Oil business seen in strong position as Trump tackles tax reform

Wed Jan 4, 2017 2:04pm EST
 
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(This January 3 story was corrected to remove reference in paragraph 8 to ConocoPhillips, which is not an integrated oil company)

By David Morgan

WASHINGTON (Reuters) - Big Oil could be in a unique position to protect its interests against a Republican proposal to tax imports, given that President-elect Donald Trump's cabinet is studded with oil champions sensitive to the risk of higher gasoline prices.

Trump's emerging leadership includes Exxon Mobil Corp (XOM.N: Quote) Chief Executive Officer Rex Tillerson as secretary of state, former Texas Governor Rick Perry as energy secretary and Oklahoma Attorney General Scott Pruitt as Environmental Protection Agency administrator.

Trump himself has made no secret of his support for the energy sector.

And in Congress, both Republicans and Democrats have close industry ties, including House tax panel chairman Kevin Brady, a Texas Republican whose district takes in the northern Houston suburbs.

House Republicans want to adopt a sweeping tax reform that would sharply reduce tax rates for corporations and end the taxation of U.S. corporate overseas profits.

But a provision known as border adjustability is stirring up controversy. Though intended to boost U.S. manufacturing by exempting export revenues from tax, the provision worries some industries because it would also tax imports.

Because U.S. oil refiners import about half the crude oil they use to make gasoline, diesel and other products, analysts say the change could lead to higher gasoline prices and potentially undermine economic growth.   Continued...

 
ExxonMobil Chairman and CEO Rex Tillerson speaks during the IHS CERAWeek 2015 energy conference in Houston, Texas April 21, 2015.  REUTERS/Daniel Kramer/File Photo