Oil Lobby Chief Jack Gerard Uses Out-Of-Context Finding To Protect Oil Subsidies

American Petroleum Institute President Jack Gerard wants you to know: “We get no subsidies in the oil and gas business.” Of course, the industry receives a total $40 billion in tax breaks over 10 years. Speaking today at a House Energy and Commerce subcommittee hearing on gas prices, Gerard defended the political favoritism citing an out-of-context finding from a Congressional Research Service study.

Gerard claimed gas prices would increase as a result of ending big oil tax breaks. His testimony echoed API’s previous statements that Obama’s call to end oil subsidies is “discriminatory”:

It calls for “all-of-the-above” then threatens the companies that could lead an energy renaissance with $85 billion in discriminatory tax increases.

The likely report Gerard seized on is the same House Speaker John Boehner has used from the Congressional Research Institute finding “On what would likely be a small scale, the proposals also would make oil and natural gas more expensive for U.S. consumers and likely increase foreign dependence.” The key point is the negligible impact, considering the $137 billion the big five oil companies made last year. Yet another CRS report, dated May 2011, debunked the oil industry’s defense of subsidies, finding gas prices won’t go up:

It is widely accepted that a proportional change in taxes on profit affects neither the firm’s incremental costs or revenues, and therefore does not change its its behavior with respect to output. Since output does not change, there is little reason to believe that the price of oil, or gasoline, consumers face will increase.

The oil industry is one of the most heavily subsidized industries, with “tax breaks available at virtually every stage of the exploration and extraction process,” the New York Times writes. The industry is also one of the most politically influential, spending over $146 million on lobbying in 2011 alone. API itself has lobbied with over $25 million since 2008 and spent $30,500 on House candidates last year.


It’s unsurprising Republicans in the same room as Gerard today — taking $5.6 million in career contributions from oil and gas — sat idly by while the oil lobby defended subsidies.