Former Exxon CEO ‘not aware’ of the existence of fossil fuel subsidies

But independent analysis suggests that Exxon gets as much as $1 billion in oil and gas subsidies.

Rex Tillerson testifies on Capitol Hill at his confirmation hearing to become the Secretary of State. CREDIT: Patsy Lynch/MediaPunch/IPX
Rex Tillerson testifies on Capitol Hill at his confirmation hearing to become the Secretary of State. CREDIT: Patsy Lynch/MediaPunch/IPX

During former Exxon CEO Rex Tillerson’s confirmation hearing for Secretary of State on Wednesday, Sen. Jeanne Shaheen (D-NH) wanted to know how, if confirmed, the former oil executive would work to fulfill a 2009 G20 pledge to phase out fossil fuel subsidies.

“I’m not aware of anything the fossil fuel industry gets that I would characterize as a subsidy,” Tillerson responded. “Rather it’s simply the application of the tax code broadly, tax code that broadly applies to all industry.”

But environmental groups argue that Tillerson’s statements are misleading at best, noting fossil fuel companies like Exxon receive significant benefits from parts of the tax code that apply only to them — and no other industry.

“Rex Tillerson lied under oath today,” Alex Doukas, a senior campaigner with Oil Change International, told ThinkProgress. “Oil, gas, and coal corporations receive big subsidies in the U.S, and definitions used by the Organization for Economic Co-operation and Development, the World Trade Organization, the International Energy Agency, and the International Monetary Fund would all agree on that point,” he said, adding that “these are hardly radically progressive organizations.”

According to analysis by Oil Change International — a research group focused on understanding the true costs of fossil fuels — Exxon receives anywhere from $700 million to $1 billion in government subsidies each year.

Those subsidies are doled out in a number of ways, which are perhaps best highlighted in a 2015 U.S. self-review, submitted to the G20, of the country’s fossil fuel subsidies. Subsidies can come from things like tax breaks, such as deductions for the “intangible drilling costs” or an oil and gas operation, or deductions for manufacturing fossil fuels domestically. They can also come from provisions that allow fossil fuel companies to set aside the costs of certain geological and geophysical expenditures. Under the current tax code, mining companies may deduct 70 percent of domestic exploration and development costs.

The 2015 U.S. review states that there are currently 16 federal fossil fuel production tax provisions that apply only to producers of fossil fuels, and no other industry.

As Exxon CEO, it’s likely Tillerson knew about these tax deductions available to the oil and gas industry, and knew the extent to which Exxon was taking advantage of them. As a company, Exxon has spent millions on lobbying related to fossil fuel subsidies — in 2012, they were the leading force on lobbying surrounding the Repeal Big Oil Tax Subsidies Act, which would have repealed several tax breaks for five big oil companies, including Exxon. In 2016, they were the only company to register a lobbying presence with regards to the FAIR Energy Policy Act, which would have also ended certain big tax preferences for fossil fuel companies.

Under Tillerson, Exxon’s political spending greatly increased, growing from a little over $700,000 in 2004 to $1.5 million in 2016. And, according to OpenSecrets, each year, around 90 percent of that money went to Republican candidates, the same candidates more likely to vote against ending fossil fuel subsidies (in 2012, for example, only two Republican senators voted for the Repeal Big Oil Tax Subsidies Act).

During Wednesday’s hearing, Tillerson made it clear that he would not support the G20 pledge to revoke fossil fuel subsidies as Secretary of State — a position he shares with President-elect Donald Trump, who has repeatedly called for an increase in fossil fuel production domestically.

“I think as the president-elect has made clear in his views, in his whole objective of his campaign, of putting America first, that he is not going to support anything that would put U.S. industry in any particular sector at a disadvantage to its competitors outside of the U.S., whether it’s automobile manufacturing or steel making or the oil and gas industry,” Tillerson said.

That’s not exactly true, however. Trump has promised to end federal funding for renewable energy development, a decision that would make U.S. industries like solar and wind much less competitive compared to international producers. China, for instance, recently announced that it plans to invest $360 billion in clean energy — a move that would create 13 million jobs by 2020. China already has over 40 percent of all jobs in renewables, globally. The U.S., meanwhile, claims just under 10 percent of the global renewable job share.