WASHINGTON—House Democrats took aim at oil companies Monday, arguing that billions in subsides for big oil would be put to better use in areas like clean energy technology and education.
“For too long we have given huge subsidies to the big five oil companies, increasing their profits and sending the bill to the American taxpayer,” said House Minority Leader Nancy Pelosi (D-Calif.) at a well-attended House Democratic Steering & Policy Committee hearing Monday.
During the meeting, details emerged of how oil companies, after making record profits last year, are still getting tax breaks crafted in 1918, which were designed to offset production costs for the then-newly emerging industry.
Other subsidies, such as the Deep Water Royalty Relief Act, passed in 1995 when oil prices were just $18/barrel, is still in effect today, while prices are topping $100/barrel.
“Giving tax breaks to oil companies to drill for oil would be like subsidizing a fish to swim or a bird to fly,” said Congressman Edward Markey (D-Mass).
Rep. Markey was co-author, together with Henry Waxman (D-Calif.), of the Clean Energy and Securities Act of 2009, which proposed a cap and trade system on carbon, and after intense debate failed to pass Congress.
A U.S. Government and Accountability Office (GAO) report released this week has singled out the oil and gas resource industries management as the biggest area of concern for this two-year period.
GAO found data on production of oil and gas from federal leases missing, as well as inconsistent data collection on the reporting of the sale of oil and gas.
In 2008, the GAO reported that the United States ranks 104 out of 115 oil and gas producers for revenues collected from these resources.
“We are essentially giving away up to $50 bill to oil companies that are taking home record profits,” said Elijah Cummings (D-Md.).
In early February, an amendment proposed by democrats, led by Markey, to eliminate royalty-free drilling in the Gulf of Mexico, was voted down 251–174.
President Obama, in his 2012 budget has proposed eliminating subsidies for oil and gas companies.
Use Money to Create Jobs in Clean Energy
House Democrats heard from Thomas S. Carnahan, chairman of the Wind Capital Group, a leading industry advocate for wind power energy.
Carnahan testified that wind is now cost competitive with other new power sources such as solar, but the long-term viability of the industry is contingent on subsidies.
Over the past few years, subsidies have been available, but not without a fight, and they have been short term. The current Wind Production Tax Credit will expire next year if it is not renewed.
Carnahan asked Congress for predictable policies that give wind energy a level playing field and that would make it possible for companies to negotiate long-term contracts with utility companies. Energy suppliers want to bring wind onto their grids, he said.
There are 400 manufacturing facilities for wind generation in the United States, billions in private investments are being made, and the industry employs 80,000 people, said Carnahan.
We have accomplished what we have in the face of an “on again, off again, wind energy policy.” With stable government investment you would see money flowing into the clean energy sector, Carnahan testified.
The top three oil companies–Exxon Mobile, BP, Shell, and Chevron—made $485 billion in profits yet they collectively reduced the U.S. workforce by 10,000 employees, said Markey.
According to the American Petroleum Institute (API), the oil and gas industry’s main national trade association, the industry directly employs 2.1 million Americans. Their top policy priorities include gaining greater access to off-limits federal lands, and developing large reserves of natural gas found in underground shale in Pennsylvania, New York, and other states.
API claims that raising taxes on oil and gas industries would lead to 170,000 fewer jobs and even greater losses in government revenue.