'Big Oil' may be off Obama's tax hook

Sen. Barack Obama has made a “windfall profits tax” on major oil companies a plank on his energy policy for some time, with plans to use proceeds as rebates to Americans weighted down by high energy prices or to fund alternative energy research.

oil_execs These guys have bigger things to worry about: BP Chairman/President Robert Malone, former Shell Oil President John Hofmeister, Chevron Vice Chairman Peter Robertson, ConocoPhillips Executive VP John Lowe and Exxon Mobil Senior VP Stephen Simon during a hearing before the Senate Judiciary Committee in May 2008. (Photo by Alex Wong/Getty Images)

But Platts reports the steep drop in oil prices might force the Democratic presidential hopeful to shelve the plan should he actually win next Tuesday’s contest:

“A senior Obama aide said in an interview in the week ended October 24 that the tax would only be implemented when oil prices are above $80/barrel.
With oil currently trading in the mid-$60-$70/b range, the tax would not kick in as Obama has long planned.
Obama has said he would use the windfall profits tax to bankroll the bulk of his energy-rebate plan, which would give families and individuals $1,000 and $500, respectively, to help offset gasoline prices.
Several Obama aides told Platts in the week ended October 24 that Obama would still offer the rebates if he is elected, but that the money would have to come from elsewhere if oil prices remain below $80/b.
One aide, who spoke on the condition of anonymity, said Obama would try to make up the difference through a government stimulus package or changes in the tax code.

Many in the industry have criticized the windfall profits tax plan, saying it would take needed investment money away from the oil companies and not bring in the revenue many imagine. The Carter administration tried it (although it wasn’t technically a tax of profits) but it didn’t seem to do what many expected and was difficult to administer and follow.
This may leave executives with firms like Chevron and Exxon Mobil breathing a sigh of relief, but then again the oil majors have plenty of other things to worry about.