Washington DC – In an open letter to Congress, over 40 national organizations have come together to say over 100 years of never-expiring tax breaks for the hugely profitable oil industry is enough. Diverse voices from the environmental, veterans, labor, renewable fuels, and social justice communities are challenging Congress to repeal nearly $4 billion a year in wasteful taxpayer subsidies handed to Big Oil and Gas despite the industry’s continued efforts to promote climate science skepticism and avoid any accountability as a leading contributor of carbon pollution. The letter was released on a press call with environmental leaders today; see full text below.
Greg Dotson, Vice President for Energy Policy at the Center for American Progress Action Fund: “The U.S. and the rest of the world have taken bold steps in recent years to address the growing threat of climate change, but there is much more we can do. Fortunately, we have clean energy companies that are ready to step up and help deliver the pollution reductions we need while growing the economy. The first thing you do when you are in a hole is stop digging. We know today that we are putting too much carbon pollution into the atmosphere – and we should stop using tax payer dollars to encourage even more.”
Stephen Kretzmann, Executive Director of Oil Change USA: “Members of Congress have been a very lucrative investment for the oil industry. For every $1 they put in in campaign contributions, they get back more than $188 in subsidies, even using these very conservative JCT subsidy figures. I am sure most Americans wish we could get returns even a fraction that good from our 401k’s. This has gone on for far too long, it is time now for a Separation of Oil and State”.
Brad Woodhouse, President, Americans United for Change: “These tax giveaways serve no useful purpose other than padding oil industry profits. We could send 166,000 kids to college every year with the $4 billion that is instead squandered on Big Oil. Over summer recess, we’re going to demand answers from Republicans in Congress who can’t find the money to address the Zika Virus or Flint water crisis, or repair our crumbling infrastructure, but think Big Oil can’t live without these subsidies. Even with persistently low oil prices, which dipped below $30 a barrel earlier this year, ExxonMobil still reported nearly $1.8 billion in profits last quarter, and BP over $500 million. It seems even in the worst of times, Big Oil can make tons of money comfortably without a taxpayer handout. And it seems the only return on taxpayers’ investment is dirty air and 14,000 oil spills every year.”
On the call, Senators were called on to support the FAIR Energy Policy Act, legislation sponsored by Senator Brian Schatz (D-HI) that would phase out special tax breaks for fossil fuels on the same schedule as the law Congress passed to phase out the wind production tax credit (PTC).
The Call to Action today also came in support of the Democratic Senators who took to the floor this week to condemn ExxonMobil Corp. for spinning a “web of denial” about climate change as part of a profit-protecting scheme to kill any legislative action to address it. Late last year investigative journalists at Inside Climate News and the L.A. Times blew the lid off a major cover-up: Exxon Mobil’s own scientists recognized the burning of fossil fuels was contributing to global warming as early as 1977, and yet the world’s largest oil and gas company went on to fund misinformation campaigns for decades against climate science. The revelations prompted a multi-state investigation by over a dozen state Attorneys General into the climate fraud perpetrated against the public, lawmakers and private investors.
“Behind closed doors, Exxon accounted for the environmental impact of climate change in their business plans, but put on a public face that everything was normal,” added Woodhouse. “Worse, for decades Exxon has funneled millions of dollars into front groups like the ACCF to wage misinformation campaigns to discredit climate science and discourage use of cleaner renewable fuels. It’s been a simple but unfortunately effective strategy: 1) Big Oil funds junk science downplaying fossil fuels’ leading role in climate change. 2) Big Oil falsely suggests the jury is not in on climate change when in fact the overwhelming consensus in the legitimate science community says climate change is real, man-made and getting worse. 3) Big Oil’s front groups point to their own bogus studies as reason why Congress does not need to act on climate change. 4) Big Oil throws millions of dollars at Republicans in Congress, who then need little convincing to kill any bill to reduce carbon pollution. And around and around we go as weather events get more and more severe and ocean levels climb higher and higher.”
July 14, 2016
Dear Member of Congress,
For more than a century, the oil industry has reaped the rewards of never-expiring tax breaks that support its monopoly over our fuel supply. Despite ongoing threats to America’s economy and climate, we are poised to hand the oil industry nearly $40 billion in tax breaks over the next ten years.1
The Joint Committee on Taxation determined that tax breaks for oil companies cost the government nearly $4 billion per year2—nearly six times what the National Institutes of Health spends on breast cancer research:3
1. Intangible drilling cost deductions (worth $13.1 billion over ten years);
2. Percentage depletion deduction (worth $12.1 billion over ten years);
3. Deduction for tertiary injectants (worth $100 million over ten years);
4. Exception from passive loss limitations for oil and gas ($310 million over ten years);
5. Amortization of Geological and Geophysical Expenditures for Independent Producers (increasing the period to 7 years would save $1.3 billion over ten years);
6. Domestic manufacturing tax credit ($10.9 billion over ten years);
7. Marginal oil well incentives
Most of these tax preferences are exclusive to the oil industry and represent a conservative
picture of the oil industry’s century-long subsidization. Meanwhile, oil companies pulled in $90 billion in 2014—even with lower oil prices.
The oil industry is misleading lawmakers and the public by claiming that oil companies only claim “standard business deductions” that “are in no way ‘taxpayer subsidies’” and that are “not unique” to its industry.4 That is false, as independent fact checkers have repeatedly pointed out.5 The Heritage Foundation has agreed that some of these provisions “should be removed” because they are “obvious and unnecessary” oil subsidies that “Congress should eliminate.”6
Even the Cato Institute has lambasted the corrosive effect of these tax breaks, calling them “big government on the sly.” Cato experts have concluded that conservatives “have no business throwing their political bodies in front” of oil industry tax breaks.7
In fact, it is heavy lobbying by the oil industry that has convinced Congress to give them additional tax breaks time and time again, over the years. Just last year, the oil industry spent
over $141 million on lobbying.
And in the 2014 cycle, oil companies gave over $61 million in political campaign contributions.
It’s easy to see what the oil industry expects in return for their lobbying and campaign contributions. As Republican Senator Bob Corker explained about one oil industry tax break in 2007: “Congress was trying to solve a manufacturing issue in this country,” and oil producers came to be a beneficiary of the tax break “almost inadvertently.”8
The “inadvertent” inclusion of the oil industry—at oil lobbyists’ behest—will cost American taxpayers over $11 billion over the next ten years for just that one tax loophole.
The oil and gas industry is the third most profitable sector in the United States. Oil companies receive billions in tax breaks, despite being among the world’s largest and most profitable corporations.
For too long, America has subsidized the oil industry’s bottom line at middle class Americans’ expense. Unless something changes, we will continue giving the oil industry tens of billions in tax breaks over the next ten years.
It is time to stand up for taxpayers and stop giving billions in tax breaks to the world’s most profitable companies.
A. Phillip Randolph Institute
Alaska Wilderness League
America Family Voices
Americans for Tax Fairness
Americans United for Change
CARS (Citizens Acting For Rail Safety)
Center for Biological Diversity
Citizen Action of Wisconsin
Citizens for Tax Justice
Clean Fuels Development Coalition
Clean Water Action
Communication Workers of America
Friends of the Earth
Green for All
Labor Network for Sustainability
League of Conservation Voters
National Education Association
Nebraska Interfaith Power & Light
Oil Change International
Social Security Works
Southern Oregon Climate Action Now
Tar Sands Action SoCal
The Center for Effective Government
The Natural History Museum
Wisconsin League of Conservation Voters