Why Eliminating Tax Breaks For Oil Companies Will Reduce Our Supplies And Raise Prices

As with any American corporation, it is profits that drive business expansion. For an oil company, expansion is the exploration and drilling for new oil; and, those two activities are very expensive propositions. For example, it costs around $500,000 a day to rent a deep-water drilling rig for use in the Gulf of Mexico. That rig will be in use for approximately 61 days before striking oil. Of course, this cost doesn't even include the materials and manpower that must be expensed in the process. Then, too, take Royal Dutch Shell oil company. They have already spent $4 billion dollars in drilling Arctic, off-shore test wells in Alaska without having found a single drop of the black gold.

Now, Mr. Obama wants to reduce oil company profits by removing any tax breaks and subsidies; claiming that they don't need those breaks because they are already reaping big profits. But, by taking the breaks away, profits will naturally be reduced and the oil companies will, in turn, have less funds for exploration and drilling. That just means less domestic production of oil and, consequently, a bigger cost to consumers. This from a President who claims that he's doesn't want high gasoline prices.