Subsidize my love
By Kate Sheppard
Our country's deference to the oil industry has become very clear in the past month. Most Americans now realize that neither BP nor the government was adequately prepared for a disaster like the one we've seen unfold in the Gulf of Mexico. They also now see that years of cozy relations (and in some cases, I really do mean "relations") between the oil industry and the federal agency intended to regulate it have allowed oil companies to operate with very little oversight. But there should probably be more scrutiny of the litany of handouts we continue to give to oil and other fossil fuels, in the form of both direct spending and foregone revenues from tax breaks. In addition to destroying the Gulf of Mexico, big oil also enjoys a number of subsidies courtesy of the American taxpayer.
Three Democratic senators this week introduced a bill that would close a number of tax loopholes oil companies currently enjoy, which the senators estimate would raise more than $20 billion in the next 10 years. The bill, from Bob Menendez (D-N.J.), Bill Nelson (D-Fla.) and Jeff Merkley (D-Ore.), includes recouping royalties that oil companies haven't been paying to drill on public lands, barring oil companies from dodging U.S. corporate taxes, and ending some tax breaks granted to oil.
"There is no good reason why some of the most profitable corporations in the world should be able to skip out on paying taxes and contributing to the betterment of our communities," Merkley said Tuesday.It's an idea the administration should both endorse and push Congress to act on. Obama pitched the idea of cutting fossil fuel subsidies at the Group of 20 meeting last fall (agreement on that topic was one of the few highlights at that summit). Cutting subsidies was also one of the more aggressive elements of Obama's 2011 budget, in which he called for the elimination of 12 tax breaks for oil, gas and coal companies. The administration estimates that will raise up to $39 billion in the next 10 years.
Even that would only be a fraction of what we hand over to fossil fuels every year. The government spent $72.5 billion on fossil fuels between 2002 and 2008, an analysis from the Environmental Law Institute found last year. The government directly spent $16.3 billion on petroleum, natural gas, and coal products, and gave the industry another $53.9 billion in the form of tax breaks. In the same period, it spent just $29 billion on renewables (and if you subtract the subsidies for corn ethanol, an alternative fuel of questionable environmental benefit, from that figure, the government spent just $12.2 billion on renewables. Shifting subsidies away from oil and other fossil fuels should be an obvious place to start reforming our energy system.