RE THIS SMALL LITTLE SLIVER
11:37:17 HERE. ALL THESE OTHERS ARE OPEC
11:37:23 COMPANIES. OPEC NATIONS THAT OWN THOSE
11:37:26 PRODUCTION FACILITIES. I GUESS WHAT I'M ASKING YOU IS
11:37:35 YOU'RE THE BIG FIVE AMERICAN COMPANIES, AM I WRONG ON THE
11:37:39 SMALL SLICE OF PETROLEUM EXPLORATION AND PRODUCTION THAT
11:37:45 IS LISTED ON THESE CHARTS? MR. TILLERSON?
11:37:49 NO, I THINK THOSE NUMBERS LOOK ABOUT TO MY RECOLLECTION,
11:37:54 AS WELL, WE DO NOT REPRESENT AN ENORMOUS HOLDING OF THE RESERVES
11:37:57 OR THE PRODUCTION. I WOULD SAY THIS, THOUGH, THAT
11:38:01 WE DO REPRESENT AN ENORMOUSLY IMPORTANT PARTICIPANT IN THE
11:38:05 GLOBAL ENERGY SUPPLIES. AND WE DO WORK IN A NUMBER OF
11:38:07 THE OPEC COUNTRIES. BUT YOU DON'T OWN ALL OF
11:38:12 THESE? NO, NO, WHAT YOU HAD WOULD
11:38:14 REPRESENT OUR SHARE OF WHAT WE --
11:38:18 AND THAT'S THAT LITTLE SLICE OF THAT OVERALL PIE.
11:38:21 YES. MR. ODOM, DID I HEAR YOU
11:38:24 CORRECTLY, YOU WERE READY TO SPEND $700 MILLION IN THE GULF
11:38:27 ON ENOUGH DOMESTIC ENERGY PRODUCTION TO POWER MORE THAN
11:38:29 600,000 VEHICLES A DAY? AND I BELIEVE YOU ALSO SAID THAT
11:38:36 YOU INVESTED $3.7 BILLION TO DEVELOP IN ALASKA.
11:38:41 NOW, IS YOUR TESTIMONY THAT SHELL HAS SPENT OVER $4 BILLION
11:38:44 TO PRODUCE DOMESTIC OIL, BUT THAT THE ONLY THING STANDING IN
11:38:46 YOUR WAY IS GOVERNMENT REFUSING T
11:38:53 TO ALLOW YOU TO GO AHEAD? THE CASE IS EMPHASIZED BY
11:38:56 WHAT'S HAPPENING IN ALASKA. WE ARE PRECISELY AT SOMETHING
11:38:58 AROUND $3.5 BILLION IN. ABOUT FIVE TO SIX YEARS NOW INTO
11:39:03 TRYING TO DRILL IN ALASKA. AND HAVE YET TO BE ABLE TO DO SO
11:39:06 BECAUSE OF THE PERMITTING SITUATION AND OVERALL
11:39:09 COORDINATION OF THE GOVERNMENT AGENCIES.
11:39:12 AND WHAT I'VE TRIED TO EMPHASIZE EARLIER IS THE IMPACT OF
11:39:14 SOMETHING LIKE THAT. SO, AGAIN, THE STUDIES THROUGH
11:39:17 THE UNIVERSITY OF ALASKA INDICATE THAT DEVELOPING THAT
11:39:20 PART OF THE INDUSTRY COULD BE 750,000 BARRELS A DAY ON A
11:39:26 LONG-TERM MULTI-DECADE BASIS. OVER --
11:39:29 $3.5 BILLION -- AND YOU CAN'T GET THE PERMITS TO DO WHAT YOU
11:39:34 KNOW IS THERE. IT DOESN'T REFLECT WELL ON
11:39:36 THE U.S., I'M AFRAID, IN TERMS OF DRAWING INVESTMENT AND BEING
11:39:40 KPETIVE IN THIS BUSINESS. ONE OF THE FIRST ACTS OF
11:39:44 SECRETARY SALAZAR WAS TO DRAW 77 ONSHORE LEASES IN UTAH AFTER
11:39:50 YEARS OF JUMPING THROUGH ENVIRONMENTAL HOOPS.
