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    Doing The 'Right' Thing: Oil Subsidies And The Deficit
    By Holly Moeller | November 18th 2011 10:08 AM | 5 comments | Print | E-mail | Track Comments
    About Holly

    I'm a graduate student in Ecology and Evolution at Stanford University, where I study ecosystem metabolics and function. In particular, I'm interested...

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    Turkey Day is coming, and with it, the deadline for Obama’s 12-member “Super Committee,” a group of Congress members tasked with carving $1.2 trillion off our national debt.

    If the bipartisan group can even reach a deal (so far, they’ve missed their own deadline by at least ten days, flatly refused each others’ proposals and been awfully closed-lipped about possible compromises), it seems like everyone’s going to feel the pinch.

    Everyone, that is, who can’t buy his or her way out of it.

    Last week, the American Petroleum Institute — the notorious “Big Oil” lobby representing Chevron, Exxon Mobil, Shell and others — started running ads thanking Republican super committee members for preserving industry-specific tax breaks worth $40 billion over the next ten years.

    Yes, $40 billion is only a few percentage points of the committee’s target. (Though it’s still two-and-a-half times the size of Stanford’s endowment, the biggest sum of money that most of us are likely to claim affiliation with in our lifetimes.)

    But the idea that an industry that earned $24 billion in profits last quarter alone can’t pony up its rightful taxes in a time of financial crisis…Well, it’s no wonder that those of us who’ve checked the facts are rolling our eyes in dismay at the soft spines of the super committee.

    Then again, the oil companies aren’t picking up my campaign tab. Nor are they running ads in my district, calling subsidy cuts “job-destroying energy taxes.” The threat is implicit: Big Oil has money, Big Oil helped you get your Washington D.C. seat and Big Oil can take it away.

    What a world of difference a political system can make. Somewhere across the Pacific Ocean, a certain rising nation is maneuvering its state-owned industries to national advantage. No muss, no fuss, no worries about making profits.

    Last month, the New York Times ran a quote from a Chinese plant manager that summed it up perfectly: “Someone has to lose money. We’re a state-owned corporation, and it’s our social responsibility.”

    Yes, I admit, I laughed. Aloud. I am an American, after all, and I believe in capitalism. I’m also a biologist who trusts in the survival of the fittest. But as a human being with a pair of eyes, I also know that an unregulated market can produce catastrophic damages to human health and to the environment. That’s where government, if it has a deft touch, can employ taxes and regulations to account for things that our economic system doesn’t explicitly value, like clean air and water, preservation of open space and intact ecosystems for future generations, and so on.

    We certainly can’t rely on corporations to do it themselves. Admittedly, a few dozen members of “the 1 percent” showed up at Capitol Hill on Wednesday to represent the “Patriotic Millionaires” — 200-plus wealthy U.S. citizens, including many current and ex-executives — and ask for higher taxes. And some corporate cultures do “give back” or “go green” for more than just the attendant publicity. But if we want the business of the American people to be, well, doing business, we have to find ways to make sure that business is still doing the right thing for us.

    Calvin Coolidge (whose speech started the whole “business…is doing business” business) ended that same speech with a reminder that monetary wealth has never been the true motivation of Americans. Rather, it’s been a means to a rather idealistic end: a free society with peaceful citizens and equal opportunity. I think that’s something every one of today’s politicians could (claim to) get behind.

    So, motivated by an intuitive sense of fair play and armed with the knowledge that money isn’t everything, now is the time to take a knife to energy subsidies. Sure, fuel prices will go up (though probably a small amount compared to the increases we’ve seen in the last few years), but our tax money will go further. And keep in mind, there are tougher things on the American pocket like, say, paying for a couple of wars.

    It’s time to face the new reality: The age of cheap oil is ending, and energy prices are already rising. We can face it now, or we can face it later. Although I’m a procrastinator in most things, this is a task I’d rather handle immediately. Cutting fossil fuel subsidies today helps level the playing field for alternative energy sources, including renewable ones like wind and solar. That means we’ll be helping these industries develop before we need to rely on them entirely. And if we’re feeling particularly forward-looking, we might actually, at long last, implement a carbon tax to explicitly link environmental quality to our economic system.

    Whether your goal is to slow the rate of anthropogenic climate change or to cut back on big government, the first thing to do is to slap the meddlesome, biased hand of oil subsidies. It is, however you look at it, the Right thing to do.

    Comments

    Hank
    Tax breaks are not subsidies.  A subsidy is when you create a minimum price and use someone's money to pay it, a tax break is designed to encourage a company to hire workers in a location; state and local officials use them all the time and there is little complaint, since it is money the government never had.

    If company A has a choice between Texas and California and either state gives them a tax break, they still get more money than they had without the company - the state still gets some tax money and employees get paid, and they pay taxes, etc.

    A subsidy, on the other hand, pays a company directly.  Solyndra got $600K per job it was creating, for example, and taxpayers are on the hook for that.   Exxon is not receiving any money from the government.   Using these terms interchangeably feels like it is political spin - if you dislike oil getting tax breaks, just make that case (a lot of us will agree, and in the audience also) but framing it so that it looks like oil companies and the $30 billion in taxpayer-subsidized companies are the same is not valid.

    There aren't many successful companies left in America and chasing more out is not wise; it may seem like it could never happen (to younger people) but America used to lead in steel and cars too.  
    A better idea would be to prevent companies like Apple and Google from shifting their revenue overseas so they don't have to pay any taxes on it - if all tax breaks are subsidies, those companies are getting more than oil.


    vongehr
    Imagine if neither California nor Texas and so on were to give tax breaks to big-oil and Exxon and Shell were to go away, close all the gas stations and set up shop in Indonesia or some place. Boy can you be glad you have the Super-Committee republicans who know the difference between tax-breaks and subsidies.
    Hank
    If jobs in oil were only gas station attendant making $5 an hour, you might have a point.
    vongehr
    I knew yesterday already that you would reply exactly this. Why do politicos become so predictable once they dig down on one side? Of course you know as well as I do that your answer is just rhetorical and why it is misleading. Nevertheless, you could not stop yourself from trying to win this little battle. This is why people do not trust anything anymore and western "democracy" is going to fall. If discourse is not about the facts but about who's side are you on, who are your allies, then discourse does not matter anymore. Why talk, lets just shoot at each other.
    vongehr
    Nice article, and courageous to mention China in a positive light. However,
    "We’re a state-owned corporation, and it’s our social responsibility." Yes, I admit, I laughed. Aloud. ... I’m also a biologist who trusts in the survival of the fittest
    puzzles me. This is why China becomes the fittest.