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Taxpayer Groups, Environmentalists, Students Call on Congress to End Oil Industry Subsidies

A coalition of 40 organizations make call to repeal billions of tax breaks for the oil and gas industry.

In an open letter sent to Congress last Thursday, a coalition of 40 national taxpayer, labor, environmental and other groups called on the federal government to repeal almost $4 billion in annual tax breaks for the oil and gas industry, calling them wasteful and lambasting Congress for subsidizing activities that will make climate change worse.

The groups called on Senators to support the FAIR Energy Policy Act, which would slowly phase out nine special tax breaks for the fossil fuel industry.

“Oil companies receive billions in tax breaks, despite being among the world’s largest and most profitable corporations,” the groups wrote. “For too long, America has subsidized the oil industry’s bottom line at middle class Americans’ expense.”

Another law passed earlier this year revokes the wind industry’s production tax credit, and the FAIR Energy Policy Act would wind down some of the oil industry’s subsidies on the same schedule.

“If we are phasing out tax credits for clean energy — something I oppose — then why are we still committing to permanently support the fossil fuel industries with tax preferences they don’t need?” said Senator Brian Schatz, a Democrat from Hawaii who sponsored that bill. “It is based on the very simple idea that there should be a level playing field for fossil fuels and clean energy.”

Of course, unlike the wind industry, which is still relatively new and therefore is quickly evolving, oil and gas drilling has been around for a long time — and unlike the wind industry, the oil and gas industry is a key driver of climate change, which is part of the reason that its subsidies are in the crosshairs of taxpayer groups.

“The first thing you do when you are in a hole is stop digging,” said Greg Dotson, Vice President for Energy Policy at the Center for American Progress Action Fund. “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.”

The campaign to end those is tax breaks also backed by a student-led campaign, #4billion4us, which is targeting the House of Representatives and has already gained the support of celebrities including Leonardo DiCaprio, comedian Keegan-Michael Key and environmentalist Robert F. Kennedy, Jr.

“We could send 166,000 kids to college every year with the $4 billion that is instead squandered on Big Oil,” Brad Woodhouse, President of Americans United for Change, explained.

Among the tax breaks for the oil industry are several that the groups argue defy common sense. For example, the drilling industry currently receives a tax break designed to keep jobs in the US, a loophole the Center for American Progress says adds up to a give-away of $10.9 billion in taxpayer dollars over the next 10 years. “This tax break is a handout to the industry,” the Center wrote, “as domestic oil and gas production — by definition — cannot move abroad.”

The groups also argued that the oil industry’s campaign donations — rather than sound public policy — helped to drive those tax breaks for the drilling industry.

“Members of Congress have been a very lucrative investment for the oil industry,” said Stephen Kretzmann, the Executive Director of Oil Change USA. “For every $1 they put in in campaign contributions, they get back more than $188 in subsidies, even using these very conservative [Joint Committee on Taxation] subsidy figures.”

Estimates for the fossil fuel industry’s total government subsidies vary broadly, with industry advocates like the American Petroleum Institute arguing that drillers receive no taxpayer subsidies, and environmentalists estimating as high as $52 billion a year or more in handouts from the US government.

Worldwide, the tally is far higher, with a 2015 International Monetary Fund report concluding that including “externalities” — like the costs of environmental damage — brings the global total that the public shoulders for the fossil fuel industry up to $5.3 trillion dollars a year.

The letter calling for a curb on $4 billion in annual oil and gas tax breaks also comes on the heels of the #WebOfDenial speech blitz on the floor of the US Senate carried out by 19 Senators who accused their colleague of blocking meaningful action on climate change and obfuscating the central role that human activities like drilling for oil and gas plays in driving global warming.

“First, they all propagate what by any reasonable scientific standard is preposterous nonsense, and masquerade it as science and independent opinion,” said Sen. Sheldon Whitehouse. “Second, they all get massive funding from fossil fuel interests, and line up always, obediently, with those interests. Third, they interlock. The interlocking is almost too complicated to track, in staff, in board members, in funding sources. But it all traces back to fossil fuel money.”

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