11:39:51 AND WE FINALLY GOT THERE. IT WAS AN AGREEMENT THROUGH THE
11:39:57 GOVERNOR. AFTER THEY'D BEEN STUDIED,
11:39:58 AUCTIONED OFF, AND PAID FOR. IT WAS ONE OF THE STRONGEST
11:40:03 ANTI-OIL SIGNALS HE COULD'VE SENT TO THE OIL INDUSTRY.
11:40:06 COULD YOU ELABORATE ON YOUR EXPERIENCE OR ANY OF THE REST OF
11:40:10 YOU IF YOU CARE TO? WELL, AGAIN --
11:40:13 AND WOULD YOU ALSO ANSWER THIS QUESTION BEFORE WE FINISH.
11:40:19 ASSUMING THIS LEGISLATION PASSES, THE LEGISLATION, WILL
11:40:24 THAT BRING DOWN PRICES OF OIL AT THE PUMP?
11:40:27 OR IS THIS THE BIG CHARADE? YOU DON'T HAVE TO USE MY TERMS.
11:40:32 BUT ANSWER THAT FOR ME. WHY ARE WE DOING THIS?
11:40:35 WHY ARE WE PUTTING YOU AT A DISADVANTAGE WHEN YOU'RE THAT
11:40:41 LITTLE SMALL SLICE OF THE OVERALL PIE.
11:40:46 AND YOU'RE COMPETING AGAINST NATIONS THAT HAVE OIL COMPANIES.
11:40:52 THEY'RE NATIONALIZED OIL COMPANIES.
11:40:53 GO AHEAD. WELL, I THINK, YOU KNOW, THE
11:41:02 COMPETITIVE AT THIS POINT IS RIGHT.
11:41:03 THE CHART IS ACCURATE FROM MY INFORMATION, AS WELL.
11:41:06 I THINK THE THING WE HAVE TO BE CAREFUL NOT TO LOSE IN THE CHART
11:41:08 IS WHAT I CALLED EARLIER THIS ENORMOUS OPPORTUNITY THAT EXISTS
11:41:12 IN THE U.S. WE HAVE A TREMENDOUS NUMBER OF
11:41:15 RESOURCES. WE CAN IMPACT THE ENERGY
11:41:18 BALANCE. WHY DON'T YOU DO IT, THEN?
11:41:20 WELL, IT'S A MATTER OF ACCESS.
11:41:22 A MATTER OF GETTING THE PERMITS.
11:41:25 WHICH GOES FAR BEYOND THE LIMITED PART OF THE CONVERSATION
11:41:29 TODAY. I THINK TO LOOK AT A REAL ENERGY
11:41:32 POLICY THAT PROVIDES THIS INDUSTRY WITH ACCESS TO THOSE
11:41:35 RESOURCES, WE COULD HAVE A SIGNIFICANT IMPACT ON THE
11:41:38 ECONOMY, DEFICIT, TRADE BALANCE, AND ENERGY SECURITY OF THIS
11:41:41 COUNTRY. I'D LIKE TO KNOW IF ANY OF
11:41:43 YOU BELIEVE THAT THIS BILL WILL HELP DECREASE PRICES AT THE
11:41:50 PUMP? NO.
11:41:51 NO. NO.
11:41:53 NO. AND BY THE WAY, I KNOW SOME
11:41:58 PEOPLE ARE A LITTLE UPSET I'VE TAKEN THIS TIME.
11:42:02 I'VE SAT HERE WHILE EVERY DEMOCRAT HAS TAKEN CONSIDERABLE
11:42:05 EXTRA TIME U. I'M THE ONLY ONE ON THE REPUBLICAN SIDE BECAUSE
11:42:08 EVERYBODY HAD TO GO TO THE WHITE HOUSE.
11:42:10 I WOULD HOPE I COULD BE GRANTED A LITTLE MORE TIME.
11:42:13 THANK YOU, MR. CHAIRMAN. I JUST HAVE ONE QUESTION, BUT I
11:42:16 ALSO WANT TO NOTE WHERE WE ARE AT THIS POINT.
11:42:21 2 1/2 HOURS INTO THE HEARING. GENTLEMEN, YOU ALL HAVE DONE AS
11:42:25 MAJOR OIL COMPANIES A DRAMATIC ABOUT FACE THIS MORNING.
11:42:28 IN 2005, ALL OF YOU -- YOU WERE THERE.
11:42:31 ALL OF YOU SAID YOU DID NOT NEED TAX INCENTIVES TO DRILL FOR OIL.
