“Congressman Cory Gardner voted to cut taxes for millionaires and end your Medicare,” the ad reads.

The ad is the last in the DCCC’s “Accountability August” campaign. Radio ads hitting on similar themes have aired in Gardner’s district as well as in the state’s Third District, represented by freshman Republican Scott Tipton. A billboard campaign in Tipton’s district carried the same message as the gaspump campaign in Gardner’s district.

In a release touting the campaign Thursday, the DCCC wrote that “House Republicans, including Representative Cory Gardner, voted to end Medicare three times and to raise seniors’ health care costs in order to protect tax breaks for millionaires and Big Oil.”

Gardner defends voting to reform Medicare and turn it partly into a private voucher system in order to “save” the program from financial insolvency without raising taxes. And he defends voting to extend tax cuts for corporations and wealthy Americans because he believes money saved in taxes “creates jobs.” He has said it’s a bad idea to take money out of the private sector during a recession.

Although that line of thinking has become dogma on the right, increasing numbers of wealthy Americans have taken issue with it as a practical matter.

Billionaire CEO Warren Buffet, for example, was one of many vastly wealthy Americans who recently begged Congress to stop “coddling” him. He said he didn’t need Congress’s special help, that he has more than enough money to pay taxes at the same percentage as do less wealthy Americans and that no amount of taxes would prevent Americans like him from continuing to make investments for profit.

In Gardner’s district last week, representatives of Americans for Prosperity, an activist group backed by the oil billionaire Koch brothers, agreed with counter-protesters at their events that government handouts to major corporations have got to end.

The National Institute for Money in State Politics recently reported that, in 2009 five of the top U.S. corporations– Bank of America, Boeing, Chevron, ExxonMobil and General Electric– won $3.7 billion in tax breaks and paid $0 in federal taxes. They enjoyed a combined profit of $77.16 billion in 2010.

“There are some bad votes out there Gardner will have to defend,” a spokesman for the DCCC told the Colorado Independent. “He voted for policies that would make it hard on the middle class while giving away millions in tax breaks to oil companies.”

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Any Americans who paid taxes last year– employed, semi-employed, unemployed, between gigs, recession-rattled Republicans, Democrats or independents– any American who paid taxes last year paid more than did all of the five corporations in the study, combined.

It will come as little surprise to residents of Colorado that, when it came to spending on ballot measures, the corporations unloaded 90 percent of their cash here and in California.

In 2008, ExxonMobil and Chevron gave a total of $2.4 million to a political committee called “Coloradans For a Stable Economy,” which was organized to defeat Amendment 58. The amendment sought to hike the amount of state severance taxes paid on oil and gas extracted in the state and, with the help of the generous giving of the corporations who would have had to pay the severance taxes, it failed.

In state races, the corporations gave nearly double the amount of cash to Republican candidates and causes than they did to Democratic candidates and causes. Most of all, however, they gave to incumbent candidates. Overwhelmingly, the corporate cash was well placed because, remarkably, in four out of five cases, it backed a winner.

From the report:

+ $17 million went to Republican candidates and party committees; $9.7 million went to Democrats.
+ 85 percent ($15.2 million) of the $17.9 million given to candidates went to incumbents.
+ More than three out of every four dollars given to candidates went to winners.
+ $2.4 million was given to candidates not up for reelection in the election during which the money was given.

Most all of the five corporations spent greater sums in Washington than in the states, seeking to influence federal laws. Chevron was the exception. The company gave $5 million to federal campaigns and $55 million to state candidates and causes.

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Senate Democrats are expected to push for a vote this week on the Close Big Oil Tax Loopholes Act of 2011, a bill to cut tax subsidies for Exxon Mobil, BP, ConocoPhillips, Shell and Chevron.

The money saved by closing these loopholes — estimated at $21 billion over 10 years — would be used to pay down the deficit.

“At a time when families are feeling the pain at the pump and our deficit keeps growing at an alarming rate, we simply can’t afford to keep giving away billions in taxpayer handouts to oil companies that are doing nothing to help lower prices,” said bill sponsor Sen. Robert Menendez (D-N.J.) “The ‘Close Big Oil Tax Loopholes Act’ is based on a simple premise: we need everyone to do their share to lower the deficit, not just working families and the elderly.”

The bill would eliminate five special oil company exemptions.

In a Senate committee hearing last week, the leaders of Exxon Mobil, BP, ConocoPhillips, Shell and Chevron called the proposal anti-completive and discriminatory and warned that it would threaten American jobs and harm innovation.

But with gas prices over $4 per gallon in much of the country, many Americans are most concerned with high fuel costs.

