President Barack Obama and other members of the Democratic Party routinely rally against “corporate welfare” and “subsidies” for the oil industry but no such subsidies or welfare actually exist.
The president most recently singled out the oil industry for criticism in last week’s debate with his Republican challenger Mitt Romney. “The oil industry gets $4 billion a year in corporate welfare,” he said.
Now, does anybody think that ExxonMobil needs some extra money when they’re making money every time you go to the pump? Why wouldn’t we want to eliminate that?
Because that would put companies like ExxonMobil at a disadvantage. Indeed, they already are. The “corporate welfare” that the president refers to are tax deductions and exemptions that are available to all American businesses. But the deductions allowed for oil and gas companies are lower than those for other manufacturers.
The president also alleged that companies “can actually take a deduction for moving a plant overseas.” Romney retorted that he had “no idea” what the Democrat was talking about. There is no special tax provision for building a plant overseas. American companies can extract the expenses of building a new plant from their taxes but that is regardless of where it is built.
However, there is a tax provision for domestic industries and that’s the biggest tax break oil companies get. But it isn’t exclusive to oil companies. All businesses than manufacture in America are allowed this deduction.
It hasn’t the stopped the president from claiming, as he did in March, that oil and gas companies take “billions a year in taxpayer subsidies.” In April, he even instructed the Justice Department to investigate the possibility of “price gouging, so we can make sure no one’s being taken advantage of at the pump,” although there was no evidence that oil companies were disproportionately profiting off higher gasoline prices.
Gasoline prices have skyrocketed during Obama’s presidency, from an average of $1.83 a gallon when he took office to $3.80 this week. The unrest in the Middle East, particularly fears of a war between Iran and Israel, are responsible but so is the administrations’ energy policy.
The president suspended deepwater drilling in the Gulf of Mexico in the summer of 2010 after the Deepwater Horizon oil spill and has refused to open more areas, in Alaska, off the Atlantic coastline, in Colorado and Wyoming, to drilling. Combined, these regions are estimated to hold over two hundred billion barrels of oil that would be recoverable with today’s technology. If fully developed, it would be enough to free America from the import of foreign oil for almost fifty years.
Yet the president insists that “drilling alone cannot come close to meeting our long-term energy needs” and is therefore subsidizing green energy companies by the billions of dollars. That actually is a form of corporate welfare but the president hardly ever talks about.