11:42:37 AND TODAY YOU'VE COME TO SAY YOU'VE GOT TO HAVE THEM WHEN OIL
11:42:41 IS AT $100 A BARREL. I THINK THAT POSITION DEFIES
11:42:45 COMMON SENSE, AND CERTAINLY EVEN ADJUSTED FOR INFLATION.
11:42:50 YOU'RE EVEN DOING BETTER NOW THAN YOU WERE IN 2005.
11:42:52 SO THIS DEBATE IS GOING TO GO FORWARD.
11:42:54 SO I JUST WANT TO MAKE SURE THAT FOLKS WHO ARE PAYING ATTENTION
11:42:59 TO THIS PICK UP ON THAT AS WE WRAP UP.
11:43:02 AND ONE LAST QUESTION TO YOU, MR. McKAY BECAUSE OF SOME OF THE
11:43:05 COMMENTS YOU'VE MADE. AND THAT'S THE TAX CREDIT THAT
11:43:08 EXISTS FOR BLENDING ETHANOL. AS YOU KNOW, YOU ALL ARE
11:43:13 REQUIRED TO IMPLEMENT THE FEDERAL STANDARDS.
11:43:20 YOUR TESTIMONY SAYS AND I QUOTE, BP IS ALREADY ONE OF THE LARGEST
11:43:23 BLENDERS OF ETHANOL IN THE NATION.
11:43:26 SO MY QUESTION, MR. McKAY, IS WHY SHOULD OIL COMPANIES -- NOT
11:43:30 JUST YOURS, BUT ALL OF THE OIL COMPANIES BE GETTING $6 BILLION
11:43:35 A YEAR IN TAX CREDITS FOR COMPLYING WITH AN EXISTING LAW
11:43:39 TO BLEND ETHANOL? THAT LAW WAS INTRODUCED TO
11:43:45 GET ETHANOL AS A BIOFUEL INTO THE FUEL MIX INTO THE U.S.,
11:43:49 WHICH IT'S BEEN VERY SUCCESSFUL AS AN INCENTIVE TO DO THAT.
11:43:52 WE'RE NOT OPPOSED TO THAT TRANSITIONAL INCENTIVE BEING
11:43:56 PHASED OUT. WE THINK IT'S IMPORTANT FOR
11:44:00 TRANSITIONAL INCENTIVES FOR SECOND GENERATION BIOFUELS.
11:44:02 THAT'S CONSTRUCTIVE. AND I'M GLAD WE'RE NOTING THAT
11:44:05 AS WE -- CHAIRMAN, YOU AND I HAVE TALKED ABOUT THIS.
11:44:08 THERE'S NO QUESTION IN TERMS OF ENERGY POLICY THAT OFTEN YOU
11:44:12 NEED AN INCENTIVE TO GET SOMETHING OFF THE GROUND.
11:44:15 CLEARLY WHAT MR. McKAY IS TALKING ABOUT IS THAT INCENTIVE
11:44:18 MADE SOME SENSE AT THE BEGINNING, IT DOESN'T MAKE SENSE
11:44:22 NOW AND IT'S INVOLVING $6 BILLION.
11:44:25 AND MR. McKAY, I THINK IT'S CONSTRUCTIVE YOU SAID YOU'D BE
11:44:32 WILLING TO PHASE IT OUT. IT'S A GOOD POINT.
11:44:37 THIS COMMITTEE SHOULD AND WE WILL LOOK AT THE EFFECTIVENESS
11:44:42 OF ALL THE TAX EXPENDITURES, ALL THE INCENTIVES TO SEE WHICH ONES
11:44:46 ARE MORE EFFECTIVE THAN OTHERS. AND MAYBE WE CAN GET RID OF A
11:44:50 FEW OF THEM. I'M SURE SOME OF YOU DON'T KNOW
11:44:55 THIS, IT'S A DIFFICULT QUESTION FOR ALL OF US.
11:44:59 THERE ARE ABOUT 141 TAX PROVISIONS THAT EXPIRE EVERY
11:45:02 YEAR OR EVERY 18 MONTHS. WE CALL THEM DIVISIONS.
11:45:05 THEY'RE A NIGHTMARE. IT MAKES NO SENSE TO GO BACK AND
11:45:09 REINVENT. 141 TIMES EVERY 18 MONTHS,
11:45:15 THEY'VE GOT TO BE PAID FOR AND IT'S MADDENING.
