Appearing on CNN’s State of the Union, American Petroleum Institute lobbyist Marty Durbin claimed “there are no loopholes” for the massively profitable oil industry. CNN’s Candy Crowley asked the lobbyist, after showing one of API’s ads that claim that removing oil subsidies would kill jobs, how the industry can tell Americans to suffer massive cuts while the top five oil companies have already made $100 billion in profits this year on high gas prices. Durbin said that Crowley just got her facts wrong:
CROWLEY: Six big oil companies piled up $36 billion maybe be profits at the end of this year $100 billion. Can you see how people go we need to help the oil industry?
DURBIN: Part of problem is that the facts aren’t out there. There are no loopholes. These are basic tax deductions that every industry is allowed to use.
In fact, there are tens of billions of dollars of special tax breaks and programs that are special to the fossil fuel industry. Here is a short list of such loopholes, with their ten-year cost on the federal budget:
$12.6 billion in percentage depletion for oil and natural gas wells and hard mineral fossil fuels
$12.9 billion in expensing of intangible drilling costs for oil and gas and expensing of exploration and development costs for coal
$18.7 billion domestic manufacturing deduction for oil, gas, and coal production
$0.4 billion in capital gains treatment for coal royalties
$0.2 billion exemption to the passive loss limitation for working interests in oil and natural gas properties
$0.1 billion deduction for tertiary injectants
$2.5 billion in federal tax subsidies to coal companies
$1.3 billion tax credit for refineries
$9.5 billion in royalty-free oil and gas leases
The big oil lobbyist is partly telling the truth, however. There are massive tax loopholes that are also used by other industries in addition to big oil, although they especially advantage the oil industry:
$52 billion in “last in, first out” accounting for inventories, a tax credit that disproportionately helps the oil and gas industry
$10.5 billion dual capacity tax credit, which also largely benefits oil and gas companies
Federal tax policy and programs subsidize the oil industry in other ways that add up to billions of dollars of taxpayer money a year, from oil defense to oil spill liability caps. The biggest oil loophole may be the free pollution of greenhouse gases that have an estimated cost to society of $100 a ton. The American Petroleum Institute is willing to spend millions running ads on CNN and sponsoring its presidential debates.
Marty Durbin is Sen. Dick Durbin’s (D-IL) nephew. Sen. Durbin has called for the end to oil subsidies worth $4 billion a year.