On Tuesday, Rep. Ed Markey, D-Mass., chairman of the House Select Committee on Energy Independence and Global Warming, held a well-publicized hearing with five of the nation’s top oil executives. The theme: Explain why the nation’s taxpayers should extend $18 billion in tax subsidies to an industry whose top five companies posted profits of $123 billion last year.
The obvious answer: Cut the subsidies and make it effective as soon as possible. Then, extend those subsidies to the alternative fuel industry and increase the nation’s conservation efforts.
That is the very least Congress should do to right the wrongs promoted and passed by a Republican Congress and President Bush since he came to office. The Republican Congress and Bush not only have been in bed with the oil companies since 2000, the excesses border on the obscene. Hence, Exxon-Mobil’s vice-chairman was testifying before the committee why it seemed reasonable that its former executive was given a $350 million salary and retirement package — an amount, as the senator from Missouri noted, that translates to $958,904 per day. When the average American is struggling to afford a tank of gasoline and oil companies are pulling in record profits, just how — the Democratic congressman asked — should he explain to his constituents why they are being taxed to pay for $18 billion in oil industry subsidies?
J. Stephen Simon, senior vice president for Exxon, did his best to explain the excess, but it was abundantly clear that greed has tarnished the oil industry as much as the hydro-carbons the industry produces.
Just what did the hearings accomplish? Well, even though it’s a drop in the bucket for the oil industry, shifting the $18 billion in tax credits to the alternative fuels industry is a significant step that has been blocked by Republicans and President Bush for the past two years. Passage this year is important. Why? Not because it would generate more energy for Americans to use in the immediate or near future (because it won’t), but because it would encourage the alternative fuels industry to set up shop in America and create jobs here instead of abroad. And that’s important to this country’s future.
As it stands, the struggling renewable energy industry in the U.S. faces the elimination of its comparatively small production and investment tax credits at the end of 2008. According to renewable energy lobbyist Scott Sklar of the Stella Group, the industry is seeing jobs moving to Europe and out of the U.S. because of a lack of certainly that the president and Congress will agree on continuing or increasing subsidies for renewal energy investments. Such subsidies are vital to emerging industries because of the amount of research and development that must be done before the industries become profitable.
It doesn’t take a genius to know that if the U.S. doesn’t extend significant long-term subsidies for the renewal energy industry (enough to match other developed countries), it’s a sure bet those jobs will be created elsewhere and Americans will be importing energy from foreign lands for a long time to come. That’s not only foolhardy, but supporting the oil industry with cash subsidies makes no sense. A few of the industry executives testified Tuesday that they don’t need the subsidies; what they want is more access to oil located within the nation’s jurisdiction — onshore or offshore.
But Congress would be making a mistake to include greater access in any legislation that could be drafted this session. Rather, as Chevron executive Peter Robertson noted, what Congress could do is conduct a geological survey of America’s offshore oil reserves and open those reserves to discussion as to which leases would be too environmentally sensitive to drill and which reserves might be allowable. Congress also should review its environmental standards that limit fuel production in terms of changed technology. The executives noted that many reserves were currently off-limits based on production technology that is more than 30 years old.
That’s an excellent idea that might make Americans less dependent on foreign oil as well as update our environmental concerns to standards based on modern science and manufacturing capability.
What was obvious from the testimony is that there is no silver bullet to solve the soaring cost of gasoline or oil. Demand from the rest of the world will continue to pressure fuel prices higher and higher. Supplies will try to keep up, but the irrefutable fact is that at some point in the future, the world’s oil reserves will give out at the current rate of consumption. That single fact — in addition to the growing concerns of global warming — mandate a change in how Americans get their energy and how we curtail our consumption of energy.
If we continue to squander our financial resources on tax giveaways to big oil, we’re fools. Getting oil-loving Republicans in Congress and President Bush to recognize that and go along with needed tax changes and changes in how we consume energy is the Democrats’ immediate challenge. To that end, Tuesday’s testimony — timed with record high gasoline prices — helped focused public attention on the issue and will make it harder for Republicans to defy reason much longer. Put simply, the nation’s energy future is at risk and Republicans can’t afford to put that in jeopardy as well.
Angelo S. Lynn