What's wrong with this picture: record oil profits, the federal government awash in red ink, and $4 billion in annual taxpayer subsidies to the oil and gas industry? The answer is obvious to everyone but Republicans in Congress.
President Barack Obama wants to end the special subsidies, preferences and tax breaks. He would instead invest those dollars in clean energy technology to reduce the nation's dependence on foreign oil. In his 2011 budget, Obama listed nine tax expenditures that primarily benefit the oil and gas industry that he wants cut in order to save the government about $45 billion over 10 years.
Not surprisingly, he's meeting Republican resistance. Republican House Speaker John Boehner had opened the door a crack by telling ABC News that oil companies ought to pay "their fair share." But that flash of good sense and willingness to put the country before partisanship didn't last long. An aide quickly made it clear that Boehner did not support Obama's call for the sweeping repeal of the industry's special breaks.
Meanwhile, with the spike in oil prices, the industry is raking in billions of dollars in excess profits while Americans suffer with gas prices hovering near $4 a gallon. ConocoPhillips announced that its first-quarter earnings rose 43 percent from the prior year. Exxon Mobil announced nearly $11 billion in first-quarter profits, up 69 percent. And even BP has come roaring back from its massive and costly oil spill in the Gulf of Mexico, with a 17 percent increase in first-quarter profits.
These outsized gains suggest the industry no longer needs to be subsidized by American taxpayers, if it ever did. In a letter to Congress hoping to build on Boehner's initial comments, the president said the high returns in the oil and gas industry "provide more than enough profit motive to invest in domestic exploration and production without special tax breaks."
But Boehner is unlikely to go along. Even as he admitted to ABC that big oil companies "don't need the oil depletion allowance," the controversial tax break that allows companies to deduct substantial revenues generated from wells, Boehner claimed that eliminating it would hurt small, independent oil companies. Of course, the real reason might have more to do with the generosity of the oil and gas industry around election time. According to the Center for Responsive Politics, the industry has given $238.7 million to candidates and parties since the 1990 election cycle, with three-quarters going to Republicans.
The wild shifts in the price of foreign oil are putting the country's nascent economic recovery at risk. To stop America from being prisoner to these swings, the country should invest in clean energy technologies, even in the face of staggering budget deficits. Taking back billions of dollars in subsidies from a rich industry that is reaping a windfall at the expense of average people seems like a no-brainer. But apparently it's too much to grasp for Boehner and his fellow Republicans in Congress.