11:45:19 AND SO WE WILL BE LOOKING AT A LOT OF THESE PROVISIONS AND
11:45:23 OTHERS. I'D LIKE TO ELIMINATE A LOT OF
11:45:26 THOSE OR MAKE THEM PERMANENT SO IT'S NOT A LOT OF UNCERTAINTY
11:45:32 SURROUNDING. SENATOR?
11:45:40 THANK YOU, MR. CHAIRMAN. LET ME CONCUR IN YOUR COMMENTS
11:45:43 IN REGARDS TO TAX REFORM. I CAN ASSURE YOU THERE'S GREAT
11:45:47 INTEREST IN MAKING OUR TAX CODE MORE COMPETITIVE AND
11:45:51 PREDICTABLE. I THINK PREDICTABILITY IS
11:45:53 EXTREMELY IMPORTANT FOR INVESTORS.
11:45:54 AND WE'VE GOT TO GIVE YOU THE ABILITY TO GET INVESTORS KNOWING
11:45:57 WHAT THE GROUND RULES ARE. SO WE AGREE ON THAT.
11:46:02 I WANT TO MAKE ONE RESPONSE TO SENATOR HATCH.
11:46:05 NUMBERS HERE, $4 BILLION AS I UNDERSTAND IT EQUALS ABOUT 3% OF
11:46:12 THE PROFITS OF THE FIVE COMPANIES.
11:46:15 MOST OF THESE PROFITS ARE GOING BACK TO THE SHAREHOLDERS.
11:46:18 SO I JUST DON'T SEE THE IMPACT THAT SENATOR HATCH IS REFERRING
11:46:25 TO ON EITHER JOBS OR ANY OF THE ISSUES THAT YOU BRING UP.
11:46:30 I JUST THINK THE MATH IS PRETTY --
11:46:33 MY POINT IS THAT -- AND I THINK THEY'RE MAKING THE POINT
11:46:36 IS THAT IF YOU'RE GOING TO DO THIS, YOU SHOULD TREAT THEM
11:46:40 FAIRLY ALONG WITH ALL THE OTHER COMPANIES THAT RECEIVE CERTAIN
11:46:43 TAX EXPENDITURES. I'VE GOT TO AGREE WE'VE GOT TO
11:46:48 DO TAX REFORM, AND THAT INCLUDES LOOKING AT EVERYTHING.
11:46:55 NOT JUST BECAUSE THEY'RE AN INDUSTRY PEOPLE HATE --
11:46:58 LET ME BRING IT BACK TO THE POINT THAT'S BEEN USED HERE.
11:47:03 I UNDERSTAND THE BUSINESS IS TAKING -- TAKING THE TAX
11:47:07 PROVISIONS THAT ARE THERE ARE TAKING ADVANTAGE OF IT.
11:47:10 THAT'S YOUR RESPONSIBILITY. IF YOU DIDN'T DO THAT, YOU WOULD
11:47:12 HAVE PROBLEMS WITH YOUR SHAREHOLDERS.
11:47:14 BUT UNDERSTAND WHY WE THINK THAT THIS IS EITHER UNWARRANTED
11:47:19 INCENTIVES OR SUBSIDIES. PARTICULARLY SECTION 199.
11:47:25 SECTION 199 WAS A RESPONSE TO DEALING WITH THE FACT THAT OUR
11:47:29 CORPORATE TAXES ARE NOT ORDER ADJUSTED VERSUS EUROPE'S AND
11:47:37 OTHER COUNTRIES TAXES ARE FOREIGN ADJUSTED.
11:47:41 WE DID SOMETHING TO HELP OUR FOREIGN SALES.
11:47:43 THAT WAS THE GENESIS OF SECTION 199.
11:47:45 AND WE WANTED TO BE ABLE TO COMPENSATE FOR THE FACT THAT OUR
11:47:50 FOREIGN COMPETITORS HAD AN ADVANTAGE OVER U.S.
11:47:53 MANUFACTURERS ON THE WAY THAT TAXES WERE HANDLED AT THE
11:47:54 BORDER. NOW, MY UNDERSTANDING IS THAT IN
11:48:00 YOUR INDUSTRY, THERE MORE IMPORTED PRODUCT THAN EXPORTED
11:48:04 PRODUCT. SO IT DOESN'T MAKE A LOT OF
11:48:06 SENSE FOR YOU TO GET A TAX ADVANTAGE ON THE PHILOSOPHY OF
11:48:12 WHAT THIS BILL WAS ORIGINALLY CREATED FOR.