A report prepared for Sen. Harry Reid (D-Nev.) by the Congressional Research Service says that eliminating tax breaks for large oil companies is unlikely to have much affect on gasoline prices, because crude oil is the largest factor in the price of gas, and the price of crude oil is set by world market.

The tax changes are unlikely to affect oil output, the price of oil and, consequently, the price of gas, CRS found in an analysis of five breaks targeted by Democrats.

The Domestic Manufacturing Deduction

Oil companies get a 6 percent deduction in net income for domestic production.

Ending this would be equivalent to an increase on the tax on corporate profit, CRS said.

It is widely accepted that a proportional change in taxes on profit affects neither the firm’s incremental costs or revenues, and therefore does not change its behavior with respect to output. Since output does not change, there is little reason to believe that the price of oil, or gasoline, consumers face will increase.

The price of oil is high enough to provide incentive for continued production in the U.S, CRS said.

With current oil prices at, or near, $100 per barrel in the United States, it is unlikely that firms will slow production, or close wells as the result of the loss of the Section 199 deduction.

Intangible Drilling Costs

For nearly a century, oil and gas companies have been allowed to take immediate deductions for costs associated with exploring for oil. This was designed to enhance investment returns for financing risky exploration activities. But with oil prices high, companies don’t need incentives to explore. CRS:

Repeal of the immediate expensing of intangible drilling costs provision and replacement with a form of cost amortization more consistent with depreciation methods common in other industries likely will have no effect on current U.S. oil production, and hence no effect on current gasoline prices.

Dual Capacity Rules

Since the 1950s oil companies have been allowed to deduct the tax payments they make to other countries.

These tax payments are broadly defined, and, according to the Center for American Progress, companies have been allowed to claim credits for payments in countries that have little or no business tax.

CRS said that since elimination of this break amounts to a tax on profit it should have no effect on output or pricing decisions, and therefore no effect on the price of gasoline.

“The incidence of the tax would appear to be on shareholders.”

Oil companies are allowed to deduct a flat percentage of revenues from a well. This break is called “percentage depletion.” CRS says that it has been eliminated for most companies and should not be a factor in investment and pricing decisions by the five major oil companies.

The companies are also allowed to deduct the cost of tertiary injectants used in drilling. CRS found that the cost of ending this tax break would be very small for industry.

“[T]he five major oil companies, to which repeal would apply, earned over $32 billion in net income in the first quarter of 2011. Repeal of the [tertiary injectant] deduction for the industry is estimated by the Obama administration to yield only $6 million in revenue in 2012.”

The tax revenue generated by ending these five exemptions is expected to be 5 percent of the earnings of the largest oil companies, the report found.

ExxonMobil reported first quarter 2011 profits of $10.7 billion compared to $6.3 billion in 2010, a 69.8-percent increase. The nation’s largest oil and gas company spent $12.45 million on lobbying in 2010 and made $928,959 in political contributions to Republicans and $109,500 to Democrats.

Chevron, which reported Q1 profits of $6.2 billion in 2011 compared to $4.55 billion in 2010, spent more on lobbying in 2010 ($12.89 million) but less on political contributions ($473,000 to Republicans and $122,000 to Democrats).

While citing a growing number of Republicans on the record backing an end to oil and gas subsidies – including House Speaker John Boehner – Checks and Balances points out key Republican committee members continue to block such efforts, including House Natural Resources Committee subcommittee Chairman Doug Lamborn of Colorado.

“These profit reports show big oil is making big bucks from high gas prices at the pump,” Denver-based Checks and Balances Deputy Director Matt Garrington said in a release. “Big oil spent $63 million lobbying Congress and $2 million in campaign contributions last year so politicians would hand out $4 billion every year in taxpayer-funded subsidies.”

Lamborn last month voted against ending royalty relief for offshore drilling companies and has been hammering on Interior Secretary Ken Salazar for policies limiting drilling on federal lands. Salazar fired back that oil and gas companies aren’t coming close to utilizing all the leases they currently hold on public lands around the nation.

The Mountain Pass Mine in California, which closed in 2002, is considered the country's best hope to combat China's trade dominance in rare earth elements. (WikiCommons)

In 1949, two geologists found what they suspected to be a massive uranium deposit in the desert of southeastern California, about an hour’s drive from Las Vegas. A cache of uranium would have been an incredibly lucrative find, but the geologists were disappointed when further testing revealed the area to be full of deposits of rare earth elements.

[Environment1] Rare earth elements, also called rare earth minerals, were thought to be virtually worthless. For the most part, the REEs, obscure elements with names like Promethium and Europium, had no practical use.

