COMMENTARY | Despite tumultuously rising gas prices, Senate Democrats have unveiled a new proposal that would repeal oil industry tax breaks, in a bill that will likely kindle a new partisan war over energy policy.
The bill, sponsored by Sen. Robert Menendez (D-N.J.), would allegedly raise $24 billion over a decade by slashing tax incentives for some of the largest oil and gas companies. Of course, in prototypical Democratic fashion, the purported government savings are not intended to address the federal government’s skyrocketing deficit.
Instead, the bill proposes extending “green” tax breaks for biofuels production, green electricity projects, energy-efficient homes, and other green energy projects — to companies like the now-defunct solar panel-maker Solyndra, which ultimately ripened into a half-billion-dollar, taxpayer-subsidized boondoggle.
“This bill is pretty simple: we end wasteful subsidies to the big five oil companies and we use those proceeds to invest in clean energy, in creating jobs, and reducing the deficit,” Menendez asserted Monday on the Senate floor. “I think the American people are sick and tired of paying ridiculously high gasoline prices at the pump and then paying big oil again with… taxpayer subsidies.”
That’s verbatim. Menendez wants to terminate “wasteful subsidies” to oil companies and use those savings to dump more taxpayer-backed subsidies into green energy firms, assumedly, to companies like Beacon Power, Eastern Energy, SpectraWatt, and Evergreen Solar — which, note, all followed the tried-and-true green path to bankruptcy. Among seven other green energy companies, which are now staggering in fiscal limbo, these firms collectively raked in more than $6.5 billion in government assistance. And ironically, Mr. Menendez calls oil companies “wasteful.”
Furthermore, environmental activists and Democratic lawmakers incessantly rail against “disproportionate” tax breaks that favor the oil industry. Meanwhile, Obama has branded his “ending tax breaks for oil companies” chorus as a staple for his meager efforts to curb the towering federal deficit. The fiscal tenor of this so-called “deficit-reduction” proposal, at least by itself, is hyperbole to the core.
The argument that oil companies receive better treatment than green energy companies was recently debunked by a report issued by the Congressional Budget Office (CBO). The CBO analysis indicated that companies in the renewable energy, energy efficiency, and nuclear energy sectors of the economy are far more profoundly subsidized by tax carveouts than the fossil fuels industry.
“The [analysis] does not, however, take into account the level of those subsidies in proportion to the amount of energy that each sector creates,” Lachlan Markay of the Heritage Foundation noted. “By that measure, renewables’ federal subsidies are even more lopsided.” Wind energy companies, for example, enjoy about a thousand times the subsidies that oil companies do, per kilowatt-hour of energy generated.
In conclusion, regardless of Menendez’s and his Democratic colleagues’ motives — whether they are to “reduce the deficit” or “level the playing field” among the economy’s energy sectors — their contentions are gravely askew. After all, in comparison to the renewable energy industry, oil companies are hardly the favored industry. And their justification that subsidized green energy firms effectively create jobs is so apocryphal that it’s almost laughable.