The banner headline on the Financial Times today is “Oil over $100 as Egypt protests intensify,” marking the first time in two years that the price of an oil barrel has cleared the century mark. This spike in prices coincides with news that the biggest oil companies nearly doubled their profits from a year ago, with Exxon alone making $9.25 billion in the last three months. In the last decade, in fact, the five big oil companies have made nearly $1 trillion:
Obviously, the spike in oil once again shows the folly of continuing to rely on an oil economy that is subject to volatility from events around the world, and is slowly killing the planet anyway. And one of the most bogus policies encouraging the continued dependence on oil is the billions in subsidies that the U.S. hands out to oil companies every year, some of them for activities that are in the oil companies’ interest to perform anyway.
In his State of the Union, President Obama called for cutting oil subsidies and redirecting them toward alternative energy sources. But, of course, this common sense suggestion to remove government support from a mature, hugely profitable industry has run into the usual buzzsaw of congressional opposition and Big Oil lobbying.
“This is a tired old argument we’ve been hearing for two years now,” said Jack Gerard, president of the American Petroleum Institute, the oil industry’s main lobbying arm, in the New York Times today. “If the president were serious about job creation, he would be working with us to develop American oil and gas by American workers for American consumers.” But as CAP’s Daniel Weiss wrote, the industry’s argument about job creation is bogus, as “the evidence indicates that clean energy investments are a more cost-effective job creator“:
A University of Massachusetts study found that investment in clean energy creates anywhere from two to four times more direct and indirect jobs compared to the same investment in oil and gas production. Investing $1 million to retrofit buildings to make them more energy efficient creates three times more jobs than a $1 million investment in oil and gas. An investment in wind energy creates two and a half times more jobs compared to the same investment in oil and gas.
The latest jump in oil is one more reason to ditch these subsidies, saving taxpayers money and lending a little bit of a hand to the effort to combat climate change. But can Congress finally follow through?