11:48:15 THE WORLD TRADE ORGANIZATION RULED THE PROVISIONS OUT OF
11:48:17 COMPLIANCE AND WE HAD TO GO TO A GENERAL MANUFACTURING PROVISION.
11:48:24 AND THAT'S HOW THIS CAME ABOUT. WELL, ON TWO FRONTS, WE HAVE
11:48:30 QUESTIONS AS TO WHETHER THIS IS A REASONABLE TAX ADVANTAGE TO
11:48:33 THE OIL INDUSTRY. IT'S NOT TRADITIONAL
11:48:38 MANUFACTURING. AND IT'S NOT THE TYPE OF EXPORT
11:48:44 ACTIVITY THAT WAS DISADVANTAGED BY THE CORPORATE STRUCTURE TO
11:48:49 HAVE A PRODUCT ENTER THE INTERNATIONAL MARKETPLACE.
11:48:53 I JUST THINK WE HAVE TO GET TO THE RATIONALE, THIS IS THE
11:49:00 SINGLE SOURCE OF REVENUES WE'RE TALKING ABOUT TODAY.
11:49:02 THAT HAS ITS GENESIS ON HELPING UNITED STATES MANUFACTURERS GET
11:49:07 A PRODUCT INTO THE INTERNATIONAL MARKETPLACE, WHICH IS NOT
11:49:14 CIRCUMSTANCES OF THE PRODUCT THAT YOU ARE BASICALLY INVOLVED
11:49:17 WITH. YOU IMPORT THE CRUDE, AS I
11:49:20 UNDERSTAND IT, THE FINAL PRODUCT IS MOSTLY DOMESTIC, I'M SURE
11:49:25 SOME HITS THE INTERNATIONAL MARKETPLACE.
11:49:28 BUT IT'S CERTAINLY NOT THE TARGET WHY THIS PARTICULAR TAX
11:49:32 PROVISION WAS PUT IN THE TAX CODE.
11:49:34 ANYONE DISAGREE WITH THAT? WELL, IF YOU WANT TO REPEAL
11:49:41 IT, REPEAL IT FOR EVERYONE. I'M NOT SURE THAT THE COFFEE
11:49:44 ROASTERS ARE GROWING COFFEE HERE AND EXPORTING COFFEE.
11:49:47 I'M NOT SURE THAT THE NEWSPAPER COMPANIES ARE EXPORTING
11:49:53 DOMINANTLY THEIR NEWSPAPERS. I DON'T DISAGREE WITH YOUR
11:49:58 COMMENT OR YOUR PREMISE. MY ONLY POINT IS, IF YOU WANT TO
11:50:02 GET RID OF IT. GET RID OF IT ACROSS THE BOARD.
11:50:05 I DON'T DISAGREE WITH THE POINT DISAGREE WITH THE
11:50:08 POINT. NOT JUST ONE OR TWO
11:50:10 COMPANIES. THERE'S COMPANIES THAT THIS
11:50:12 IS ROUGH JUSTICE. IT REALLY HELPS THEM.
11:50:13 I WOULD RATHER DO IT DIRECTLY LIKE WE DID WITH FOREIGN SALES.
11:50:17 I'D LIKE TO REFORM OUR TAX CODE SO WE HAVE A COMPETITIVE BASE.
11:50:22 IF WE CAN DO THAT, THAT'S MY FIRST CHOICE.
11:50:23 IF WE CAN'T DO IT, WE SHOULD TAILOR IT MORE TO ITS PURPOSE OF
11:50:27 HELPING EXPORTERS WHO MANUFACTURE IN THE UNITED
11:50:29 STATES. AND MY ONLY PRINCIPLE THAT I
11:50:32 ASK YOU NOT TO VIOLATE IS, DO NOT TREAT COMPANIES WITHIN THE
11:50:37 SAME INDUSTRY DIFFERENT AND DO NOT TREAT INDUSTRIES ON YOUR
11:50:40 PRINCIPLE OF EXPORTS DIFFERENTLY.
11:50:42 WELL, WE'VE GOT -- IT'S TOUGH SOMETIMES TO DRAW A LINE AND I
11:50:48 UNDERSTAND THE POINT YOU'RE RAISING.
