For Obama, fairness means no oil subsidies

Source: Manuel Quinones • E&E • Posted: Wednesday, January 25, 2012

As part of his plan for a sustainable economy based on fair play, President Obama is repeating his call for Congress to scrap subsidies on the oil industry.

During his State of the Union address last night, Obama likened tax incentives for big energy companies to millionaires who don’t pay their fair share.

“We have subsidized oil companies for a century. That’s long enough,” the president said to loud applause, mainly from Democrats.

Obama’s talk of ending subsidies was exactly what many environmental advocates wanted to hear — a president taking on big energy companies much like he has talked about reforming Wall Street.

“When you have enormously profitable corporations like Exxon Mobil getting tax breaks at a time when we have a 15 trillion [dollar] national debt, that makes no sense to me,” said Sen. Bernie Sanders (I-Vt.), who participated in a rally hours before the speech where he spoke against subsidies

Sanders said he was preparing to introduce legislation to end tax breaks on oil and coal companies. Previous attempts at doing so have ended in stalemate.

Industry leaders, many Republicans and some Democrats often dispute the notion that big energy companies receive government subsidies. They see the president’s proposal as a nothing more than a crippling tax increase.

“I was not pleased at the president’s comments about ending tax incentives for oil companies,” Rep. Gene Green (D-Texas), who represents the energy-rich Houston area, said in a statement last night. “It’s not fair to penalize one specific industry unjustly, much less one that’s so critical to our nation’s economy.”

In an interview, Green’s home-state colleague Sen. John Cornyn (R) echoed that sentiment: “Rather than pick winners and losers I think it’s important to level the playing field for everyone.”.

Despite growing controversy over clean energy incentives, particularly in the wake of solar company Solyndra’s demise, the president argued for helping some industries while letting others make it on their own.

“It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising,” the president said. “Pass clean energy tax credits and create these jobs.”

But Obama’s rhetoric rankled many Republicans.

“He’s got a false premise that somehow we are subsidizing oil and gas,” Rep. Trent Franks (R-Ariz.) said after the speech. “We should not be subsidizing oil and gas or we should not be subsidizing Solyndra.”

The issue of subsidies is not exactly partisan, with lawmakers looking to protect industries that fuel economic growth back home.

That point was illustrated when Democratic Sens. Mark Begich of Alaska and Mary Landrieu of Louisiana refrained from applauding during the president’s mention of oil subsidies, but Maine Republican Sen. Olympia Snowe did.

“He made clear that we need to continue to regulate and fairly tax the extractive industries,” said Rep. Jim Moran (D-Va.). “There’s a lot Republicans can see in this message that they can agree with.”

The president talked about energy under the theme of fairness. Clearly, however, there is strong disagreement about how the concept translates to policy.

“We should let the market decide which energy supply works best,” Franks said, “and which is the cheapest and the best and easiest to acquire.”


But Sen. Barbara Boxer (D-Calif.), head of the Environment and Public Works Committee said, “What we want to do is encourage younger industries to come up and move forward — wind, solar and the like.”