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Taxing Oil Companies to Fund Biofuel Investment

Gina-Marie Cheeseman
| Friday May 9th, 2008 | 3 Comments

E85.jpgThe oil companies invest paltry sums in renewable energy and biofuels, despite claims to the contrary and record high profits last year. In February the San Francisco Chronicle reported that Chevron made $18.7 billion in profits last year. According to the article 2007 was “the fourth consecutive year that the San Ramon company made record amounts of money.” Shell made $27.6 in profit, British newspaper the Guardian reported in January. ExxonMobil raked in $40.6 billion in profits,
U.S. News and World Report
reported in January.
Last month the Congress held hearings on gas prices. The Select Committee on Energy Independence and Global Warming grilled oil industry executives about high gas prices and investing in renewables and biofuels.


Committee Chairman Rep. Markey (D-MA) told oil executives, “The poorest Americans are now spending an average of 10 percent of their income to pay for gasoline. We need the companies here today to make a similar commitment to American families and pledge to invest at least 10 percent of their profits in renewable energy and biofuels.”
Chevron Vice President Peter Robertson told Markey, “The enormous scale of the energy system means that we must continue to bring traditional energy supplies to the market.”
Markey asked ExxonMobil’s senior vice president, Stephen Simon, “How much have you invested in renewable energy, Mr. Simon, in 2008?”
Simon replied that current renewable fuels do not have “any kind of appreciable impact on the challenge that we are trying to meet.” Simon later acknowledged that ExxonMobil spent “a very modest amount” on renewables.
Markey challenged the oil companies to invest ten percent of their earnings into renewable energy.
Rep. Candice Miller (R-MI) said she hoped oil companies would “do right by these profits” and “advance new, cleaner technologies.” If they did not, she said, “You will also see a backlash from this Congress that could go further than the elimination of tax breaks.”
Taxing oil companies
Triple Pundit writer, Pablo Paster pointed out in January that the U.S. government “subsidizes all petroleum fuel with over $49 billion in military expenses to ensure the flow of Persian Gulf petroleum resources, the equivalent of $1.17 per gallon.”
In February the House passed the “Renewable Energy and Energy Conservation Tax Act of 2008,” or H.R. 5351, which would restore taxes on oil companies in order to invest in renewable energy. The Act extends the “income and excise tax credits for biodiesel” through 2010. The bill is now before the Senate. President Bush vowed to veto the legislation if passed in the Senate.
Senator Christopher Dodd (D-CT) said, “In addition to making us better stewards of the environment, this is also vitally important to protecting our national security by reducing our dependence on foreign fossil fuels. Done responsibly, it can also spur economic growth and create tens of thousands of new good-paying green collar jobs.”
Speaker of the House, Rep. Nancy Pelosi (D-CA) released a statement in support of the Act. “The bill extends and expands tax incentives for renewable electricity, energy and fuel, as well as for hybrid cars, and energy efficient homes, buildings, and appliances,” the statement said. “It does not add to our deficit, but rather repeals $18 billion in tax subsidies for Big Oil companies.”
Rep. Gabrielle Giffords (D-AZ), member of the House Committee on Science and Technology and its Subcommittee on Energy and the Environment, said, “I believe we need to move towards energy independence both for our national security and for the safety of our planet. That is why my sixth vote in the 110th Congress in support of H.R. 6 was to repeal subsides for oil companies and invest those funds in renewable energy.”


▼▼▼      3 Comments     ▼▼▼

Categorized: Policy & Government|

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  • Dave Shires

    Interesting idea, but I don’t think it’s a good idea. Here’s why:
    Gas companies can simply pass the buck to consumers and almost certainly will. People get excited about taxing gas companies because they see them as greedy pigs with too much money and not urge to change. While the latter is definitely true, I really have no problem with them having too much money because it’s people who have given it to them. If you sell something that’s increasingly scarce and demand is still high, the price will go up and you’ll make tons of money.
    The thing that’s going to change this is the price of gas. Keep it high and people start to demand other options (including better neighborhoods that are designed for walking and biking -never mind bio-fuels). Believe it or not, oil companies’ profit margins are not out of line with those of any other type of company.
    Secondly, most bio-fuels are crap which take huge amounts of land, pesticides, and food crops, etc…
    The subsidies that we are ALREADY paying (as pointed out by Pablo) should be eliminated. This will actually put more money into people’s pockets, but will also result in a higher price of gas.
    Therefore – people will be able to better afford the higher prices at the pump, but they will have twice the incentive to stop using the stuff and change will evolve naturally.

  • Paul Vaggen

    I can’t figure out why there is so much hesitation for switching to renewable energy. This is clearly a complicated issue with money, politics, and jobs all involved but people have to understand that our economy will be better off. There may be a hit at early adoption stages but thats what happens with any technological revolution. Oil company’s investing in renewable energy can make great positive effects, one example was a post I did a while ago:
    http://www.ecologicliving.ca/2008/04/make-green-part-of-the-strategy/
    The hesitation just drives me nuts!!!

  • David Killion

    The hesitation for switching to renewable energy is not the result of the comapanies bringing oil to the market. As consumers we need to do a better job of purchasing and supporting alternative energy consuming devices, not gasoline consuming devices. If we keep buying Tahoes and H2s we’re never going to make headway. Can you blame the oil companies for supplying what the consumers are demanding. Can you imagine the impact of penalizing the oil companies? It would just result in less oil in the market and a rise in prices. Think, people, think … we can’t penalize the suppliers. We, as consumers, are the only ones that can make a difference. I imagine that when gas hits $10/gallon then more people might wake up. It’s simple economics, folks.
    Hillary’s comment of, “I want to take the profits from the oil companies and build a strategic energy fund” only shows how much she doesn’t know about economics. Of course, it sounds really good to uneducated voters that she is pandering to though.