Targeting ‘fossil energy subsidies’

It’s official, now. The Obama administration isn’t simply trying to raise federal revenue to pay for its economic recovery programs by taking away oil and gas tax breaks. It wants to eliminate “fossil energy subsidies” to fight global climate change, and it would like the rest of the world to join the effort.

“Over the last few weeks, we have worked to build consensus on important new commitments to phase out fossil energy subsidies over time,” US Treasury Secretary Timothy F. Geithner said during a Sept. 24 press briefing at the G-20 conference in Pittsburgh. “And I can say today, based on the important work of countries around the table, we're seeing a lot of support for that proposal, and we think this will have a dramatic impact on our collective effort to reduce carbon emissions.”

For example, he said that estimates by the Organization for Economic Cooperation and Development suggest that if all countries followed the G-20’s lead in agreeing to phase out fossil fuel energy subsidies over the medium term, this would reduce global greenhouse gas emissions would be 10% lower by 2050. Geithner called this “a very substantial down payment” on US President Barack H. Obama’s objective to reduce global emissions to 50% below 2005 levels by 2050.

Cutting what the administration considers fossil fuel subsidies would not just reduce US vulnerability to future energy price shocks and substantially reduce air pollution, he continued. “Eliminating hundreds of billions of dollars spent on these subsidies would help promote faster growth and improve our capacity to use the taxpayers' resources more effectively for other priorities,” Geithner maintained.

The Obama administration and Congress face many difficult choices if they decide to comply with this G-20 commitment, American Petroleum Institute President Jack N. Gerard warned on Sept. 25.

‟Above all else, [they] should not use this commitment as an excuse to raise energy taxes on American consumers and businesses,” he said. “Does the president really think it wise to eliminate tax provisions that encourage investment in technology and exploration and development and would likely constrict future energy supplies, raise energy costs and kill jobs?”

The pledge to the G-20 also raises questions about the White House’s commitment to efforts such as the Low Income Home Energy Assistance Program, which helps ensure that economically disadvantaged citizens won’t be denied winter heat; the US Strategic Petroleum Reserve; and the Highway Trust fund, Gerard pointed out.

“What America really needs is energy from all sources, including renewables and oil and gas, to fuel its economy and remain competitive in global markets,” he said. “According to the US Energy Information Administration, fossil fuels account for 83% of total domestic energy demand. As our nation attempts to stimulate an economic recovery, now is not the time to lay on new taxes that would stifle job creation and growth.”

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Slowing down Kempthorne’s ‘jump start’

Sept. 21 was more than the Autumnal Equinox in Washington. It also marked the end of the six-month period US Interior Secretary Ken Salazar established for comments on a new five-year Outer Continental Shelf leasing plan after suspending one his predecessor, Dirk A. Kempthorne, “jump-started” in August 2008.

Salazar said he was seeking, among other things, additional public comments. Special interest groups delivered plenty to the Interior Department.

American Solutions for Winning the Future dropped off 90,358 comments in support of offshore drilling. “The American people have spoken loud and clear that America’s abundant energy resources have been off limits for too long,” said Vince Haley, the group’s vice president for policy. “Every day of inaction by Secretary Salazar is another day the now-expired ban on drilling stays in effect despite the American people’s overwhelming support for offshore drilling.”

“The only real question: Will the Obama administration listen to the will of the American people and allow us to make use of the affordable, abundant, and reliable domestic energy supplies we rightfully own? Was the decision to lift the decades old ban on offshore exploration truly a response to the will of the vast majority of the American people? Or was it merely an election year gesture to be replaced indefinitely by a de facto ban?” said Institute for Energy Research President Thomas J. Pyle, who planned to submit 11,816 comments which IER received.

Environmental organizations focused their concerns on offshore Alaska areas. Twelve collected 300,000 comments urging Salazar to stop oil and gas activity in the US Arctic now and permanently protect Bristol Bay. They also sent a letter to the Obama administration signed by more than 400 US and foreign scientists stating that plans for the Alaskan offshore created during the Bush administration did not fully consider environmental consequences or impacts on indigenous residents.

“The American public has unequivocally said that Bush’s aggressive plans for oil and gas development have no place in America’s Arctic and Bristol Bay,” said Cindy Shogan, executive director of the Alaska Wilderness League. “Secretary Salazar pledged to make wise decisions based on sound information. We urge him to continue the process he has begun, and come up with a rigorous plan that ensures the survival of these two national treasures.”

American Petroleum Institute President Jack N. Gerard noted that the nation will mark the one-year anniversary of the expiration of congressional offshore lease moratoriums off the US Atlantic and Pacific coasts in 10 more days.

“Despite the public’s clear desire for more domestic energy development and the industry’s years of experience operating offshore in an environmentally sensitive way, this administration repeatedly has slow-pedaled this plan which would benefit all Americans, especially in these tough economic times,” he said. “New oil and gas development could create thousands of jobs, add over a trillion dollars to government coffers, strengthen America’s energy security and encourage our economic recovery. It’s time to end the delays.”

Salazar has indicated that he plans to continue proceeding deliberately, not only re-evaluating the five-year OCS plan Kempthorne wanted to finish two years early, but also broadening it to consider renewable and alternative technologies. Congressional Republicans have protested that waiting until July 2012 to put it into effect represents a delay. The secretary apparently thinks he’s simply returning it to its original schedule, with a chance to make it better in the process.

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