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Obama Calls for End of Oil Subsidies in 2011 Budget

Shannon Arvizu | Thursday February 4th, 2010 | 6 Comments

Sun Sets for Oil Subsidies?

In Obama’s 2011 FY budget proposal sent to Congress this week, the administration calls for eliminating more than $2.7 billion in tax subsidies for oil, coal and gas industries. As a result, more than $38.8 billion dollars in tax revenue could be generated for the federal government over the course of the next ten years.

The budget proposal also cuts funding provided through the Department of Energy for expensive petroleum exploration, including the Ultra-Deepwater exploration program (saving $50 million) and expansion of the Strategic Petroleum Reserve (saving $71 million).

With this proposal, Obama is sending a loud and clear message that the nation is moving towards a clean energy future. Overall, the budget provides over $28 billion for the DOE in 2011, a 7% increase over this year’s budget estimates. Much of this increase is for the support of renewable energy generation and advanced vehicle technologies.

For advanced vehicle technology funding, this recent increase culminates in a three-year trend. In 2009, $267 million was appropriated through the DOE for clean car research and technology deployment. In 2010, that number increased to $312 million. In the proposed 2011 budget, $325 million is earmarked for these activities.

Of course, $325 million for clean cars appears like a drop in the bucket compared to the billions in federal subsidies for the petroleum industry. Time will tell if these inclusions remain in the budget. In 2008, Congressional House Speaker Nancy Pelosi led a bill with similar provisions that passed in the U.S. House of Representatives, but failed in the U.S. Senate.

Given the economic climate of the country, giving away money to corporations that rank amongst the most profitable in the world is a testament to the continued power of the old energy paradigm. I hope that this time our elected officials have enough conviction to make the right choice.

Shannon Arvizu is a clean -tech strategist and educator. You can find more at: www.MissElectric.com.


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  1. February 04, 2010 at 2:25 am PDT | SGreen writes:

    This is great news! Saves the economy money and improves the business case for renewables.

    Reply Or REGISTER HERE if you are new.

  2. February 04, 2010 at 19:13 pm PDT | David Smith writes:

    You've been had. The “subsidies” mostly have to do with expensing and depreciation of certain costs related to drilling. Oil companies have been permitted to expense them, and now they need to amortize them. To characterize this accounting change as an elimination of a subsidy is misleading, but that it very much in character with this government and its disastrous budget proposal. It took you in, and you're a smart switched-on person . . . they'll have no trouble conning the 40 watt compact fluorescent bulbs out there.

    Hopechange!

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  3. February 08, 2010 at 6:31 am PDT | Shannon Arvizu writes:

    Thanks David Smith for clarifying….Very interesting about the ways in which cuts in oil subsidies are framed in the budget and to the public. Any links to any sources on this information? I would be very interested to learn more.

    Reply Or REGISTER HERE if you are new.

  4. February 10, 2010 at 8:46 am PDT | David Smith writes:

    Sorry Shannon if I came on too strong and took time reverting. Here are a couple of links. The law firm post is very technical discussion; the Texas government post is non-technical and totally accepts the framing of depreciation/amortization vs. expensing and disallowing of drilling costs as subsidy elimination. I just don't accept that. Business' costs are their costs, disallowing them is illegitimate. To call accounting treatment a subsidy and a change in it as subsidy elimination should satisfy no one: it hurts business, and it gyps environmentalists who think the politicians are really doing something substantial in a policy way. You're at Columbia? I went there too. Peace.

    http://www.bakerlaw.com/energy-tax-alert-taking
    http://www.window.state.tx.us/specialrpt/energy

    Reply Or REGISTER HERE if you are new.

  5. February 10, 2010 at 16:46 pm PDT | David Smith writes:

    Sorry Shannon if I came on too strong and took time reverting. Here are a couple of links. The law firm post is very technical discussion; the Texas government post is non-technical and totally accepts the framing of depreciation/amortization vs. expensing and disallowing of drilling costs as subsidy elimination. I just don't accept that. Business' costs are their costs, disallowing them is illegitimate. To call accounting treatment a subsidy and a change in it as subsidy elimination should satisfy no one: it hurts business, and it gyps environmentalists who think the politicians are really doing something substantial in a policy way. You're at Columbia? I went there too. Peace.

    http://www.bakerlaw.com/energy-tax-alert-taking
    http://www.window.state.tx.us/specialrpt/energy

    Reply Or REGISTER HERE if you are new.

  6. June 28, 2012 at 8:36 am PDT | Cris Hamilton4 writes:

    Mr. Obama is on a bate & switch direction.  He wants the money direct to subsidizing more to public transportation, i.e., high-speed rail and metropolitan transportation ridership subsidies to a tune of $22 + billion.   That is for transportation systems that have NEVER paid for themselves. But he is concerned about $4 billion that helps domestic energy sustainability.  Then there is the private sector jobs that will be lost in the energy field.  Amazing!!!

    Reply Or REGISTER HERE if you are new.

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