But the geologists saw potential in REEs and convinced the Molybdenum Corporation of America to buy the mining rights to the 222 acres of land that would later become known as the Mountain Pass Mine. The decision to mine that land, once considered a gamble, is now paying off in a big, big way.

During the last 60 years, the company, which became known as Molycorp, developed thousands of uses for REEs, jump-starting a worldwide race to mine the minerals and landing the company squarely in the middle of a trade face-off between the United States and China.

Amid new fears about the United States’ dependence on China for its REEs, politicians are calling for the U.S. to develop its own REE resources. Attention has shifted back to Molycorp and its Mountain Pass Mine, considered by many experts to be the country’s best hope to compete with China. But the Mountain Pass Mine closed down in 2002 amid a series of waste water spills that dumped radioactive materials all over Mountain Pass. Now, the company, which is planning to reopen the mine amid big claims about its potential to meet the country’s REE demand, must prove that it can clean up its act.

Through the early 1970s, Mountain Pass was the world’s largest REE supplier. “They were unchallenged in the world as suppliers of this material until the Chinese discovered that they had a large amount of this stuff as a byproduct of iron deposits,” said Bill Bird, president of Medallion Resources, an REE exploration company.

But China soon began to realize its REE potential. In the 1980s and 1990s, China doubled down on a strategic effort to become the world’s REE superpower. In 1992, Deng Xiaoping, head of the country’s Communist Party, famously said, “The Middle East has oil, China has rare earths.”

The effort paid off. China now corners the market on REEs, controlling an estimated 97 percent of the world’s production. And the market is huge — and growing. REEs are used in everyday consumer goods like DVD players, cell phones and televisions; they are found in satellite communication devices and the military’s smart bombs; and they are key components of clean energy technology like wind turbines and electric vehicles.

Trade experts have long raised concerns about China’s control over the world’s REE supply. Those concerns reached a fever pitch last week when The New York Times reported that China was blocking shipments of REEs to the United States. The report came just days after the Obama administration announced it would investigate the country’s green tech trade practices.

By the mid-1990s, the Mountain Pass Mine was feeling the weight of China’s REE exploits. China had developed its own resources and was exporting REEs at prices that the company couldn’t match. “The Chinese started producing rare earth elements, and China being what it is, they were able to produce them very cheaply,” Bird said.

On top of that, the Mountain Pass Mine came under fire from state and federal regulators for a series of mine waste spills. Over the course of ten years, thousands of gallons of waste from the Mountain Pass Mine spilled from holding ponds and waste pipelines, according to reports. The waste included thorium, a radioactive byproduct of REE mining.

Mining at Mountain Pass stopped soon after the spills came to light. Industry sources say Union Oil of California, which bought Molycorp in 1977, couldn’t afford to comply with environmental rules and felt that it couldn’t compete with China. In 2002, the company did not renew a permit to store tailing, the uranium and thorium waste that is a byproduct of REE mining, and the Mountain Pass Mine shut down.

“The economics wasn’t there because China had ramped up its production and was aggressively mining,” said Molycorp spokesman Jim Sims.

One industry veteran said the spill will cost oil giant Chevron — which bought Molycorp from Union Oil of California in 2005 — an estimated $185 million to clean up. The official called the mine’s poor environmental record “legendary.”

Confronted with China’s REE dominance and questions about its environmental record, Molycorp worked during the next several years to reopen the mine and develop a cheaper and more efficient way to remove and isolate REEs. The chemical separation process, which extracts the valuable REEs, is the most expensive and environmentally risky part of REE mining.

With a new and cheaper separation process, Molycorp, which became the sole owner of the mine in 2008, is hoping to break ground on the new REE separation facility in January. The “near-zero emissions” facility will recycle the waste water produced from the process, as well as many of the chemicals necessary to separate out the REEs, Sims said.

“The new facility incorporating these new environmental technologies will produce rare earths at a cost-per-pound that is one half of the Chinese,” Sims said, adding that the company hopes to begin mining again at Mountain Pass in 2012. Sims says the mine will produce 20,000 tons of REE-equivalent each year, more than the current U.S. demand of between 15,000 and 18,000 tons per year.

“We’ll be in a position of virtual independence,” Sims said, though he noted that the company will also sell REEs overseas.

But the industry veteran, who requested anonymity, raised questions about whether Molycorp could meet its timeline for beginning operations. “They’ve been saying it’s six months off since 2007,” the industry veteran says.

Given the recent reports about China, there is more pressure than ever on the United States to develop home-grown REE resources. Experts say U.S. rare earth demand is certain to balloon in the coming years, as plug-in hybrid electric vehicles become cheaper and wind turbines begin to pop up all over the country. One turbine can require as much as a ton of REEs.

