House Democrats send clear message: Cut oil subsidies, invest in clean energy future

House Democratic Leader Nancy Pelosi and members of the Democratic Policy Steering Committee convened a hearing today on securing America’s energy future. CAP’s Junayd Mahmood has the story.

Democrats called the hearing in front of the steering committee in order to hear from witnesses the GOP would never invite to House energy committees. Witnesses testified in favor of cutting oil subsidies and enacting long-term energy policies aimed at fostering renewable energy. This would create millions of American jobs, and significantly reduce national security risks.

Pelosi highlighted the urgency of the moment:

For the sake of our economy and our future, we must change course now”¦.  From the beginning of this Congress, Democrats have said we will measure every proposal by the same test: Does it create jobs? Does it strengthen the middle class? Does it reduce the deficit?

The hearing comes days after House Republicans voted to defund energy innovation programs and subvert decades of environmental protections by passing budget bill HR 1. According to former McCain advisor and Moody’s chief economist Mark Zandi, the Republican funding cuts would cost 700,000 American jobs.

The fifteen assembled Democrats offered a different path forward that would create jobs, expand the middle class, and put America on track to an energy innovation economy.

Tom Carnahan, chairman of Wind Capital Group, testified that the wind energy industry currently employs approximately 85,000 American workers (compared to 16,000 in the coal industry and 63,000 in the oil extraction industry), and competes at the same price point as other new energy sources.

This past year, Wind Capital installed 100 American-made GE wind turbines in DeKalb County, Missouri. The $340 million, 150 megawatt project was the largest single investment in Missouri in 2010. However, Carnahan expressed frustration with the uncertain treatment of short-term renewable energy incentives that last for a mere two years. Not unlike conventional energy plants, renewable energy projects require decades to realize a return and short-term incentives deny investors the certainty they need to make those long-term investments. Carnahan promised that billions of dollars of domestic and international capital are “waiting in the wings” for long-term energy policies. He believes that such policies would unleash investment into the renewable sector and drive costs even lower.

The hearing also focused on the billions of dollars in subsidies granted to profitable oil companies each year. Despite $19 billion in profits in 2009, ExxonMobil escaped the U.S. tax man entirely, finishing the year without paying a single red cent in American corporate income taxes. Unrest in the Middle East is pushing profits for big oil even higher as prices climb up to the $100 per barrel threshold. Subsidies for such a profitable industry make little sense. As Rep. Ed Markey (D-MA) lamented, “subsidizing oil companies to drill for oil is like subsidizing a bird to fly or a fish to swim.” Markey also lambasted the oil industry’s claims about its job creation He highlighted that during the past five years, the top five American oil companies fired 10,200 American workers but walked away with $485 billion in profits.

Rep. Elijah Cummings (D-MD) shared a February 16th Government Accountability Office, or GAO,  report revealing widespread fraud by oil companies drilling on public lands. The non-partisan GAO report found that oil companies drastically understated the amount of oil recovered from federal lands, thereby dramatically reducing royalty payments to the Treasury. Additionally, oil companies have successfully sued to continue drilling public leases without paying royalties. Ms. Ryan Alexander of Taxpayers for Common Sense estimated that total revenues from unpaid royalties and tax loopholes amount to more than $50 billion per year.

Captain Drew Sloan (U.S. Army Ret.), a Truman National Security Project Fellow and executive at efficiency firm OPower, pointed out the clear national security implications of America’s addiction to oil. The United States consumes 22 percent of global oil production. Our demand keeps prices high, and therefore benefits nations like Iran even though we do not buy oil from them. Sloan noted that many drilling advocates “fail[s] to understand that oil is a global commodity, and that even if we exploited every [domestic source], cast off every environmental protection and shred of natural and personal dignity in pursuit of additional oil resources, our collective impact on the price of oil would be negligible at best.” Sloan also argued that our historical addiction to oil has prevented us from conducting the principled foreign policy worthy of our ideals. Because of our oil dependence even positive developments in the Middle East can be economically calamitous if they lead to oil price spikes.