11:50:50 ALL I'M POINTING OUT IS THAT THAT'S WHY SOME OF US LOOK AT
11:50:53 THE SECTION 199 AS IT RELATES TO THE OIL INDUSTRY AS EITHER AN
11:50:59 UNJUSTIFIED INCENTIVE OR AS A SUBSIDY BECAUSE WE DON'T BELIEVE
11:51:03 IT IS THE ORIGINAL INTENT TO BENEFIT YOUR TYPE OF ACTIVITIES.
11:51:07 AND I JUST REALLY WANT TO PUT THAT ON THE RECORD.
11:51:11 I VERY MUCH APPRECIATE YOUR RESPONSE.
11:51:12 THANK YOU, SENATOR. I WANT TO REPEAT BUT THEN
11:51:17 EXPAND A LITTLE BIT ABOUT WHAT I SAID EARLIER.
11:51:20 I REALLY DO BELIEVE THAT YOU'RE OUT OF TOUCH.
11:51:23 I DO BELIEVE THAT, MR. TILLERSON DOESN'T.
11:51:27 THAT DOESN'T MEAN YOU'RE NOT GOOD PEOPLE, THAT YOU DON'T
11:51:29 PARTICIPATE IN YOUR COMMUNITIES, THAT YOU DON'T DO HELPFUL
11:51:35 THINGS, ALONG WITH THE WORK THAT YOU HAVE TO DO.
11:51:39 BUT I THINK THAT THE MAIN REASON THAT YOU'RE OUT OF TOUCH,
11:51:42 PARTICULARLY WITH RESPECT TO AMERICANS AND THE SACRIFICES
11:51:46 THAT WE'RE HAVING TO LOOK AT HERE IN TERMS OF TRYING TO
11:51:50 BALANCE, OR COME EVEN CLOSES TO BALANCING A BUDGET, IS THAT YOU
11:51:56 NEVER LOSE. YOU'VE NEVER LOST.
11:51:57 YOU ALWAYS PREVAIL. YOU ALWAYS PREVAIL IN THE HALLS
11:52:01 OF CONGRESS. AND YOU DO THAT FOR A WHOLE
11:52:04 VARIETY OF REASONS, BECAUSE OF YOUR LOBBYISTS, BECAUSE OF
11:52:07 FRIENDS, BECAUSE OF ALL THE PLACES WHERE YOU DO BUSINESS.
11:52:11 AND I DON'T REALLY KNOW ANY OTHER BUSINESS THAT NEVER LOSES,
11:52:16 THAT ALWAYS FAILS TO DO AS WELL AS YOU DO.
11:52:19 AND THEN I THINK ONE OF THE PROBLEMS -- AND YOU CAN'T HELP
11:52:23 THIS IN A WAY -- IS THE SIZE, JUST THE SIZE, OF THE AMOUNT OF
11:52:28 MONEY YOU TAKE IS REALLY HARD FOR AVERAGE PEOPLE IN WEST
11:52:33 VIRGINIA TO EVEN COME CLOSE TO UNDERSTANDING.
11:52:36 THEY DON'T THINK THAT THAT CAN BECOME BY IN THE REGULAR OF THE
11:52:40 ORDER OF THE WAY THE WORLD TREATS THEM.
11:52:44 THEY'RE ALWAYS IN THE PROCESS OF LOSING.
11:52:48 EVERYTHING IS ON UPHILL BATTLE. SO MY VIEW OF MY WORK IN WEST
11:52:54 VIRGINIA IS THAT -- WHICH IS MOSTLY MOUNTAINOUS, 96%
11:52:59 MOUNTAINOUS, IS THAT I'M HOLDING ON TO A HUGE BOULDER, NOT TOO
11:53:04 HUGE, WITH BOTH HANDS AND TRYING TO PUSH IT UPHILL.
11:53:08 IT'S EVERY DAY I FEEL THAT. AND I LOVE THAT FEELING.
11:53:13 BUT I KNOW IF I TAKE ONE HAND OFF, I AND BOULDER DISAPPEAR
11:53:19 INTO THE ETHER, I GUESS THE OPPOSITE OF THE ETHER.
11:53:26 THE GULGE. SO THAT THEN LEADS ME TO SAY --
11:53:31 THIS IS MY OPINION, BUT I REALLY BELIEVE IT.
