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Democratic presidential candidate Barack Obama sought to tap into Americans’ anxiety over high gasoline prices by pledging to seek a windfall profits tax on U.S. oil companies if elected.
“I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills,” the Illinois senator said on Monday according to Reuters.

On Tuesday, the big oil companies with the help of Senate Republicans showed the nation who’s boss. The Senate slapped aside an energy package that would have imposed a 25% tax on unreasonable profits on the five largest oil companies who squeezed a staggering $36 billion profit out of consumers pockets this first quarter, it would have given government the leeway to address oil market speculation, opened the way for antitrust actions against the OPEC oil cartel (the forever oil lobby and administration stymied NOPEC legislation) and made energy price gouging a federal crime.

In doing so, Congress has once again shown how out of touch it is with the feelings and desires of its constituents for forceful action. And once again this administration, together with the oil lobby, has been the cheerleader for the vested and powerful interests of the oil industry.
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The government will refund value-added taxes on gasoline and diesel imported by the country’s two largest oil companies in the second quarter, the Ministry of Finance has said.

Value-added taxes on 500,000 tons of gasoline and 1 million tons of diesel imported by China National Petroleum Corporation (CNPC) between April 1 and June 30 this year will be refunded, the ministry said on its website yesterday.

It will also return collected taxes to China Petrochemical Corporation (Sinopec) on imports of 500,000 tons of gasoline and 1.5 million tons of diesel in the same period, the statement said.

Analysts said the 17 percent tax refund is aimed at reducing the refining losses of the oil companies and increasing refined oil products supply in the domestic market to prevent a shortage.
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How can oil industry executives justify billions of dollars in federal tax breaks when they made $123 billion in profits last year? Truth be told, they’re business people and they’ll take advantage of whatever is available to help the bottom line.

The real question, however, is: How can Congress defend such tax abatements, particularly at a time when consumers are paying record gasoline prices? The current practice is indefensible.

But perhaps Massachusetts Congressman Edward Markey put it best when he referred to the situation during a House debate two years ago as, “Oil companies want to play Uncle Sam for Uncle Sucker.”
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Sinopec, one of China’s two largest oil companies, announced yesterday that it received a subsidy of 12.3 billion yuan ($1.7 billion) for its losses in the refinery business.

It is likely that the jaw-dropping subsidy will spark another round of public complaints. This is the third year that this oil giant has got such a handsome subsidy while reporting overall profits of tens of billions of yuan.

Many people doubt the legitimacy to pay such money to a company that is a beneficiary of the State monopoly in the oil industry.

But the authorities insist that the extra expenditure is necessary to sustain the government’s tight control over retail oil prices, which is essential to reining in rising consumer inflation.

However, the problem is that the astronomical subsidy accounts for only a part, if not a small one, of the real costs that the country is paying for the current oil pricing mechanism. The increasingly negative impact it exerts upon our efforts to improve energy efficiency justifies a thorough examination of the real costs of subsidized oil.
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