The president is now trying to distract from his own policies by blaming the oil companies for high gas prices, and he wants to increase their taxes, by taking away “subsidies.”
a) Does he really think that increasing oil companies’ costs will reduce gas prices? Apparently the question tied Jay Carney up in verbal knots.
b) Do oil companies get much in the way of “subsidies” that other companies don’t? If he’s talking about things like accelerated depreciation and R&D tax credits, this is helpful to any company, not just an oil company. If he is proposing to take it away from them alone, isn’t he simply punishing a vital industry because it’s making him look bad?
Ramesh Ponnoru makes a good point:
The big energy subsidies, on a per-unit-of-energy basis, are for ethanol, solar, and wind power. Get rid of the oil subsidies — and the “oil subsidies” — and nothing much changes. Get rid of the subsidies for those other energy sources, and those industries disappear. Just ask their lobbyists.
And good riddance, too, if they can’t make it without Uncle Sugar.
[Update mid afternoon]
“The president doesn’t know squat about energy production.” Which, unfortunately, doesn’t distinguish it in any way from most other subjects.
Obama is just a powerful reminder of the banality of chaos and how little information can be mined from random frustrated action. He’s like Charles Foster Kane trashing Susan’s room, minus the snowglobe.
The Ryan budget calls for eliminating tax breaks in exchange for a lower overall rate. Looking at the nine tax subsidies that are in question, they appear to be exactly the sort of tax breaks that Ryan wants to cut. It appears to me that Ryan and Obama agree on this one.
Obama is only proposing eliminating them for oil companies. And he’s not proposing a rate decrease.
Either way, these are exactly the kind of tax breaks that both parties seem to be agreeing on getting rid of. Why not get rid of some of them while the companies in questions are profitable and can afford to loose them?
There’s a difference between a bailout, and a subsidy.
Subsidies should only be for things that we, the public, want to occur at a greater-than-market-forces pace. Research, elimination of ‘old, higher-pollution’ plants, whatever.
Unless, of course, the goal is actually to reduce energy consumption. Hey, nevermind.
Sure, Chris, enjoy that higher gas price because you will pay it. But if MY industry loses its tax break, then bye bye solar, wind and ethanol. None of which will turn a profit as an industry without them for about…20 years, if then.
Speaker of the House John Boehner wants them cut as well.
http://www.scpr.org/programs/airtalk/2011/04/27/boehner-oil-subsidies/
Boehner wants to cut oil subsidies
[[[During an ABC News interview on Tuesday House of Representatives Speaker John Boehner said he would consider cutting multi-million dollar tax subsidies to oil companies, saying “it’s certainly something we should be looking at.”]]]
So it looks like this is one issue President Obama and the Tea Party might agree on….
He’s still stuck on the Democratic playbook c. 2007. Back then, you could blame Bush and everyone just nodded, regardless of whether they agreed with your actual assertion or not. Now that BO himself is president, and he has presided over the largest expansion of the money supply in US history, this is just silly. I mean, he couldn’t even come up with something new? Like the War in Libya… oh, wait. The media actually tried that, until they realized it might make Obama look bad, then… we get oil company demagoguery.
Is it just me, or is this guy’s plan B always either to fall back on Bush policy, or to fall back so Senator Barack Obama 2007 policy?
The Obama Doctrine is: Punt, then lie about it until tee time.
Il Dufe must find an Emmanuel Goldstein in every situation. Anything to avoid economics.
I’ll bet he does.
Years ago I watched in stunned amazement from afar as a taxpayer activist group in Alaska backed an effort to fight what many considered fuel price gouging up there by — hold onto your hat — imposing new taxes on the oil companies that owned Alaskan refineries.
I said to one of them in an email almost exactly your question, Rand, and her answer offered no indication whatsoever that she understood it.
Obama doesn’t think that getting rid of subsidies for oil companies will lower prices, he just wants to punish them. There is probably a large number of people that would like to see oil companies punished whether they deserve it or not. Hurting others in order to make themselves feel good.
Carney didn’t seem to realize how his answers were in contradiction. On the one hand he said in these times of high deficits we need to get rid of subsidies and then he went on to say we would take the money and spend it on clean energy. It isn’t cutting spending if you take the money and spend it in a different program.
wodun Says:
“Obama doesn’t think that getting rid of subsidies for oil companies will lower prices, he just wants to punish them. ”
He enjoys that..fodder for the lib masses. But he also likes to see gas prices at the pump rise…and rise…….and rise….