11:53:38 I'VE JUST NEVER SEEN AN INDUSTRY SO CONSTANTLY SUCCESSFUL.
11:53:41 I THINK YOU ALL HAVE A GREAT SENSE OF ASSURANCE AS YOU'RE
11:53:45 SITTING THERE, MORE SO THAN USUAL, AND WE HAVE STEEL PEOPLE
11:53:49 OR AUTOMOBILE PEOPLE OR OTHER KINDS OF PEOPLE THERE, YOU HAVE
11:53:53 A GREAT SENSE OF ASSURANCE. I DON'T THINK YOU FEEL
11:53:56 THREATENED BY ANYTHING THAT'S GOING ON HERE AND I DON'T
11:53:59 NECESSARILY KNOW YOU HAVE ANY REASON TO FEEL THREATENED
11:54:01 BECAUSE OF THE WAY VOTES LINE UP IN THIS PRESENT CONGRESS.
11:54:09 BUT I YEARN FOR ONE OF YOU TO SEE WHAT AVERAGE PEOPLE ARE
11:54:17 GOING THROUGH AND TO FIGURE OUT SOME WAY IN YOUR MIND, WHAT CAN
11:54:21 I DO AS A VERY, VERY LARGE AND PROFITABLE COMPANY, TO MAKE SURE
11:54:29 THAT THAT BAD THING DOESN'T HAPPEN TO THAT PERSON, LOSING
11:54:33 HEALTH INSURANCE OR LOSING UNEMPLOYMENT INSURANCE OR ALL --
11:54:38 I MEAN, THE ENDLESS NUMBER OF THINGS THAT PEOPLE HAVE TO WORRY
11:54:41 ABOUT EVERY SINGLE DAY. YOU DON'T HAVE TO WORRY ABOUT
11:54:43 THOSE. NONE OF YOU TOOK A COMMERCIAL
11:54:48 AIRPLANE TO COME HERE. "DON'T BLAME YOU FOR THAT.
11:54:50 YOU HAVE THE MONEY TO HAVE PLANES.
11:54:53 BUT OUR PEOPLE DON'T. AND SO I WANT TO JUST SORT OF
11:54:57 STIPULATE THAT AND THEN SAY ONE MORE THING.
11:55:00 THE GREATEST DANGER TO THIS COUNTRY RIGHT NOW, OTHER THAN
11:55:02 THE DEFICIT, IN TERMS OF NATIONAL SECURITY, IS SOMETHING
11:55:07 CALLED CYBER SECURITY. WE'RE WRITING A BILL ON THE
11:55:12 COMMERCE COMMITTEE AND THE HOMELAND SECURITY COMMITTEE IS
11:55:17 PARTICIPATING IN THAT WHICH COMES UP WITH A SOLUTION WHICH I
11:55:19 HOPE WE CAN PASS THIS YEAR. THERE'S AN ENORMOUS AMOUNT OF
11:55:26 WORK THAT COMPANIES AND EXPENSE THAT COMPANIES HAVE TO GO TO WHO
11:55:31 ARE ARE BEING ATTACKED ALREADY, P
11:55:37 . PENTAGON I THINK IS HIT MAYBE A
11:55:40 MILLION TIMES A DAY BY PEOPLE HACKING IN, GETTING SECRETS, NOT
11:55:45 JUST WIKILEAKS BUT ANYONE CAN DO THAT.
11:55:47 SO HOW DO THEY DEFEND THEMSELVES?
11:55:49 WELL, THEY HAVE TO GO TO ALL KIND OF SECURITY MEASURES.
11:55:51 AND YOU KNOW I MET WITH MOST OF THEM YESTERDAY, PARTICULARLY THE
11:55:55 BIGGER ONES. I SAID, YOU KNOW, YOU'RE GOING
11:55:57 TO HAVE TO BEARER THAT EXPENSE. THE GOVERNMENT CAN'T DO THAT FOR
11:56:01 YOU. WE DON'T HAVE THE MONEY TO DO
11:56:02 THAT FOR YOU BECAUSE THIS IS GOING TO GO ON FOR THE NEXT 50
11:56:05 OR 100 YEARS. WE'LL BE FACING THESE PROBLEMS.
11:56:08 THEY DIDN'T OBJECT TO THAT. IN FACT, THEY SAID, WE THINK
11:56:11 THAT'S THE RIGHT THING, THE WAY IT SHOULD BE.
