U.S. Representative Mike Pompeo (R-Kan) has introduced a bill dubbed the “Energy Freedom and Economic Prosperity Act.” The bill eliminates tax credits for new industries attempting to compete with petroleum while maintaining billions in taxpayer subsidies for Big Oil. Furthermore, the bill would immediately eliminate every tax credit for alternatives to petroleum, including cellulosic ethanol, biodiesel and wind. Yet the bill only eliminates two petroleum tax credits (marginal well incentives and enhanced oil recovery credits) that only go into effect when crude oil prices are well below current levels. Ironically, despite the immediate elimination of all things alternative, the oil tax subsidies would not be eliminated until the end of 2014.
“Rep. Pompeo’s bill ought to be named the ‘Petroleum Monopoly and Big Oil Prosperity Act,’” said Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA). It’s hard to take seriously the Congressman’s comment that we can’t afford ‘taxpayer-backed subsidies to companies that don’t need them’ when his bill does not eliminate a single oil subsidy currently in use. Rather the bill leaves intact oil subsidies that date back literally 100 years for the most profitable industry in the history of the world. If the question is, ‘When can Big Oil stand on its own two feet without a taxpayer crutch?’ then Rep. Pompeo’s answer is apparently ‘not yet.’”
If the bill were to be passed as is, the petroleum tax subsidies that currently cost taxpayers billions each year including:
- Percentage depletion allowance
- Intangible drilling costs expensing
- Deduction for tertiary injectants
- Exception from passive loss limitations for oil and gas
- Oil and gas excess percentage over cost depletion
“This bill simply tilts government policy even further in favor of petroleum,” continued Shaw. “Big Oil continues to be protected by the federal petroleum mandate and federal oil pipeline loan guarantees. But that’s not enough. Big Oil also wants to maintain its current smorgasbord of tax subsidies while cutting off alternatives. Isn’t it embarrassing that the corn ethanol industry was mature enough to give up its tax credit after 30 years, but the oil industry is clinging to its Century of Subsidies?”
Shaw has called for a well-rounded review of America’s energy tax policy, and notes that the Pompeo bill is not the starting point. “This bill represents a big government, nanny-state approach to protecting Big Oil,” Shaw concluded.