The committee pointed to these compelling reasons to make the case for a rapid  transition to a clean energy future . The case has been made by Presidents as early as Eisenhower, but the witnesses detailed America’s repeated failure to change course in the face of a deeply vested and powerful set of interests. But today, faced with the specter of economic stagnation and reliance on a precarious and volatile region, the stakes are higher than ever. Americans stand to benefit immensely from a clean energy future- through middle-class job creation for American workers, liberation from fiscally obscene oil subsidies, and through a secure future freed from the instability of unsavory regimes. Nancy Pelosi and the Democrats claim that the rationale for change is crystal clear. How much longer America must wait is considerably less certain.

By Junayd Mahmood, CAP Energy Policy Intern.

7 Responses to House Democrats send clear message: Cut oil subsidies, invest in clean energy future

  1. JDD says:

    The only prospect for any of this happening was with a Democratic majority in both Houses. How sad that they weren’t politically adept enough to keep it. The much-maligned “Blue Dogs” were what made that majority possible in the House, and they won’t get it back anytime soon, in all likelihood. The contrast with FDR, who kept the Southern Democrats with him to pass the New Deal, is telling (of course, he made compromises that aren’t acceptable today, but it made what followed possible.) Hard to see where the prospects are for any bi-partisan progress on energy or climate, because the GOP ideology is so unhinged from reality (and one of its tenets is that the global warming “believers” are part of an irrational cult – hence, there’s no basis for rational dialogue.)

  2. catman306 says:

    I knew there must be some reason I’m a Democrat. Ending all the oil subsidies and thievery would do a lot for the budget and renewable energy’s competitiveness. Seems like a no brainer.

    I sincerely hope the Koch brothers run right into

    The Limits of Objectivism. Ms. Rand didn’t think we’d ever notice. Selfishness has limits.

  3. OregonStream says:

    If they actually succeeded in cutting oil subsidies, I wonder if the masters of spin would be poised to blame higher prices on the dems. Unless those subsidies are applied at least partly to consumer tax relief (an oil subsidy redirection credit?) and electric/hybrid incentives, there’s a chance they’ll succeed.

  4. Zetetic says:

    catman306 said:

    Ending all the oil subsidies and thievery would do a lot for the budget and renewable energy’s competitiveness. Seems like a no brainer.

    Yup, which exactly why the Republicans want to keep the subsides going in the name of “preserving jobs” as they cut a jobs program that costs a fraction of the amount. The last thing the Republican party’s fossil fuel masters want is to actually have to compete with renewables when renewables keep getting more cost effective.

    @ OregonStream:
    Good point, I don’t doubt that they would try that. Of course we could just point out the increase in prices before the subsidies were cut and how reducing oil dependence would reduce/eliminate the issue.

  5. Jesse says:

    It always puzzles me the resistance, even amongst liberals, to rising oil prices. What we need desperately is for oil prices to soar, so that the appropriate price signals will encourage people to invest in alternative energies. One way we could make this happen is by removing oil subsidies. I would like to see us go even further, towards the route of Costa Rica, where they tax oil at a very high rate. This would have to be coupled with temporary relief for the lower classes who depend on oil based transportation and heating for their livelihoods. In a market economy, higher oil prices should now be our goal.

  6. OregonStream says:

    Yes, we could do that, Zetetic, but messaging has so far been a weak point. People still go by what they experience personally, and what they hear in the corporate media. Maybe better for them to also see/hear about credits and incentive programs funded by oil subsidy abatement.

  7. Jesse says:

    I can only imagine the uproar that people would have at the prospect of the US government willingly allowing gas prices to rise, even in the presence of credits and incentives funded by the money that now subsidizes oil companies. While there seems to be a growing interest in environmentalism in this country, that doesn’t always seem to extend to people’s wallets. Gas prices represent something that millions of Americans experience every day, and I seriously doubt there are many who smile at rising prices, thinking that this will help us cut our dependence on oil quicker than if gas prices stayed low. Any such cut in gas subsidies would have to be accompanied by a massive education campaign explaining the reasoning behind ending the subsidies, showing the alternative energies that the subsidies would be shifted to, and ensuring gas coupons for all low income families who would struggle to pay higher gas prices. It seems like such a long shot, but we need to start moving in this direction sooner or later. After all, Europeans pay somewhere around double what Americans do for gas, are they really suffering or living in a less advanced state?

    Zetetic, I’d be interested in hearing more about the less costly jobs program that the Republicans cut.