“We’re becoming dependent on these things for the economy to keep going,” said Jim Hedrick, an REE consultant. “As people are learning more about the rare earths, more and more chemists and biologists are finding new uses for them.”

Hedrick believes the U.S. is too reliant on rare earths to not develop a domestic REE industry. “If you pull rare earths out of the equation, then you’ll cause a lot of disruption,” he said.

Despite Molycorp’s goals, experts suggest that it will take many years to develop a U.S. REE industry. Yaron Vorona, executive director of the Institute for the Analysis of Global Security’s Technology and Rare Earth Metals Center, cited an April 2010 Government Accountability Office report that says it could take 15 years to develop a U.S. rare earth industry.

Vorona says the U.S. has a lack of scientific knowledge about REEs because most scientists went to China to continue their work on the minerals decades ago. “If the mines that are being planned were all to come online tomorrow that would be fantastic, but there would be nobody to run them,” Vorona said, noting that China has 100,000 rare earth scientists.

He also said that chemical separation of REEs is often very difficult to perfect. “It’s a very long and involved process,” he says. “That’s one of the biggest risks. It can take dozens, hundreds of steps to separate the rare earths.”

The announcement comes a little more than a week after the Obama administration announced that it is overturning the moratorium on deepwater drilling. Though environmentalists still have concerns with the practice, deepwater drilling stands to yield massive quantities of oil. The administration has established new deepwater drilling safety rules that companies must comply with before drilling.

The Jack and St. Malo oil fields are in about 7,000 feet of water, while the Deepwater Horizon oil rig was in about 5,000 feet of water. Chevron is investing $7.5 billion to develop the fields. The project is expected to start producing in 2014. Chevron says it can produce 170,000 barrels of oil and 42.5 million cubic feet of natural gas per day.

The oil fields are potentially very lucrative. Chevron says they have the capacity to produce 500 million barrels of oil.

The report also finds more than 40 instances of Koch Industries donating to groups that have in the past opposed climate legislation.

Some examples from the report:

• “More than $5 million to Americans for Prosperity Foundation (AFP) for its nationwide ‘Hot Air Tour’ campaign to spread misinformation about climate science and opposing clean energy and climate legislation.”
• “$365,000 to Foundation for Research on Economics and the Environment (FREE) which advocates against taking action on climate change because warming is ‘inevitable’ and expensive to address.”
• “$360,000 to Pacific Research Institute for Public Policy (PRIPP) which supported and funded An Inconvenient Truth…or Convenient Fiction, a film attacking the science of global warming and intended as a rebuttal to former Vice-President Al Gore’s documentary. PRIPP also threatened to sue the US Government for listing the polar bear as an endangered species.”

Update: It turns out, this report came out in March. But it’s still worth taking a look at, given all the talk about the Koch brothers.

According to Politico, Murkowski’s top aide sent an e-mail to a number of lobbyists late last week inviting them to participate in a conference call. While it is unclear what they discussed, the clear implication of the Politico article is that the conference call was designed to solicit money for the write-in campaign.

The story says:

Write-in campaigns are notoriously difficult and expensive because they require a massive voter education components — even for Murkowski, who aides say still has about $1 million in the bank. Murkowski will need to collect funds from many sources — including from Washington lobbyists — in order to continue her race.

On the call, Politico reports, were employees at a number of major oil companies, including Chevron, Conoco Phillips and Marathon Oil.

Murkowski is a key player on energy policy in the Senate. The ranking Republican on the Senate Energy and Natural Resources Committee, she worked alongside Chairman Jeff Bingaman (D-N.M.) to craft the committee’s comprehensive energy legislation. At the same time though, Murkowski has been critical of legislation to cap carbon emissions.

According to the statement:

Today’s announcement demonstrates the industry’s commitment to safe operations. The experts and engineers at these companies will build on the lessons of the Deepwater Horizon accident to design, develop and implement a state-of-the-art engineering system that will raise industry safety preparedness and capability.

API also outlined more details on the system. Four oil companies — Exxon Mobil, Chevron, ConocoPhillips and Royal Dutch Shell — have put $1 billion into a new non-profit organization called the Marine Well Containment Company. The non-profit will construct a new “subsea containment assembly,” which will stop the flow of oil in the event of a future blowout, API said.

Interestingly, BP is not among the four companies. The companies are Exxon Mobil, ConocoPhillips, Royal Dutch Shell and Chevron.

Update: This post has been updated to reflect the fact that the companies are creating a spill response system, not an emergency fund.