Time to End the Big Oil Boondoggle
The nation narrowly escaped a budget collision and government shutdown a few weeks ago, but that was just the opening round in the epic battle to rein in out of control deficits in Washington. While conservation and public health protection bear the brunt of the attack, the oil and gas industry has escaped the guillotine ensuring that pollution and profit at the expense of American households will continue unabated.
Enshrined for too long in our tax code, oil and gas tax loopholes and high profits add “salt to the wounds” for families who are paying almost $4.00 a gallon for gasoline to fuel their cars, up over $1.00 from last year. Even the former CEO of Shell Oil, John Hoffmeister, recently admitted that Big Oil doesn’t need subsidies.
Voters agree; a February ABC News/Wall Street Journal poll found that 74 percent of voters support eliminating tax breaks to oil companies.
While fossil fuels continue to enjoy legacy subsidies, renewable energy struggles to compete in an unbalanced system. In a comprehensive study of government support for energy, fossil fuels enjoyed a 5 to 1 advantage in government backing over renewable energy.
If Congress was serious about solutions to increasing gas prices, it would end wasteful spending on false solutions and instead direct investment to real, clean solutions such as an efficient transportation system, electric vehicles, and next-generation bioenergy.
Will Congress Get it Right?
Prior to the current price-hike and profit reports, both the House and Senate voted-down proposals to end the wasteful spending earlier this year. In February, Senator Carl Levin (D-MI) sponsored an amendment to end tax breaks for Big Oil. The proposal failed 44-54, with 7 Democrats joining all Republicans in opposing the measure. In the House, while debating a stop-gap government funding measure, 249 Members stood with Big Oil and voted against eliminating oil & gas subsidies.
Congress may have another chance to rectify the situation.
Senate Majority Leader Harry Reid has pledged to hold a vote soon after the Congressional recess to cut-off the nearly $4 billion taxpayer boondoggle benefiting Big Oil and Finance Committee Chairman Max Baucus (D-MT) has announced a plan to repeal oil and gas tax breaks while investing in clean energy solutions. According to details released by the Chairman, the “Clean, Affordable Energy Production Plan” would:
- Repeal tax breaks for the largest oil and gas companies – end tax incentives for the five largest oil and gas companies that announced tens of billions of dollars in first quarter profits this week. This includes the elimination of the section 199 manufacturing deduction, reduction in the foreign tax credit for royalty payments to foreign governments and the imposition of an excise tax on certain Gulf leases.
- Promote demand for clean, domestic fuel – encourage increased production of cleaner and more affordable domestically-produced fuel by making it easier for manufacturers to produce and for consumers to purchase.
- Incentivize fuel efficient vehicles – increase demand for the most fuel efficient vehicles by providing incentives for the purchase of these vehicles and encouraging manufacturers to increase production.
- Build a clean energy infrastructure – incentivize the infrastructure needed to support clean energy vehicles, such as alternative energy fueling stations, that will make the clean energy transportation of the future possible.
House Minority Leader Nancy Pelosi, Congressman Early Blumenauer, and other House Democrats have also asked for a vote on ending Big Oil tax breaks. Although indicating he may be in favor of such a move, Speaker Boehner has since recanted and continues his backing of Big Oil profits. Meanwhile, House Budget Chairman Paul Ryan (R-WI) has recently expressed support for ending Big Oil subsidies, a potential opening for such reform in the upcoming budget negotiations.
President Obama is putting the weight of the White House behind this effort, calling on Congress to invest in clean energy “instead of continuing to subsidize yesterday’s energy sources”.
Now is the time to invest in real energy solutions that truly reduce our dependence on foreign oil while creating homegrown American jobs.