Democrats introduce legislation to end oil's 'wasteful subsidies'

By Holly Jessen | February 11, 2011

As Republicans gear up to make deep cuts to reduce the deficit, Democrats are working to direct attention to billions of dollars in tax breaks to oil and gas companies. On Feb. 10, seven U.S. House of Representatives Democrats introduced the “Ending Big Oil Tax Subsidies Act,” which seeks to cut nearly $40 billion in subsidies to oil companies in the next five years. “The biggest companies no longer need 100-year-old subsidies to sell $100 dollar per barrel oil to make nearly $100 billion a year,” Rep. Ed Markey, D-Mass., said. “We shouldn’t be trying to balance the budget on the backs of our seniors and struggling middle-class families while oil company executives continue to line their pockets with tax breaks.”

Introducing the bill with Markey were Reps. Earl Blumenauer, D-Ore., John Conyers, D-Mich., Jim Moran, D-Va., Lois Capps D-Calif., Peter Welch, D-Vt., and David Price, D-N.C. The bill was introduced less than two weeks after Senate Democrats introduced the “Close Big Oil Tax Loopholes Act.” President Barack Obama has also targeted oil subsidies, saying in his State of the Union address that the U.S. should eliminate subsidies for oil companies and invest in tomorrow’s energy instead.

House Appropriations Committee Chairman Hal Rogers, R-Ky., announced on Feb. 10 that $100 billion in spending would be cut to meet the Republican “Pledge to America.” Further details on specific cuts and funding levels will be available when the legislation is introduced. “Our intent is to make deep but manageable cuts in nearly every area of government, leaving no stone unturned and allowing no agency or program to be held sacred,” he said.

However, Democrats haven’t found their colleagues on the other side of the aisle very receptive to the idea of cutting tax breaks for oil. Rather than going after low-hanging fruit, Markey compared Republicans’ proposed cuts to chopping down the whole tree, ripping up the roots and putting it through a wood chipper. “Fiscal responsibility must be a priority as we rebuild our economy and focus on our No. 1 priority—creating jobs,” he said. “But Draconian cuts that decimate our ability to cure cancer, prevent disease, keep our food safe, end our dangerous reliance on foreign oil and create clean energy jobs are unacceptable.”

Should legislation pass to cut tax breaks to oil companies it would barely make a dent in the bottom line for companies like Exxon, BP and Chevron, Price said. Oil companies raked in $77 billion in profits in 2010. “We need to invest in programs that create jobs for the American people and lay the foundation for our long-term global competitiveness,” he said.  

Most subsidies and tax breaks for oil were established when oil was less than $30 a barrel, Moran said. At that time domestic oil producers needed help to compete with foreign industries. Today, however, oil sells for nearly three times as much. “To move forward on a path to clean energy, we need to stop propping up the dirty energy industries of the past, he said.