Americans understand that eliminating tax deductions for expenses incurred in producing and refining oil is the same as imposing new taxes. Those taxes would result in curtailed drilling and production, reduced royalty revenues, worker layoffs, still higher gasoline prices, and increased costs for everything we grow, make and transport with petroleum. Blue collar, poor and minority families would be hurt worst.
Every US business claims deductions for new equipment, facility depreciation, utilities, payroll, research and other expenses. This ensures that businesses, like individuals, recover their costs and get taxed only on their net incomes.
Five oil companies should not be singled out and punished as the sole exception to this rule.
Legitimate expense deductions are very different from subsidies. Subsidies amount to government taking money from individuals and profitable companies, and transferring it to politically favored companies and products that could not survive without perpetual support.
The system is even more insidious when the subsidized entities return substantial portions of their taxpayer largesse as campaign contributions to President Obama and other politicians who arrange the wealth transfers.
Other facts make the practice still more disreputable. “Alternative,” non-hydrocarbon energy is often justified by assertions that we face imminent manmade catastrophic global warming. In reality, as NASA scientists recently emphasized, virtually no empirical evidence supports hypotheses, assertions or computer model projections about melting polar icecaps, average global temperatures, storm frequency and intensity, sea levels and other natural phenomena.
Wind, solar and biofuel energy are also justified by claims that we are running out of oil and gas. In fact, America is blessed with vast proven petroleum reserves, and even greater undeveloped prospects that our government has made off limits. The natural gas and hydraulic fracturing revolution is merely a hint of the energy, jobs and revenues Americans could produce, if certain politicians would end their obstinacy.
Yet another “renewable” argument is that petroleum “keeps us trapped in the past.” In truth, we need to worry about the present, especially our depressing unemployment and unsustainable debt. Oil and gas provide 60% of America’s energy. By contrast, despite untold billions in subsidies, wind and solar combined still provide barely 0.60% – and are unlikely to do much better for decades to come.
Oil companies do make a lot of money, because they produce, refine and sell the enormous quantities of fuel and other petroleum products that are and will long remain the foundation of our economy. But they also pay billions in taxes and royalties – and produce real energy: abundant, reliable and affordable.
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