I don’t get broadcast TV (because it’s useless) but had a chance to watch some news crap the other day. Of course, they were all about targeting the evil oil companies as the main culprit. But really, I think it’s a marvel that they can pull this substance from miles below the Earth, ship it all around the world on these massive tankers, refine it down into a safe and convenient substance, truck it for thousands of miles to a gas station right down the street, and all for the price of a few dollars a gallon. All of this brings an amazing level of empowerment to average people. I’d wager we’ve all become jaded all around but specifically those that seek to establish policies that limit access to these commodities that facilitate economic mobility are more interested in promulgating there own socio-economic standing within the community then have some over arching altruistic motive. In other words they are self proclaimed royalty that just don’t just feel their levels of prestige and power are sufficient without enough serfs scrapping beneath them. For them, they’ve really processed no further then the doctrine of the divinity of kings.
Hmmm… So we need someone with energy experience…
Palin 2012
Josh Reiter Says:
“Of course, they were all about targeting the evil oil companies as the main culprit.”
What % of the cost of a gallon of gasoline is profit for the oil company and what % of the cost of a gallon of gasoline is taxes from the government?
From the linked article about Obama not knowing squat (Cole could’ve ended the sentence there and it would’ve been more accurate):
Institute for Energy Research vice president Dan Kish isn’t from Oklahoma, but he know energy issues as well as anybody in the nation’s capital. He’s not impressed with Obama’s call on OPEC to remember that higher energy prices hurt the U.S. economy (a reminder that no doubt elicited a flood of crocodile tears from its recipients).
Here’s Kish:
“The president now says his administration is pushing major oil producers to increase oil output in an effort to lower prices. What he really needs is to have someone tell the government of the world’s third largest oil producer to boost output. In case he is unaware, that oil producer is the United States.
“He could do that at his next cabinet meeting by telling EPA to stop holding up Shell’s drilling in Alaska and by telling Secretary Salazar to stop closing access to our nation’s energy supplies, which the Congressional Research Service says are larger than any country on earth.
“The president is beginning to look like the Ugly American in his attempts to point the finger of blame anywhere but his record, which includes seeking higher taxes on energy and stopping energy production wherever possible. It requires a suspension of disbelief to accept his protests about higher energy prices when that is his policy. His chickens are coming home to roost.”
“Why not get rid of some of them while the companies in questions are profitable and can afford to loose them?”
If you actually have to have *this* explained to you, you aren’t qualified to hold an opinion on the subject.
http://www.eia.doe.gov/energyexplained/index.cfm?page=gasoline_use
According to DOE, US national gasoline consumption in 2009 was 137 billion gallons. That’s gasoline alone, not Jet A, home heating oil, etc., etc., that also comes from crude oil. You can choose your own math on how to figure how $4B/year in tax breaks, subsidies, whatever you want to call them, to US oil companies, if taken away, would be smeared-out into costs passed-on to all the various users of crude oil-derived products, and how to factor-in domestic produced vs imported crude costs. But assume the “evil” oil companies directly pass that $4B on to gasoline consumers only. Looks like less than a nickel a gallon to me. Demagoguery about the current tax breaks/subsidies to all those “evil” oil companies as a big factor in the cost of gasoline? Might be…
Regardless of the impact to the cost of a gallon of gas if those subsidies were taken away, do I think the subsidies are justified? I don’t know enough about the subject to have an informed opinion. But it seems reasonable to take another look at them, like Boehner said. And take a look at the subsidies to all those “green” energy sources, too, as many others have already said.
I doubt Obama knows enough about economics to realize that high prices and high profits are supposed to send a signal to everyone that says “Hey! Do what I’m doing and you’ll make lots of money!” Current oil companies would normally expand and outsiders would get into the oil business, both increasing production until the returns on investment are back on par with other industries. But nobody in the US can respond properly to the signal because Obama, the DOE, and EPA have effectively prohibited increased production by throwing up giant roadblocks, mountains of red tape, and regulatory barriers. They’ve taken what should be a normal nerve signal in a healthy free-market economy and turned it into phantom pain from an amputated limb.
“What % of the cost of a gallon of gasoline is profit for the oil company and what % of the cost of a gallon of gasoline is taxes from the government?
Can’t speak to the taxes because they vary by state outside the federal burden but 10% of revenue is pretty good for an oil company. If I remember correctly, McDonalds does better.
