"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.