disputant calderon: Should Big Oil Receive Taxpayer Subsidies?

Sunday, February 17, 2013

Should Big Oil Receive Taxpayer Subsidies?

Amid conversations about budget cuts and safety nets, my curiosity was piqued as to why some of the wealthiest oil companies in the world were being given a helping hand by the American people.? Or more simply put, "Why are these companies being subsidized by the federal government?"

In addition to receiving funding, they are also the beneficiaries of exemptions from enacted environmental standards. This means they are not bearing responsibility for the consequences of health burdens resulting from their actions.

Jessica Ennis, a Legislative Representative at EarthJustice, explained to me, "In order to transition to renewable energies, it is essential to level the playing field." While oil and gas companies are receiving subsidies and are not being held to the same standards of accountability, that won't happen.

The Federal Policy Director of Oceana, Corry Westbrook, ran some numbers by me. She said, "The oil and tax subsidies that go to the top oil producers such as ExxonMobil, Shell, and Chevron are $4 billion plus per year--roughly $43.6 billion over ten years." In a observation of understatement, Westbrook added, "That's a lot of money."

Many of these tax breaks have been in the tax code for one hundred years. As time passed, they became more elaborate and entrenched. The government does provide subsidies for alternative energies, but because they are relatively new--the protocol demands that requests be submitted annually.

Westbrook indicated that beginning in 1980, during Ronald Reagan's administration, alternative energy began receiving federal subsidies. However, since they are not an "integrated" or "embedded" part of the tax code, alternatives must continually request extensions.

ExxonMobil ranked globally as the number-one money-making company in 2012. Their revenue was $486.4 billion. Shell comes in at number two ($470 billion), BP is number four ($386.4 billion), and Chevron squeezes into the top ten at number seven ($253.7 billion).

Do taxpayers realize that their dollars are going into the pockets of these companies?

Discussing the connection between powerful and monied donors and politicians, Westbrook illustrated the premise with the example of Presidential candidate Mitt Romney--who received $5.3 million from the gas and oil industries.

The Executive Director of Oil Change International, Stephen Kretzman, referenced the beginning of the 20^th Century as both the birth of the car and the oil industry. When it was a young business, oil needed help getting off the ground. However, the subsidies that were easy to enact have since become hard to take away. Echoing Westbrook, Kretzman pointed to the symbiotic relationship between elected officials, lobbies, and donors. At the Dirty Energy Money website, citizens can check which companies are pumping funds to elected representatives.

"We know that we have to stop using fossil fuels," Kretzmann told me. "We have to leave two-thirds of all existing fossil fuels in the ground." He continued, "The first thing we have to do is to stop subsidies, stop wasting taxpayers' money, and put it toward alternatives. The latest climate science shows that this is the way to avoid the worst impact of climate change."

The question remains as to why our dollars are going to companies that are reaping billions in profits, contributing to health issues, as well as adding to what Kretzmann qualifies as "climate chaos."

Efforts to address this issue have been undertaken, but with no results. S.2204 - Repeal Big Oil Tax Subsidies Act was introduced on? March 19, 2012, by Sen. Robert Menéndez (D-NJ). Despite nineteen co-sponsors, it didn't get very far. OpenCongress.org has a robust detailing of organizations that supported or opposed the bill, along with a money trail. ExxonMobil is listed there as one of the "specific organizations" opposed to the initiative. The New York Times called out the oil and gas companies for fighting the bill in their editorial "Big Oil's Bogus Campaign."

Approximately two months later, Sen. Bernie Sanders (I-VT) and Rep. Keith Ellison (D-MN) held a press conference to announce their legislation to end "billions of dollars in oil, coal and gas subsidies." My favorite point was:

"Deny deduction for oil-spill costs: BP was able to deduct from its tax liability billions of dollars for certain costs related to remediation from the Gulf oil spill. This provision would ensure that corporations responsible for oil spill clean-up and damages do not get a tax break for paying to clean-up their mess."?

So where do things stand now?

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