President Obama wrong to demonize oil and gas companies

oil.serendipityThumb President Obama wrong to demonize oil and gas companies

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.

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Posted by at 09:00 | Posted in Economy, Energy, President Obama | 14 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jack Lord God

    >Every four minutes, another American home or business goes solar; every
    panel pounded into place by a worker whose job can’t be outsourced.

    Hey Obama – Every heard of Solyndra? Yeah, that was when you spent half a billion on panels that got outsourced. The guy pounding nails installing the dopey thing? Yeah, I guess you have no idea who all those guys are hanging around the Home Depot parking lot.

    When installing solar panels rather than making them is the aspiration and you can’t even get that right I would say we have fallen quite a bit from “I propose that by the end of this decades we send a man to the moon and land him home safely”.

    • DavidAppell

      Rupert Huse of Rupert Huse and Son (www.huse.com) of Springfield, Oregon wrote:
      Every heard of Solyndra?

      Until there is a price on carbon pollution, the government will have to pick winners and losers, instead of letting the market do it.

      A revenue-neutral carbon tax,would do that automatically.

      But the loss from Solandra is just a small fraction of what carbon pollution costs Americans — which is now about $400 per person per year.

      Make fossil fuels pay their way, and solar gets a LOT cheaper. But conservatives like Rupert Huse would rather subsidize fossil fuel companies. It’s difficult to understand.

      • .

        ‘Green’ Appell is so…a certain ‘perturbed’ Giant is calling for minions to Pea on this fruit cake, so toning it with a michael moore Smurfy hue of blue coup.

        • .

          Pea, as in the liquid forum of Mrs. Stewart’s Bluing concoction in substance with may other uses…
          https;//mrsstewart.com/many-uses-for-msb/

  • Myke

    This country runs on energy. Though a smaller segment of the overall economy then in the ’70s, everything still moves to and from on some form of energy provided by these companies. That begs the question of ‘Who would be hurt most by changing the matrix of cost/benefit to this industry?’ Those who are least able to afford it. Not stock holders, they’ll still make their profits, but consumers who rely on cheap, efficient energy to produce and move consumables, both food and durable products, to and from. Both in services offered, and as producers, energy is the backbone of our economy. Now, I’m not against some investment into renewables as a national policy. Its good to be clean. But, a rush to dismantle what has been, and still is, the greatest factor in domestic mobility in a country that spans between two great oceans is insane. On the other hand, since a greater and greater percentage of our population isn’t going to work, because of job killing ideas, who needs to drive anywhere?

    • DavidAppell

      Fossil fuel pollution changes the climate for the next 4,000 generations of human beings. Do you think you have the right to do that?

  • Bob Clark

    The $4 billion Obama talks of is a tax deduction for depletion and depreciation, which many other industries also enjoy. What’s more, oil and natural gas companies pay tens of billions of dollars into the U.S Treasury every year in corporate income taxes, because they actually do have net positive economic return whereas most renewable energy companies only exist because their draw on public subsidies.

    But this demagoguery will continue no matter the facts, as it has become built into much of the DNA of Americans.

    • I am Ardbeg

      Not true, Oil Companies get to deduct the cost of doing business the first year of a new well. It’s called “intangible drilling costs”, basically drilling, rig time even labor cost are deductible from 70-100%. Most people agree this is not needed in an industry that turns such a huge profit every year. My issue is this break is only given to the oil industry. I bet there are a lot of businesses big and small that would love to get the same tax break for the first year of a new product line or a new division with in their company. But too bad for them, only big oil gets that special treatment. You need to wake up Bob and start understanding what big money and lobbyists get the big companies. You guys want to make this about Red vs Blue. And that’s just what they want, you fighting over ideology as they go laughing to the bank.

    • DavidAppell

      Generating power with fossil fuels creates more damage than value-added, according to Yale economist William Nordhaus in a 2011 paper:

      Muller, Nicholas Z., Robert Mendelsohn, and William Nordhaus. 2011. “Environmental Accounting for Pollution in the United States Economy.” American Economic Review, 101(5): 1649–75.

      http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.5.1649

      To summarize that paper’s findings: for every $1 in value that comes from coal-generated electricity, it creates $2.20 in damages.

      Total damages: $70 billion per year (in 2012 dollars).

      Petroleum-generated electricity is even worse: $5.13 in damages for $1 in value.

      The National Academy of Sciences estimates that fossil fuel use causes damages of at least $120 B/yr to health and the environment:

      “Hidden Costs of Energy: Unpriced Consequences of Energy Production and Use”

      National Research Council, 2010

      http://books.nap.edu/catalog/12794.html

      Of course, no one on forums like this wants to mention external costs, because including them makes it clear that we are all subsidizing fossil fuels by a huge amount through worse health and higher medical costs.

      • .

        Appell, raise your hoarse tail high enough so the blow back on your con’dsnortz minions hits ‘em smack dab in the middle of their leftist blinked eyes.

  • DavidAppell

    Oil and gas companies are indeed being given huge subsidies — the right to pollute for free. That pollution does damage, and damages costs money — at least $120 billion per year, according to a 2010 study by the National Academy of Sciences.

    That doesn’t show up at the gas pump, but you still pay it.

    • .

      Harp, harp, send this lefty looney away to pluck figs until fig plucker’s return and take his shrilling rig away.

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