Oil Company Subsidies

May 11, 2011

Now the gutless wonders of Congress want to cut “subsidies” to oil companies. The biggest subsidy they are talking about is the oil depletion allowance.  This allowance is not money paid from the treasury like the bank bailouts or the money paid to farmers, this is simply revenue the IRS did not collect because it is a tax credit.  Now let’s think about this.  Farmers get paid by check, (REAL money!) for not planting crops (farming the mail box), every business gets to take depreciation (depletion allowance) on cars, trucks, desks, fax machines, buildings, computers, etc.  The difference is that farm land is still usable, as are desks, buildings, fax machines, etc. But OIL, once pumped to the surface and refined, is gone forever!  For every barrel of oil pumped, the company is a barrel of oil closer to putting itself out of business. Now consider the fact that without a tax credit (depletion allowance) the cost to produce a barrel of oil rises dramatically. Guess who is going to pay for that?  We are of course..again.

This is from www.energytomorrow.org:

In the long run, the negative economic consequences of higher taxes more than offset any short-term tax revenue gains. An additional $5 billion in new, annual taxes — similar to what’s been proposed by the Administration, or some in Congress —could actually decrease cumulative government revenue by $128 billion by 2025 according to an economic analysis by Wood Mackenzie. And even worse, higher taxes could result in the loss of tens of thousands of jobs between now and 2025. Right around the corner, in 2014 alone, we’d lose 170,000 of these jobs.

There is a better way than saddling a troubled economy with new taxes and fees that hurt consumers and workers. The oil and natural gas industry should be allowed to develop the vast energy resources that belong to the American people. If we open areas that are currently off-limits to development, we could create more than 500,000 jobs throughout the economy and generate an additional $150 billion in government revenue by 2025.

Note: Sen. Harry Reid wants to cut the “subsidy” for oil companies but wants to keep the subsidy that pays for the Cowboy Poetry Festival in Nevada. HUH?

Thanks Assholes!