The People of America's Oil and Natural Gas Indusry

Federal Subsidies Study is Irresponsible

Mark Green

Mark Green
Posted September 18, 2009

The Environmental Law Institute and the Woodrow Wilson International Center for Scholars released a study today examining federal subsidies (direct subsidies, tax preferences and loan guarantees) to traditional fossil fuels and renewables.

In response, however, I would like to point out that assertions that oil and natural gas companies receive subsidies through programs like the Highway Trust Fund, the Low Income Home Energy Assistance Program and the Strategic Petroleum Reserve are ludicrous. This study is an irresponsible rendition based on a contorted recycling of government data that should never be used to craft national policy - especially a tax increase on the oil and natural gas industry that would raise energy costs and kill jobs.

Do the authors mean to suggest that LIHEAP, which provides heating to some of America's most-vulnerable citizens in the winter, should be scrapped? Do they mean to suggest that the petroleum reserve program that provides insurance against an unexpected supply crisis be ended? And do they mean to suggest they would end funding to highways and bridges at a time when our economy could use such projects to help fuel a recovery?

The real economic story, according to a recent study by PricewaterhouseCoopers, is that the oil and natural gas industry supports 9.2 million jobs and in 2007 contributed 7.5 percent to the gross domestic product. It makes no sense to raise taxes that threaten those jobs and undermine one of our nation's vital economic engines at a time when America needs energy from all sources to fuel a recovery.

A study last year by the Energy Information Administration found that oil and natural gas produce a substantial bargain for taxpayers when so-called "subsidies" are compared with the amount of energy produced. The EIA found that ethanol and biofuels receive $5.72 per British thermal unit of energy produced compared with $2.82 for solar, $1.35 for refined coal and 3 cents for every million BTU of natural gas and petroleum liquids.

Allowing such an irresponsible report to be presented at the distinguished Wilson Center for Scholars is disappointing and unfortunate. The true concern of Americans is that our nation is trying to recover from a serious recession, and needs all energy sources to stimulate growth and create jobs.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.