by NW Spotlight
The U.S. oil and gas sector is one of the bright spots of the economy. So, naturally, it came under assault by President Obama during his State of the Union speech last night. We can’t have people making “profits” in this country. Remember, “there’s a time for profits. Now’s not the time.”
Last night, the President said: “It’s not just oil and natural gas production that’s booming; we’re becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can’t be outsourced. Let’s continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don’t need it, so that we can invest more in fuels of the future that do.”
Let’s unpack that because it assumes that the oil and gas sector is being “given” billions of dollars a year while the renewable energy sector is contributing mightily to the workforce and government coffers. According to the non-partisan Congressional Research Service, 78 percent of all federal energy tax provisions allocated between 2007 and 2013 benefit green and renewable energy projects. That’s more than $67 billion for projects that don’t contribute nearly the same benefit as the oil and gas sector.
Since the end of the recession, employment in the oil and gas sector has grown by 40 percent, as opposed to just 1 percent in the rest of the economy. It now supports 10 million U.S. jobs. By contrast, each new renewable energy project job costs taxpayers $11 million each. Despite this heavy subsidization, Energy Information Administration data shows that less than nine percent of the energy consumed in the U.S. comes from renewable sources like solar, wind, geothermal, and biomass.
Companies in the oil and gas sector pay a higher effective tax rate – 37 percent – than any other sector on the Standard & Poor Index, which averages 29 percent. Most renewable energy companies have little, if any, tax liability due to the availability of tax credits pegged to investment or production. The oil and gas sector has invested $56 billion back into the economy since 2012.
Rather than demonize companies that are singularly responsible for the creation of those high-wage, American jobs the President wants, he would be better off promoting their success. Oil and gas companies don’t “cost” the government anything when you look at their tax rate and economic impact. Using that metric, he’d be wise to level his rhetoric at those in the renewable energy sector that trade lucrative tax benefits for meager economic impact.