The 12,000-barrel oil spill carried by Exxon Mobile’s Pegasus pipeline in central Arkansas last week has brought to light a current tax loophole that oil and gas giants are abusing. A legal technicality states that the transportation of a certain type of crude oil — the oil used in Exxon’s pipeline and the same oil being used for the Keystone XL Pipeline — does not require a payment into the Oil Spill Liability Trust Fund.
Exxon, like all companies that transport oil, is required to pay eight cents into the OSLTF for every barrel they transport. However, the oil spilled is classified as tar sands, an unconventional oil, and is exempt from this tax. The corporation has refused to reveal the amount they pay to the fund, or the value of the non-oil oil they transport.
This loophole could be costing the OSLTF millions of dollars. The controversial Keystone Pipeline will reportedly transport around 590,000 barrels of this tar sands oil per day, tax-free. That alone is almost $50,000 a day that Big Oil will be pocketing instead of paying into the fund. No one knows the exact amount of money that oil companies are saving from this loophole because they are not obligated to divulge that information.
For years, oil companies have been profiting from this loophole, skirting a tax that was intended to protect the communities that the companies pass through to transport their product. Exxon’s response agreeing to cover all cleanup costs is meant to appease the local community and divert attention from the loophole. Yet the law still exempts Exxon and other energy companies from liabilities related to this type of spill, even though tar sands crude oil inflicts the same costs and environmental hazards as any other type of oil. This demonstrates a lack of social conscience from large oil firms, as well as a governmental failure to protect its citizens.
Exemptions like these represent the worst part of our political system. They arise because oil companies save money, policymakers are paid by lobbyists not to worry about it and the public never hears about it. Americans distrust Congress because of these backroom deals. Closing this loophole and others like it would save the government money and send a message to the public that Congress truly wants to be by the people, for the people.
A version of this article appeared in the April 4th, 2013 print issue. Email the WSN Editorial Board at [email protected].
postwick • Apr 8, 2013 at 9:35 pm
ExxonMobil pays around $180,000 PER MINUTE in taxes. So yeah. The pay about $3 in taxes for every $1 in profit. So yeah.
http://www.forbes.com/sites/nickschulz/2012/08/09/taxation-hero-exxonmobil-pays-3-in-taxes-for-every-1-in-profit/
Jim Burnett • Apr 7, 2013 at 5:22 pm
The clarification by Alan Jeffers from ExxonMobil was useful, but it also begs the larger question in this story – what would the company’s position be on eliminating this exemption from the OSLTF? That could become a very important issue if the Keystone pipeline is constructed, and a “tar sands” spill would certainly be no less damaging.
postwick • Apr 8, 2013 at 9:36 pm
Just because they don’t pay into the fund for this type of oil doesn’t mean they don’t pay into it at all, and doesn’t mean the fund can’t be used to clean up this kind of spill. Should the law be re-addressed? Sure. But there is a lot of misinformation and rhetoric spreading about this story, and it’s harmful to a rational dialog about things.
OilBaron • Apr 7, 2013 at 5:15 pm
“We’re sorry about the Arkansas spill and are committed to cleaning it up.”
You mean like you cleaned up the Valdez spill? Or the way BP cleaned up the Gulf disaster?
Hey Alan, what’s with the no-fly-zones that you and your paid government shills impose over your disasters so that the American people can’t see the destruction you cause?
Scott Dickson • Apr 7, 2013 at 5:35 pm
I have been a commercial pilot since 1982 and have never seen a TFR(no fly zone) over a spill…only fires and presidential visits as last week here in SF when obumble was selling more access via his OFA
alanjeffers • Apr 7, 2013 at 3:34 pm
Had you researched your story by calling ExxonMobil, you would have learned that the oil in the pipeline is not oilsands crude and therefore would be taxable under the fund. You also would have learned that ExxonMobil is paying the cleanup costs and not using the trust fund.
We’re sorry about the Arkansas spill and are committed to cleaning it up.
Your readers can learn more at http://www.exxonmobilperspectives.com
Alan Jeffers, ExxonMobil