Idiocy. This alone is reason to get rid of Obama and his crew. It’s not the only reason.
Exxon makes ~ 8.7% profit margin. Royal Dutch Petroleum ~ 7%. Barry’s corporate croney buddy Jeff Imhelt at GE gets 11% and his campaign contributors at Google get 36%. But it’s the oil companies that are bad, bad people.
Obama and his minions couldn’t do much more to drive up oil prices if they tried short of having the Navy start sinking tankers and blow up refineries. Maybe I should not have said that. I wouldn’t want to give those idiots any more ideas.
Paging Mister Ragnar Danneskjöld…
Oh, speaking of:
That’s alright. I’m sure the Russian’s will be happy to drill for more arctic oil for us.
My employer just paid 8 BILLION dollars in income taxes for the 1st quarter. Yes, it’s an energy company. Then there’s the income taxes we employees paid on top of that. Oh yeah, thousands of other people are paying taxes on the 95 BILLION we spent during the quarter. Of course you won’t read about that, just about Obama demonizing us.
http://www.exxonmobilperspectives.com/2011/04/27/gas-prices-and-industry-earnings-a-few-things-to-think-about/
“ExxonMobil’s earnings are from operations in more than 100 countries around the world. The part of the business that refines and sells gasoline and diesel in the United States represents less than 3 percent – or 3 cents on the dollar – of our total earnings. For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.”
There is now video of Paul Ryan agreeing with the President about ending oil company subsidies.
Ryan wants to end corporate subsidies in general. The president wants to demagogue against the oil companies, to distract from his own disastrous energy policies.
There’s a good ethical and economic argument on ending all subsidies and crazy tax structures aimed at particular industries. If we properly view a corporation as a legal person, then equal protection under the law should compel us to treat all corporations the same instead of having special laws and tax breaks for this one and that one.
On the economic side, history teaches that governments are horribly bad at picking winners and losers, and many if not most of their interventions into the free market backfire, and having a government involving itself in a market causes distortions and inefficiencies.
George, I appoint you to go teach that to Obama AND Congress. Good luck and God speed!
Why am I not surprised Chris has a video from Think Progress? Why am I not surprised Chris writes Ryan agrees with the Prez when his proposed budget, which the Prez hates, ends most corporate welfare and was issued BEFORE the Prez started his attacks? Are you a big Lee Fang fan, Chris?
I’m really sick of hearing the tired argument that the rich create the jobs in this country. Before you say here goes another liberal, not having a clue, I happen to be a lifelong Republican. The class warfare that has been utilized by both sides of the aisle is ridiculous. Let poor people move somewhere else? If that were a solution, everyone would be headed for New York and California and there would be no poverty in Tennessee. What color is the sky in your world?
Sure, a rich man may create 100, or even a thousand jobs to manufacture his product. That goes without saying. However, how many jobs are created by the average consumer who buys that product? The poor and middle income Americans drive our economy. Take spending money away from either segment and our economy will completely collapse. Without their buying power, who would step up to pay the taxes to support our government?
The fact is that as long as we have a military that can, and does, send pallets of cash, totaling $8.2 billion to Iraq, and then can’t account for where one single dollar of that money went, we have a problem. When we allow gas companies to purchase contracts to pump oil on public land, and then never collect a penney from those companies in return, we have a problem. When our major corporations take advantage of “tax havens” to avoid paying the taxes owed to our treasury, we have a problem. Subsidizing oil companies, farms, or anything else, for that matter, is not a bit different than bailing out GM, or major banks. Our tax dollars do not belong in the market place.
I have wanted, for a long time now, to have a flat tax in this country. Set the percentage where you will, but everyone will have to pay the same with no exemptions. If someone earns $10 billion, good for them, but they will have to pay the same percentage that someone that earns $10,000. That isn’t class envy, that is common sense. Until then, I want to see the IRS go after the tax dodgers…rich or poor.
We are blessed with the lowest tax rate we have had since 1950. Products and services are much more expensive today than they were then. Yet we have some self-proclaimed “Einsteins” that assume we can operate a 2011 government on a 1950 dollar. We are in this mess because of fighting a war on two different fronts without attempting to pay for it. Instead, our greed has taken hold, and we want to pay less and less. Then, when the bills come due, we use the poor as scapegoats and blame them for all of our problems. “Class envy” indeed.
Chattanooga