President Obama said today that it’s time oil companies get by without subsidies from American taxpayers. CNBC’s John Harwood reports. Bart Chilton, CFTC commissioner, and CNBC’s Rick Santelli discuss why gas prices continue to rise. And what can the country do to tap its natural gas resources, with CNBC’s Jim Cramer.
Go about 6 minutes in to get to santelli himself:
Full video and COMPUTER GENERATED transcript below:
we begin this evening with president obama trying to deflect sagging poll numbers by using his rose garden pulpit to rail on big oil. cnbc chief washington correspondent john har wood squloins us with details. good evening. i’m not sure anyone needed reminders that this will be at the center of the campaign. we got one in the rose garden when republicans were using budget votes to bash him on the hill. walked out on the rose garden. tried too publicize to rip into oil company profits and rip into republicans for not joining him in taking away the industry’s tax breaks. it’s not as if these companies can’t stand on their own. last year, the three biggest oil companies took home more than $80 billion in profits. million every hour. and when the price of oil goes up prices at the pump go up, and so do the company’s profits. here is voters sentiment the president was trying to capitalize on. look at this bloomberg poll. when you ask who is to blame for eye ohio pricees. two thirds say oil companies and middle east nations. much more than the president. other on the other hand, republicanes have a come back. look at the numbers from the new york times. does the president have substantial ability to do something about high gas prices? majority say yes. of course that’s the response from republicans from the speaker, from all of the republican leadership. which is it? you take away tax hikes the president want to do. it would end up even higher. as famously say sed with be there you go again. this sounds like more of the same from president obama. right any $4 billion of your tax dollars goes straight to the oil industry. it’s inexcusable. how do they deserve another $4 billion from taxpayers and subcy dies. on top of the money they get from you at the gas station every time you fill up, they want some of your tax dollars as . it’s outrageous. does anybody think that they need help? that they don’t have enough incentive to drill for oil? does that make any sense? no. i just want it make sure. i didn’t think it was a wise use of your tax dollars. my quick rebuttable. first of all, new technology. at current prices we have trillion barreles. that 60 times president’s obama’s number. we are on the verge of north american energy independence with fossil fuel supplyes a we will need for decades to come. and the question is subsidies, oil, natural gas and coal, receiving 64 cents. per megawatt hour. that’s right, 100 times the bsidies. the case is made that while the president is talking about tax subsidies he is really talking about depreciation write-offes. oil companies are eligible for only 6% deduction. most manufacturers get 9%. depreciation is important for business investment. in my book everybody should have a hundred percent write-offs. regarding oil companies paying they’re fair share, their effective tax rate is 41% as of 2010. one of the highest taxed industries in america. according to the tax foundation between 1981 and 2008, oil and gas companies sent more tax dollars to washington and state capitols than they earned in profits for shareholders. that is a fact. now if you ask me all these tax preferences for all industries should be apolished. just cut corporate tax rates. slash them. but bashing oil and gas is unsupported demagoguery rhode island. let’s bring in our guest, bart shelton, commissioner of commodities future trading commission and our pal rick san telly. bart? i say president obama is wrong on his facts. i think the country needs more fossil fuel drilling and pipe lines if we are going to be prosperous. i don’t understand the president’s constant bashing of oil and gas. well, you’re right that we need energy sources larry, as we have talk about a bunch of times. but i do have sympathy for cutting $4 billion when the three largest oil companies are getting $80 billion in profits. the thing that concerns me and we have talked about it before is that there is also speculation going on there and it’s excessive speculation. we need speculation in markets but i think that’s also pushing the price of oil and gas up beyond what normal supply and demand would merit. bart, i want it get rick in on the speculation. but i want to say, yes, oil companies are profitable. yes, natural gas companies are profitable. but they pay a fortune in taxes. i heard you echo the obama line. they pay more in federal and state taxes than they even make in profits for shareholders. those are facts. they have over 40% tax rate. what do you want out of them? this is supposed to be free market capitalism. so you know, they are only going to bring in 76 billion in profit if we do way with the 4 billion? is that really trouble you that they will only get 76 billion in profits instead of 80? no, it troubles me that they are being singled out. that’s what troubles me. rick, you can respond on that point or bart wants speculators. i don’t know if he wants them done away with but he blames speculators. part of it, not all of it — what’s your take on that. speculators, traders, investors, rick? when i see the s&p move up and ben bernanke smile, i don’t see speculators et going yelled at with regard to what they are trading in equities. when i see the gray markets up move up and down and see that 5% actually take delivery rb who the rest is taking the market? i don’t see that singled out. when you look at countries like china before they were involved in markets, there were shortages of scarce resources. the market allocates well. i knothat bart thinks speculation is a problem and has quoted many studies like the goldman study. are you aware of that goldman study bart? yeah. for every million barrels of speculative long it adds 8 to 10 cents per barrel. if you ex traf late that. it paens means we are paying 26 per barrel. it means there are executive speculation now. we have gone from 60% of speculators in the oil market