How rules allow the oil industry to save $4.4b a year in taxes

Motorists are paying nearly $4 (Dh14.68) for a gallon of petrol as the oil industry reaps pre-tax profits that could hit $200 billion this year. This makes another big number hard to take: $4.4 billion. That\'s how much the industry saves every year through special tax breaks intended to promote domestic drilling. President Barack Obama is increasing pressure on Congress to eliminate these tax breaks — including one that is nearly a century old — at a time of record budget deficits. The President and congressional Democrats say eliminating the tax breaks will also lower gas prices by making alternative energy sources more competitive. Oil industry advocates, a group that includes most Republicans in Congress, argue just the opposite. They say oil companies reinvest tax breaks into exploration and production, which ultimately generates more tax dollars and increases the supply of oil. They say eliminating tax breaks will raise the cost of doing business and lead to higher gas prices. Executives from the five biggest oil companies will be asked about these tax breaks Thursday at a Senate finance committee hearing. The 41 US oil and gas companies that break out their federal taxes said they paid Uncle Sam $5.7 billion in 2010, according to data compiled by Compustat. That\'s more than any other industry. Exxon alone paid $1.3 billion. (The company\'s total tax bill was $21.5 billion, but most of that was paid to foreign governments and states.) But at a time when motorists are fuming about $4 petrol, Obama and Democrats sees a huge political opportunity. from / Gulf News