Mr. President…What Oil Subsidy?

by Tina Grazier

The President wants us to think that oil companies have an unfair advantage. He recently slammed oil companies for high gasoline prices implying they didn’t deserve the subsidies they receive: “four billion dollars of your money are going to these companies at a time when they’re making record profits and you’re paying near record prices at the pump. It has to stop.”

His timing is way off. He makes oil companies sound like greedy monsters feeding off the blood of little children. And he makes himself sound ridiculously parental. A shameless campaigner, he’s fudging the truth, and once again attempting to pick winners and losers. This isn’t leadership, it is community organizing.

Mr. President if you have a sound argument for eliminating subsidies then make it but make an argument that applies to industries across the board. You are the President of the entire nation not just the green energy sector. Your job is to look out for the best interests of all Americans not the investment returns for believers in the latest green energy experiments. Americans need solutions that will create stable gasoline prices and jobs and this will not help!

A story in the Washington Times fleshes out the reality about oil company subsidies and the Presidents shameless, oil is our enemy, rant:

What in the world is he talking about? Does he intend to eliminate the “expensing” of intangible drilling costs, which has been part of the tax code since its inception? Allowing an immediate deduction for development costs rather than amortizing them over a longer period has always been understood to be necessary in order to provide the capital and cash flow in an industry where the risks are huge and returns are realized, if at all, over many years or even decades. Eliminating this deduction would hit an industry that employs 9 million workers but which has a rate of return on investment significantly lower than that of other industries.

The other “subsidies” that President Obama proposes to eliminate are tax credits offered to all manufacturers, not just to oil and gas companies. Of course, if the president were truly concerned about wasting taxpayers’ money on wasteful subsidies, he would kill the ethanol subsidies that have driven corn and wheat prices sky high as well as those for wind and solar.

A simplified explanation for what the president is proposing:

1. Companies pay taxes on profits. 2. Profits are determined after subtracting expenses from gross receipts. 3. All companies in America may continue to subtract those expenses. 4. Oil companies are the one exception to the rule.

The following would be the result of the President’s proposal:

Gasoline prices will reach a new permanent average high!

Jobs will be lost in the industry!

Americans will buy less gasoline!

The government will realize less revenue from oil!

Products and services will cost more!

Industry and the economy will be further oppressed.

Jobs will be lost across the board.

The President believes you will think he has taken a tough stance against an evil enemy. The president thinks this will make you want to vote for him in 2012. The President has no grasp of the inter-related aspect of the oil business and the overall economy. Oil companies are not our enemy and the President’s war against them is unseemly and offensive.

But, but…but… what about oil companies paying their fair share?

The Washington Times provides an example of the tax burden for just one oil company:

During the last quarter of 2010, ExxonMobil paid the U.S. government alone more than $9.8 billion, including an income tax expense of $1.6 billion. Over the past five years, ExxonMobil’s U.S. tax expense of almost $59 billion was $18 billion more than the company earned in the United States during the same period. (emphasis mine)

Mr. President…enough already! We’re tired of your central planning and manipulation. Spreading the wealth isn’t making us richer it is making us poorer…or is that your ultimate goal?