11:56:14 WE SHOULD HAVE TO PAY MORE, WE SHOULD HAVE TO DIG INTO OUR
11:56:16 PROFITS TO MAKE OURSELVES MORE SECURE.
11:56:21 SO THAT'S WHY, YOU KNOW, I JUST -- WHEN YOU TALK ABOUT R &
11:56:32 D, YOUR EXPENSES ARE RESEARCH AND DEVELOPMENT FOR
11:56:35 PHARMACEUTICAL COMPANIES, SOMEBODY ELSE, IS WHY I THINK
11:56:37 IT'S WRONG OF YOU TO SAY THAT BECAUSE IT JUST ISN'T SO MUCH OF
11:56:43 THAT EXPLORATION HAS ALREADY BEEN DONE.
11:56:44 I THINK THAT'S A COST THAT YOU COULD ABSORB SO EASILY AND STILL
11:56:51 DO VERY WELL. BUT NOT ONCE DURING THIS HEARING
11:56:55 HAVE I HEARD ANY SEMBLANCE OF A WILLINGNESS TO SHARE, UNLESS
11:57:02 EVERY OTHER COMPANY ALSO HAS TO, WHICH IS BUILDING UP THE DEFENSE
11:57:05 THAT IT CAN'T HAPPEN. WELL, PUTTING IT MORE SIMPLY, I
11:57:09 HAVEN'T HEARD ANYBODY TALK ABOUT WHAT THEY'RE DOING, WHAT THEY
11:57:11 WOULD BE WILLING TO DO, TO SHARE IN OUR BUDGET PROBLEMS AND IN
11:57:17 THE TOTAL CONCEPT OF WHAT KEEPS AMERICA TOGETHER.
11:57:20 AND THAT IS A SENSE OF FAIRNESS, THAT EVERYBODY HAS TO LOSE AT
11:57:25 SOME TIME. EVERYBODY HAS TO GIVE SOMETHING
11:57:27 UP FOR US TO BE A REAL COUNTRY. AND DO ANY OF YOU HAVE ANY
11:57:36 THINGS, SO LONG AS EVERY OTHER COMPANY DOES IT, TOO, THAT YOU
11:57:43 COULD GIVE UP, THINGS YOU COULD JUST STOP DOING, BREAKS THAT YOU
11:57:48 NOW GET THAT YOU WOULDN'T GET AS A WAY OF HELPING?
11:57:55 SENATOR, VERY MUCH APPRECIATE THE COMMENTS THAT YOU'RE MAKING.
11:57:59 I CAN ONLY REPRESENT HOW WE AS A COMPANY FEEL.
11:58:04 I DON'T KNOW HOW THE OTHERS DO. BUT WE FEEL LIKE WE'RE
11:58:08 CONSTRAINED AND RESTRICTED FROM OUR OPPORTUNITIES.
11:58:10 WE FEEL WE'RE IN A NOBLE INDUSTRY THAT PROVIDES THE
11:58:13 ENERGY THAT HAS DEVELOPED THIS COUNTRY INTO WHAT IT IS AND ITS
11:58:17 STANDARD OF LIVING AND WE'RE CONSTRAINED FROM WHAT WE FEEL
11:58:20 THAT WE ARE PART OF THE ENERGY SOLUTION FOR THIS COUNTRY.
11:58:26 WE'RE CONSTRAINED, SHACKLES ON US.
11:58:29 WE'RE READY TO INVEST. WE'RE READY TO DO FOR MORE.
11:58:32 YOU'VE HEARD TODAY. SO IT'S NOT A QUESTION OF
11:58:34 LOOKING FOR INCENTIVES. WE'RE LOOKING FOR -- GIVE US --
11:58:38 PUT US BACK TO WORK. OPEN UP -- GIVE US ACCESS TO THE
11:58:41 LAND. LET US START DRILLING.
11:58:43 PUT OUR PEOPLE BACK TO WORK AND WE'LL DEVELOP --
11:58:46 I'M WAY PAST MY TIME, BUT CAN I JUST SAY THAT, YOU KNOW, WE
11:58:52 FEEL CONSTRAINED, WE CAN'T DO WHAT WE WANT TO DO, MAYBE YOU'RE
11:58:58 RIGHT AND MAYBE YOU'RE WRONG. I THINK YOU'RE WRONG.