Obama Budget Targets Oil and Gas Industry

From Forbes:

Granted, President Obama’s newly submitted budget is likely dead-on-arrival in Washington, but it’s still well worth taking a look at it to get a sense of what he would do to the energy industry if he were king instead of just president.

The headline proposal is the president’s idea for an EnergySecurity Trust, “funded by royalty revenue from oil and gas leases to support initiatives to shift our cars and trucks off oil, cutting our Nation’s reliance on foreign oil.” The budget states that the Trust would be funded with $2 billion of royalty income over 10 years.

That’s a relatively small portion of the $9 billion in annual oil and gas royalties that the government collects from drillers, but as I’ve opined here recently, what do we need a dedicated trust for when congress can just fund research directly? Why complicate matters by creating a new level of bureaucracy, a new middleman?

Read that whole article here.

Further analysis of the new budget, from the Center for American Progress:

President Barack Obama’s budget proposal for fiscal year 2014 would eliminate $39 billion of special tax breaks for Big Oil companies over the next decade as part of comprehensive business tax reform. These companies earned billions of dollars in recent years due to high oil and gasoline prices and do not need additional support from taxpayers. These tax breaksemerged over the past 100 years to help the then-nascent industry develop, and they relieved the oil and gas industry of $466 billion in tax payments to the federal treasury between 1918 through 2009, according to DBL Investors. Now that the oil and gas industry is fully developed and mature, President Obama’s budget would end this century of largesse.

The five largest oil companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—earned a combined total of $255 billion in 2011 and 2012, largely a result of higher oil prices. Meanwhile, these companies are producing less oil, have $72 billion in cash reserves, and are using one-quarter of their profits to buy back their own stock to enrich their largest shareholders. (see Table 1) Reuters reported last year that Chevron, ConocoPhillips, and ExxonMobil—the three largest American oil companies—paid half or less of the standard corporate tax rate. President Obama’s budget recognizes that oil companies no longer need tax relief. 

Read that whole article here.

And lastly, an opposing view from The Tennessean:

Would we be wrong in hoping that at least one intrepid reporter would simply ask any of the many accusers to name the special handouts the industry actually is receiving? 

Many would rather not know because it is easier to portray the oil and gas industry as Public Enemy No. 1 for providing the lifeblood of an economy that once was the most prosperous in the history of mankind. 

Unlike the “green energy” industry, Big Oil receives no direct cash subsidies, unique tax credits or targeted deductions from the federal government. For decades the petroleum industry has been subject to discriminatory punitive tax treatment.

Read the rest of that article here. 

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