Wednesday, April 27, 2011

Gridlock Continues On End To $4 Billion/Yr. Oil & Gas Tax Subsidies

Apr 26: In a letter to Speaker John Boehner (R-OH), Senator Majority Leader Harry Reid (D-NV), Senator Mitch McConnell (R-KY), and Representative Nancy Pelosi (D-CA), President Obama pressed the legislative leaders to address the issue of tax breaks for the oil and gas industry. The President called for an end to subsidies to "yesterday's energy sources." Immediately, House and Senate Republican leaders responded negatively to the President's letter.
    In his letter the President said, "I am writing to urge you to take immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil. High oil and gasoline prices are weighing on the minds and pocketbooks of every American family. While our economy has begun to recover, with 1.8 million private sector jobs created over the last 13 months, too many Americans are still struggling to find a job or simply just to pay the bills. The recent steep increase in gas prices, driven by increased global demand and compounded by unrest and supply disruptions in the Middle East, has only added to those struggles. If sustained, these high prices have the potential to slow down the pace of our economy's growth at precisely the moment when we need to be accelerating it.  

    "While there is no silver bullet to address rising gas prices in the short term, there are steps we can take to ensure the American people don't fall victim to skyrocketing gas prices over the long term. One of those steps is to eliminate unwarranted tax breaks to the oil and gas industry and invest that revenue into clean energy to reduce our dependence on foreign oil. Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies, even though oil prices are high and the industry is projected to report outsized profits this quarter. In fact, in the past CEO's of the major oil companies made it clear that high oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks. As we work together to reduce our deficits, we simply can't afford these wasteful subsidies, and that is why I proposed to eliminate them in my FY11 and FY12 budgets.  

    "I was heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies for the oil and gas industry. Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done. In addition, we need to get to work immediately on the longer term goal of reducing our dependence on foreign oil, and our vulnerability to price fluctuations this dependence creates. Without a comprehensive energy strategy for the future we will stay stuck in the same old pattern of heated political rhetoric when prices rise and apathy and neglect when they fall again.

    "I recently laid out my approach to a comprehensive strategy in my Blueprint for a Secure Energy Future [See WIMS 3/30/11 & WIMS 3/31/11, which includes safe and responsible production of our domestic oil and gas resources and doubling down on fuel efficiency in the transportation sector while investing in everything from wind and solar to biofuels and natural gas. None of you will agree with every aspect of this strategy. But I am confident that, in many areas, we can work together to help show the American people that we can make progress on an energy policy that creates jobs and makes our country more secure. And I hope we can all agree that, instead of continuing to subsidize yesterday's energy sources, we need to invest in tomorrow's. We need to invest in a 21st century clean energy economy that will keep America competitive. In the long term, that's the answer. That's the key to helping families avoid pain at the pump and reducing our dependence on foreign oil.

    Senator McConnell issued a quick response to the President's letter and said, "The President's latest call to raise taxes on U.S. energy is as predictable as it is counterproductive. If someone in the administration can show me that raising taxes on American energy production will lower gas prices and create jobs, then I will gladly discuss it. But since nobody can, and the President's letter to Congress today doesn't, this is merely an attempt to deflect from the policies of the past two years. Instead of returning again and again to tax hikes that increase consumers' costs, the administration and its Democrat allies in Congress should open their eyes to the vast energy resources we have right here at home and to the hundreds of thousands of jobs that opening them up could create. If the President were truly serious about lowering the price of gas at the pump, he would open these areas to development, stop penalizing American job creation with new fees and tax hikes, and call an end to the anti-energy crusade at the Environmental Protection Agency."

    Speaker Boehner did not have an official release or statement on the letter but a spokesman seemed to indicate that the Speaker was backing away from his previous comments in an ABC News interview. Reportedly, the spokesman said, "The Speaker made clear in the interview that raising taxes was a non-starter, and he's told the president that. He simply wasn't going to take the bait and fall into the trap of defending 'Big Oil' companies. Boehner believes, as he stated in the interview, that expanding American energy production will help lower gas prices and create more American jobs. We'll look at any reasonable policy that lowers gas prices. Unfortunately, what the president has suggested so far would simply raise taxes and increase the price at the pump."

    Democratic Leader Pelosi issued a release and letter to Speaker Boehner calling for him to schedule a vote next week to end what she said was "billions of dollars in taxpayer subsidies to Big Oil. House Democrats have long advocated the elimination of these outdated and costly subsidies." In the letter to Boehner, Pelosi wrote: "…we have had several votes on this subject in the House, and have been disappointed that these proposals have not been supported by the Republican leadership. Your comments yesterday acknowledged that oil companies ought to be paying their fair share. It makes little sense for American consumers -- who are now paying over $4 a gallon for gasoline in most parts of the United States -- to have billions of their taxpayer dollars subsidizing oil companies that are making record profits."

    Senator Reid responded with a statement and said, "I agree with the President that it is long past time to end wasteful subsidies to big oil companies that are raking in record profits. If Senate Republicans are serious about cutting spending, as Democrats are, they'll stop filibustering our efforts to eliminate corporate welfare that even a former Shell Oil CEO said is unnecessary. Rather than giving handouts to big corporations, we should be investing in clean energy development and construction here at home to create jobs, diversify our economy, break our dangerous dependence on oil and make our nation safer. As a bipartisan delegation of senators saw first-hand, China and other countries are aggressively investing in this industry for exactly those reasons. Abundant solar, wind and geothermal resources in Nevada and across the country combined with American know-how give our country the ability to be the world leader in clean energy. We should not lose our edge in this global competition just so Republicans can give even more taxpayer money to companies that don't need it." The Senate Majority Leader also released a transcript of Speaker Boehner's interview with ABC.

    Access the President's letter (click here). Access the statement from Sen. McConnell (click here). Access a report from The Hill on the ABC News interview and Speaker Boehner comments (click here). Access the statement and letter from Rep. Pelosi (click here). Access the statement from Sen. Reid (click here). Access the transcript of the Speaker Boehner interview (click here). [*Energy/OilGas]