Oil Industry Revives Campaign to Avoid Losing Tax Breaks

U.S. oil and gas producers began a public-relations campaign to protect industry tax breaks as Obama administration and congressional negotiators seek revenue to offset spending cuts that take effect next month.

The American Petroleum Institute, which represents Exxon Mobil Corp. and ConocoPhillips, will broadcast commercials in the Washington area and in select states warning against higher taxes on producers, Khary Cauthen, senior director of federal relations, said today on a conference call.

“Discriminatory tax treatment of the oil and gas industry is a bad idea,” Cauthen said in an interview. “They can keep us from doing what we do to help the economy; jobs, energy production and over the long term, even the revenues our industry provides to the government.”

Oil Change International, a research group that opposes fossil-fuel tax breaks, also plans to advertise, said Steve Kretzmann, executive director of the Washington-based group. Both sides hope to sway public opinion as Congress debates measures to avoid the so-called fiscal cliff -- $607 billion in spending cuts and tax increases set to start in January.

“It looks to us like there definitely is some possibility of the Republicans going along with some elimination of oil-company tax breaks,” Kretzmann said in an interview. “It’s probably the smallest slice possible that they’re interested in.”

Obama, Menendez

President Barack Obama has called for a repeal of about $40 billion in industry tax breaks over a decade. In 2011, Senator Robert Menendez, a New Jersey Democrat, sponsored a bill that would eliminate tax breaks worth about $24 billion over 10 years for the largest oil and gas companies operating in the U.S. The Senate fell nine votes short of the 60 needed to advance the measure.

The petroleum group, the largest trade group representing the oil and gas industry, in May opposed Menendez’s legislation to end the benefits for selected energy companies.

“The amount of tax breaks we’re giving them is less than the profits Exxon Mobil makes in a quarter,” Ben Schreiber, tax analyst for the Washington environment group Friends of the Earth, said in an interview. Higher U.S. production is “not because of tax breaks. It’s because of technological developments.”

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