Washington D.C. - After proposing a 2012 budget that maintains $96 billion in tax subsidies and royalty-free drilling for oil and gas companies while cutting investments in alternative energy technology development by 90 percent, House Republican leadership did an about-face and today stated that oil companies need to start paying their fair share, including suggesting an end to an almost century-old tax break called the depletion allowance. Rep. Edward J. Markey (D-Mass.), the top Democrat on the Natural Resources Committee, today said it’s time to end the legacy of U.S. tax subsidies to gas and oil companies that is costing the American taxpayers billions.
“I am encouraged that Republican leadership is considering a change of course on their ‘Oil Above All’ energy strategy, and I eagerly await more details,"said Rep. Markey. “While American consumers get tipped upside-down at the pumps, Big Oil is set to report record-breaking profits this week thanks in part to oil and gas subsidies on the books that predate the Warren Harding administration. Our nation is facing too many fiscal challenges to continue giving 100 year-old tax breaks to the most profitable companies in the world when oil is at $112 per barrel. We just do not need to do it."
The oil and gas industry has access to at least eight different tax break programs that the Office of Management and Budget estimates will cost U.S. taxpayers $44 billion over the next decade. Most of these subsidies date back decades and represent an era when oil and gas exploration was in its infancy, and when resources were plentiful but remained largely unexplored. Unfortunately, some of the subsidies have been on the books for nearly 100 years and date back to days when oil cost one dollar or less per barrel. The depletion allowance, singled out today by Republican Speaker John Boehner, was first put in place under President Calvin Coolidge in 1926, when oil was $1.88 per barrel. While oil prices have climbed dramatically, the depletion allowance has remained a permanent fixture of the tax code, costing U.S. taxpayers $111 billion since 1968.
