Rolling Back Oil Subsidies

By Justin Gardner | Related entries in Environment, Legislation, Money

The House passed the legislation, and now it’s going to the Senate.

The details

The House rolled back billions of dollars in oil industry subsidies Thursday in what supporters hailed as a new direction in energy policy toward more renewable fuels. Critics said the action would reduce domestic oil production and increase reliance on imports. [...]

The legislation would impose a “conservation fee” on oil and gas taken from deep waters of the Gulf of Mexico; scrap nearly $6 billion worth of oil industry tax breaks enacted by Congress in recent years; and seek to recoup royalties lost to the government because of an Interior Department error in leases issued in the late 1990s.

Democrats said the legislation could produce as much as $15 billion in revenue. Most of that money would pay to promote renewable fuels such as solar and wind power, alternative fuels including ethanol and biodiesel and incentives for conservation.

The Republicans are calling this a tax increase and…communist.

“We do not need a tax on domestic energy production and development,” said Rep. Dennis Hastert, R-Ill., the former House speaker. “Increasing taxes on our nation’s energy industry means one thing more reliance on foreign oil and gasoline.”

Added Rep. Don Young, R-Alaska: “If you want to do things right, let’s tax foreign oil.”

Young, who had on a bright red shirt, made reference to it when he said, “It’s the color of this bill we’re debating Communist red.” The legislation “amounts to a taking of private property” by forcing oil companies to renegotiate leases they view as valid contracts, he said.

And what does the White House think?

The White House said it strongly opposes the new production fees and future lease bans. Those steps could reduce domestic production, according to the administration. It views the repeal of the tax break for oil companies as unfairly singling out an industry.

Here’s my question, if we’re unfairly singling out an industry, where else is the money going to come from besides getting rid of subsidies for the very companies who are posting historic profits?

I leave the question to you…


This entry was posted on Friday, January 19th, 2007 and is filed under Environment, Legislation, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

9 Responses to “Rolling Back Oil Subsidies”

  1. Sean Aqui Says:

    I like how targeting tax breaks to oil companies isn’t “unfairly singling out an industry”, but taking away those tax breaks is.

    I don’t believe in punishing oil companies, but I don’t believe in giving them special treatment, either.

    Forcing the renegotiation of leases is a stronger point; a contract should be a contract, in general. It depends on the type of error and the circumstances involved. If fixing the error merely restores the terms the oil companies thought they were agreeing to, then do it. And certainly do something about the time frame of the leases, if they are long-term. We won’t demand a refund of money lost up until now, but we’ll demand our proper share from here forward.

  2. Lewis Says:

    This bill is clearly eye candy for dem supporters. It gives the appearance that the new dem leadership is doing great things for all us ordinary Americans who have been so oppressed by evil repubs. The whole 100 hours thingie has been eye candy. Nothing sustantial has been accomplished. We’re doomed if we can’t find better leadership.

  3. Liberal Journal Says:

    The alternative to ‘Communist Red’ is ‘Exxon in the Black’

  4. BenG Says:

    Lewis; Eye candy compared to what, buffalo chips we’ve been fed the past 6 years from this administration?
    This is unbelievable to me. Tax subsidies were given during lean times when oil was selling for $10 a barrel. How can you argue continuing them when the oil co’s reap huge profits? The use of public lands to obtain these fortunes does, and should, require fees like it would for any private venture. To argue that this is ‘communist’ flies in the face of reason. This is not over-taxing, it’s fees. Communist Governmnts own the businesses so there’d be no fees.
    I’m a carpenter. Can I go into public forests and harvest trees for my lumber supply? That would lower my costs significantly, but of course I’d have to pay a fee because it’s a resourse owned by the public.
    This is high school economics. I’m not an expert here, can somebody tell me why your argument isn’t anything more than ridiculous partisan nonsense? It’s starting to sound desperate.

  5. Lewis Says:

    Ben, I say it’s all eye candy because it’s playing to the perceptions (accurate or inaccurate) of the dem base. None of the bills passed have much impact. Minimum wage – a very small percentage of workers. A conservation tax on deep drilled oil/gas – where will that wind up….wasted? Promoting solar and wind energy and ethanol – yeah, that will really help, just like it did in the seventies. Sounds more like pork for a lucky few.

    But these kinds of things, which do little to nothing of practical value, do give the dems the chance to beat their chests and impress their base. It’s eye candy – just empty calories.

  6. wj Says:

    So, if the removal of the tax breaks for oil companies is “eye candy,” meaning that it won’t have much impact, why object to it? Lewis, I’m seeing a little consistency problem here.

  7. BenG Says:

    Yea, final coment here Lewis; I get the point about ‘not having much impact’ as they’ve been called ‘low hanging fruit’, to be picked easily. But these are steps in the right direction, like the ethics legislation. Everybody n their brother knows this MUST get done to bring back integrity in the congress. What do the Repubs do? Show a bi-partisan effort to reverse the past? No, let’s attach a line item veto. Dems want an easy, no-brainer? Sure, but let’s get something out of it. Great politics, but it ain’t workin any more. We’re sick of it !
    But about the original post; Rolling back oil subsidies is not a ‘conservation tax’. Why are you calling it that? It’s correcting a wrong, as I understand it. As for the conservation tax, this is public land that the oil co’s are reaping RECORD profits from. The public need is to find another source for energy, again a no brainer. Instead of the failed, wasted efforts this W.H. has involved us in, let’s give this a try. To dress up in red shirtrs and call this a communist plot is just trashy, unproductive, offensive behavior – about the only thing the Repubs in office have been any good at.

  8. sleipner Says:

    Actually, Lewis, monetary and legislative support of green energy sources will do far more today than in the 70′s because the technology to make those sources competitive with oil is already here, despite decades of resistance and suppression from oil and car companies.

    Hopefully the Dems avoid the lure of the billions of lobbying dollars spent to avoid progress in this area and start to do what is absolutely required to keep 2/3 of the world’s population centers from being underwater by 2100.

    That’s why I’m hoping that Nobel Peace Prize candidate Al Gore runs and wins in 2008 – he’s the only candidate that has shown he understands the enormity and immediacy of the issue, and knows what must be done to stave off impending disaster.

  9. Byron Wine Says:

    Concerning existing technology:
    200 years ago an engine running on the components of water was demonstrated.
    77 years ago the President of General Motors predicted 80-mpg by 1939
    70 years ago Ford Motor Co. tested a 170-mpg Pogue carburetor
    33 years ago Shell Oil Co demonstrated a 376-mpg automobile
    29 years ago a 100-mpg Ford V-8 was demonstrated
    23 years ago Peugeot advertised a 72-mpg @ 56-mph Diesel
    4 years ago an English newspaper article announced a 104-mpg Toyota Diesel and 94-mpg VW/Audi Diesels
    Commercial fuel cell vehicles have been available in Europe for years
    Many U.S. Patents exist for devices that separate the elements of water for use as fuel, one patent #603,058 was granted in 1898
    The governor of Alaska, in 2005, said there is enough oil on the North Slope to last the USA 200 years
    A chairman of ExxonMobil, on 9/11/2006, said Peak Oil theories wrong.

    Documentation for the above is on my webpage http://www.byronwine.com

    Also on my web page, in #12, are videos of different vehicles using the components of water for fuel. These are not fuel cell powered vehicles with electric motors or are they fueled from a source external to the vehicle. The engines in these vehicles are conventional internal combustion engines running on the components of water. A device connected to a tank of water supplies fuel to the engine. One inventor has been running engines on water for over 30-years.

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