Yesterday, the Senate voted down an amendment to its tax extenders bill, proposed by Sen. Bernie Sanders (I-VT), that would have cut $35 billion in tax subsidies to Big Oil companies, redirecting $25 billion to reduce the deficit and $10 billion to energy-efficiency grants. The vote was 35-61.
Big Oil, of course, is wedded to these subsidies, and complains vigorously every time someone suggests cutting them (as the Obama administration has done for the last two years). This was on full display during a hearing before the House Energy and Commerce Subcommittee on Energy and Environment yesterday. Subcommittee member Peter Welch (D-VT) asked the oil executives who were on hand to testify whether it was really appropriate for a hugely profitable, established industry to still be receiving subsidies:
The question for Congress, and I’m going to ask you to comment on this, is whether we’re at a point where taxpayers are being well served when taxpayers are continuing to provide subsidies for a business as usual energy policy that’s based on a carbon energy, 19th century approach, versus a clean and renewable fuel policy of the 21st century that we need. And the question, really, is should taxpayers of the United States continue to provide billions of dollars in subsidies to an industry, the oil industry, that’s mature, to an oil industry that’s extremely profitable?
Of course, the oil executive said that the corporate welfare they receive is vital. “I’m not sure how to explain to a refinery worker why his job isn’t any more or less important than an automotive workers job,” said Exxon CEO Rex Tillerson. Chevron’s CEO John Watson agreed, saying that he doesn’t consider the free money a subsidy at all.
Welch only named two of the subsidies — one given for “intangible” drilling costs and another meant to preserve manufacturing jobs — but there are actually nine different subsidies in the tax code that go to oil companies. Ditching all of them would save the U.S. government $45 billion over ten years.
The executives’ claim that taking away the subsidies would result in job loss is pretty laughable, considering how lucrative an enterprise oil is on its own. Sima Gandhi has pointed to estimates from the Office of Economic Policy at the Department of Treasury, which found that removing subsidies for the oil industry would affect domestic production by less than one-half of 1 percent at most.
We would get far more bang-for-the-buck in terms of job creation if we used this money just about anywhere else. But instead, job creating legislation stalls on Capitol Hill, while subsidies to the most profitable of industries continue.