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Big Oil Lobby Claims The Industry ‘Gets No Subsidies, Zero, Nothing’

By Rebecca Leber  

"Big Oil Lobby Claims The Industry ‘Gets No Subsidies, Zero, Nothing’"

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Despite ranking among the most profitable corporations in the world, Big Oil benefits from $4 billion in annual tax breaks. It fights to maintain them through aggressive political donations, lobbying, and heavy ad spending, but also employs another tactic: Pretending these tax breaks don’t exist.

“The oil and gas industry gets no subsidies, zero, nothing,” API President Jack Gerard said on Tuesday. “We get cost-recovery benefits, much like other industries. You can go down the road of allowing economic activity, generating hundreds of billions to the government, or you can take the alternative route by trying to extract new revenue from industry by increasing their cost to do business.”

Tax deductions are indeed subsidies, as API admitted in a document that labeled “subsidies for alternative fuels” as “preferential tax treatment.” And the oil industry’s $4 billion preferential treatment is written permanently into the tax code. These include:

Percentage depletion allowance: lets companies deduct the costs of an oil or gas well, about 15 percent, from its taxes.

Domestic manufacturing tax deduction: Allows oil companies to collect $1.8 billion each year, even though there are vast differences between oil and traditional U.S. manufacturing. It is a benefit that was never intended for them, according to Sen. Bob Corker, a Tennessee Republican, who said Congress included oil producers “almost inadvertently.”

The foreign tax credit: Oil companies overwhelmingly fall into the category of companies that can claim credits for payments to foreign governments.

Expensing intangible drilling costs: For over a century, oil companies have written off wages, fuel, repairs, and hauling costs.

ExxonMobil, Chevron, and ConocoPhillips have paid federal tax rates well below the 35 percent top corporate rate, a far cry from paying “more than our fair share”. ExxonMobil, for instance, paid a 13 percent tax rate in 2011, after drilling deductions and benefits, and 14 percent on average between 2008 and 2010.

The record-high gas prices of 2012 reinforce the decades of data showing domestic drilling has very little impact on gas prices. At the same time, the Big Five companies are on track to collect more than $100 billion profit this year.

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15 Responses to Big Oil Lobby Claims The Industry ‘Gets No Subsidies, Zero, Nothing’

  1. Lonnie Avery says:

    Ho0w quaint ! 14 % Taxes for Big Oil benefits with $4 billion in annual tax breaks. It fights to maintain them through aggressive political donations, lobbying, and heavy ad spending, but also employs another tactic:…….. This is so special. Out and Out Lying to Pretend these tax breaks don’t exist.

  2. Lonnie Avery says:

    “We get cost-recovery benefits, much like other industries. You can go down the road of allowing economic activity, generating hundreds of billions to the government, or you can take the alternative route by trying to extract new revenue from industry by increasing their cost to do business.”

  3. rollin says:

    They are also heavily subsidized by not having to comply with all the pollution and environmental laws as well as not having to pay for the environmental destruction their drilling and products cause. We all have to pay the biggest price down the road, not the oil companies.

  4. Stephanie Palmer says:

    Is anyone surprised to find out that the oil companies lie? Not only do they get subsidies and tax deductions, they also get free security courtesy of the US government. I don’t know why we give them free security, especially since we get no break with the cost of their product which is ALWAYS sold on the world market.

  5. Roscoe McCloskey says:

    It’s quite possible that it is far worse than even this article describes. Check this other article out…

    http://priceofoil.org/fossil-fuel-subsidies/

  6. Gus diZerega says:

    Since the invasion of Iraq was due to oil, the oil industry should pay for that war from its profits. Ditto for maintaining such a large fleet to protect the sea lanes for tankers.

  7. Chris Winter says:

    “Cost-recovery benefits.” Great. And what was going on at Rick’s Cafe Americain was “recreational probabilistic currency exchange.”

  8. Paul Klinkman says:

    There are some nice wind canyons on Vancouver Island. If the United States Army were to invade Canada to seize these wind canyons and then give these canyons away to one or two particular wind power companies, the cost of our government hiring all of those troops would be a hidden subsidy for these wind power companies. Another hidden subsidy would be our wanton expenditure of good will with our neighbor to the north.

  9. Timothy Hughbanks says:

    It is only coincidence that nations in which the United States places its troops and tanks and over which it flies its aircraft and drops its bombs (as measured by the cost in treasure and lives we’re willing to sacrifice) is closely correlated with the geography of oil wells. There is no subsidy there, zero, none.

  10. Rick says:

    “And the oil industry’s $4 billion preferential treatment is written permanently into the tax code.” It’s more like $40 billion.

    If the subsidies were removed, and they should be, it would change the way we do things in the US. People would not like it, but they would adapt. This would be a hugh beginning to slow AGW. Public transportation would take off, it would be good for all.

    Unfortunately, I don’t see this happening.

  11. Consider the Connection to:
    The Economic Pyramid CTC3
    There are 2 sides to the Economic Pyramid, NEGATIVE(-) & POSITIVE(+)
    [ BIG OIL IS ON THE (-) SIDE
    http://www.twitter.com/CTC123GREEN
    http://www.pbckt.com/aY.8V1o

  12. Tom says:

    What of the oil drilled on public land? ALL of the profit from that is rightfully the property of WE THE PEOPLE – yet another huge subsidy – not that it make any sense at all to drill on public lands, but to GIVE that money to oil companies compounds the sin.

  13. Bruce Nagy says:

    We could create a price for carbon and then pretend it didn’t exist.

    -Bruce Nagy