Obama Moves To Cut Oil Industry Subsidies
President Obama will propose nixing around $36.5 billion a year in oil and gas company subsidies and tax breaks in his new budget, set to be released later this month.
The administration said the move would "foster the clean energy economy of the future and reduce our reliance on fossil fuels that contribute to climate change, according to a White House official quoted by Reuters.
"We will not continue costly tax cuts for oil companies," president Obama said, Reuters reported. The announcement was part of a proposed budget the 2011 spending year, which starts in October.
This will be the third time Obama has tried to pull federal support for the oil industry, the New York Times reported. But, each time, heavy lobbying from energy producers and bipartisan opposition in Congress have stepped in the way. The argument against for keeping the subsidies? A top oil industry lobbyist told the NYT that cutting the subsidies would damage the economy:
"This is a tired old argument we've been hearing for two years now," said Jack Gerard, president of the American Petroleum Institute, the oil and gas industry's main lobby in Washington. "If the president were serious about job creation, he would be working with us to develop American oil and gas by American workers for American consumers."
Mr. Gerard noted that there was bipartisan opposition to lifting the tax breaks, adding: "The federal government by no stretch of the imagination subsidizes the oil industry. The oil industry subsidizes the federal government at a rate of $95 million a day."
The oil and gas industries are doing just fine, U.S. interior secretary Ken Salazar told Reuters in response. "All you have to do is to look at record profits in the oil and gas world over last several years and, in my view, you're going to continue to see a great interest in oil and gas because it's an essential part of our economy today," Salazar said, according to the news service.
Renewable energy will get a funding boost in the same budget, according to Reuters, including $302 million for solar energy (up 22 percent), $123 million for wind energy (up 53 percent) and $55 million for geothermal energy (up 25 percent).
But researchers told the NYT that these subsidies were more of the same:
"My view is the country is better off on having a neutral playing field for all forms of energy," said Douglas Koplow, founder of Earth Track, a group in Cambridge, Mass., that studies global energy subsidies.
"President Obama defines 'clean fuels' as natural gas, coal with carbon capture, nuclear," Mr. Koplow said. "From my perspective, if you subsidize carbon capture and storage, that's a big subsidy for coal. Nuclear is massively subsidized through a risk transfer from shareholders to ratepayers. It's hard to justify these technologies that can't make it on their own."