This post is by ClimateProgress guest blogger Bill Becker, Executive Director of the Presidential Climate Action Project.
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As the new energy bill hit the Senate with a thud last week, we had to ask: Is it really so easy to stall vital public policy with tired old scare tactics? Last Friday, the answer was “yes.”
One of the potholes the bill has encountered is its $13 billion take-back from Big Oil. The bill proposes to repeal tax breaks given to the industry by the Republican-controlled Congress in 2004-2005 and to close some tax loopholes that allow oil companies to game the system when they report income from foreign oil and gas extraction.
Predictably, the oil industry and the White House complained about a tax increase and warned of higher prices at the pump — two time-tested themes to trigger knee-jerk opposition from the public.
Let’s break it down.
First, rolling back a tax break isn’t the same as raising a tax. It’s the equivalent of having the oil industry return a gift it doesn’t need or deserve, rather than picking its pockets.
Second, while oil companies might use the rollback as an excuse to raise gasoline prices, it wouldn’t be the fault of the energy bill. The U.S. Energy Information Administration says that subsidies in this range are “too small to have a significant effect on the overall level of energy prices and consumption in the United States.” In other words, subsidies at this scale don’t lower energy prices, and their repeal won’t raise them.
Third, oil companies have paid bargain-basement prices for taking oil and gas from public lands — lands that belong to us all. According to the Government Accountability Office (PDF), “the U.S. federal government receives one of the lowest government takes in the world” in regard to royalty payments.
Sometimes, the oil industry doesn’t pay at all. Last year, the Justice Department began investigating reports that former industry executives in the Bush administration were lax in their oversight of royalty payments. As if to make sure poor oversight continues, the Bush administration has cut funding for government audits of royalty payments. The industry reportedly escaped $10 billion in royalty payments due to a mistake in the 1990s during the Clinton administration.
Isn’t it time to lock the candy store and put a sign on the door that says “Closed for Remodeling”?
Beyond fairness, the squabble over oil subsidies raises much bigger questions involving national security, global warming, and where we are headed as a nation.
For example: Why, if America is addicted to oil, does the president want to subsidize the drug?
Why, if we have only a few years to make a serious switch to low-carbon energy, are we continuing to subsidize Big Oil? In effect, we taxpayers are paying oil companies to speed up global warming.
And how long will we buy the simplistic argument that more domestic oil production is good for national security? Big Oil claims that when federal subsidies boost domestic production, they reduce oil imports. But oil and gas production in the United States peaked more than 30 years ago. The oil industry is resorting to increasingly exotic and costly methods to obtain petroleum from harder-to-reach places, and is invading environmentally sensitive lands to do it — but that doesn’t seem to be slowing imports. They are at record levels and climbing.
In the final analysis, it makes no difference whether our addiction is fed by American oil or foreign oil. A drug is a drug. We will steal from our grandkids to get it here and we’ll sacrifice our principles and our security to get it overseas. Our domestic dealers take control of public policy while overseas dealers control our foreign policy. In the world market, the Putins, Chavezes and Ahmadinejads gain power. And as international competition grows for the same finite oil supplies, whose production may already have peaked, the price will continue to rise — in dollars and blood.
As the Senate ponders the energy bill and the nation’s future, it might ask where $13 billion is best invested. That amount is chump change for the oil industry. Oil cost only $16 per barrel just eight years ago. Today, it’s flirting with $100-per-barrel levels. Consumers are paying nearly $5 billion more every day for oil than they did five years ago.
But $13 billion would give a significant boost to the renewable energy and energy efficiency technologies we need for economic security and climate stability. The U.S. Department of Energy’s budget for developing and commercializing clean energy technologies is only about $1.2 billion each year.
The debate over national energy policy is not a matter of Republicans versus Democrats. It’s green versus greed. It is a battle between the past and the future, the old fossil-energy economy, and the new clean-energy economy. The old economy causes global warming and conflict. The new offers solutions to both.
The new energy bill has many good provisions, but it is only a first step in the comprehensive public policy reforms we need to make a rapid transformation to a post-carbon economy. For example, the Presidential Climate Action Plan released last week in Colorado calls for an end to virtually all taxpayer subsidies of fossil energy, nuclear energy, and greenhouse-gas emissions. It offers more than 300 specific ideas to jump-start federal leadership on energy security and climate action — and it still only scratches the surface.
The mission before Congress and us voters is put beautifully by photojournalist Gary Braasch in his excellent new book, Earth Under Fire: “No policy should be promulgated, no program initiated, no alliance sealed, no purchase made, no machine designed or built, no land use permitted, no product introduced, now law passed, no politician elected unless the action is a step forward to the reduction and reversal of the effect of greenhouse gases.”
Finally, we need to ask: If not us, who? And if not now, when? As far back as 1965, a presidential science panel warned us of global climate change. The oil embargoes of the 1970s revealed our vulnerability to petroleum addiction. We didn’t solve the problems then. Now, we must.
If oil companies want help from the taxpayers, let them join our national transition to a low-carbon, renewable energy economy. Then, what’s good for Exxon-Mobile might once again be what’s good for America.
This post was created for ClimateProgress.org, a project of the Center for American Progress Action Fund.
