The Congressional Budget Office says that the government provided $24 billion of tax credits and direct subsidies to the energy industry in 2011. Here’s how it was divided up:
- $2.5 billion in various tax credits to the fossil fuel industry
- $6 billion to the ethanol industry
- $16 billion to renewable energy and energy efficiency programs
So, the industry that receives about 10 cents of each dollar of incentives the government provides produces 85% of all the energy to keep America going. And, yet it is the industry that Barack Obama demonizes and wants to punish with higher taxes.
It is important to understand that the various government incentives do not all come in the same form. The hydrocarbon industry takes advantage of tax credits designed to incentivize more investment in exploration and production. Most of it is identical to the kind of depreciation and expensing credits available to every other business in America. However, much of the support to ethanol and green technology is direct subsidies and grants; the government literally sends them a check.
Not only does the oil and gas industry supply us with the vast majority of the energy we need, it returns an average of 41% of net income back to the government in taxes and fees amounting to $85 million every day of the year. Meanwhile, the media is full of stories about bankrupt and struggling green energy companies that are net “takers” rather than “payers” to the Treasury.
With growing outrage over soaring gasoline prices, instead of approving the Keystone Pipeline and policies that would increase supplies, Barack Obama has renewed his attack on oil and gas calling for Congress to “eliminate this oil industry giveaway right away.” He reportedly wants to take the additional taxes from oil and gas and further subsidize green energy. Higher taxes would of course increase gas prices even more.
Perhaps even more paradoxical is that the impact of rising gas prices is extremely regressive – higher costs disproportionately impact lower income people who are already struggling the most in the lagging economy. Yet, Obama contends it’s the wealthy that he wants to punish with higher taxes and somehow give lower income folks a break. He can say it all he wants, but his policies produce just the opposite result.