Oil and gas companies are probably celebrating the collapse of the deficit supercommittee because they get to keep their subsidies and tax breaks.
Many Democrats tried to kill those subsidies as part of the plan, which of course prompted a strong oil industry pushback.
The supercommittee’s failure means there will no more attempts to remove those subsidies this year. It’s a testament to the industry’s lobbying clout even during a year of near-record energy prices, soaring profits and lots of attempts to end them.
The oil industry claims lucrative deductions on income they make from domestic manufacturing. The American Petroleum Institute and others argue that eliminating tax incentives will result in higher energy prices and lost jobs, while critics say such a mature, profitable industry doesn’t need additional gifts, especially when so many essential programs are being cut to reduce the deficit.
Democrats have introduced legislation in the Senate to repeal the incentives, but they couldn’t get 60 votes to overcome a GOP filibuster, and there’s no chance of it passing in the GOP-led House.
The supercommittee’s demise, however, isn’t all good for the oil industry, which hoped to use it to expand drilling even further. The prize would have been opening Alaska’s Arctic National Wildlife Refuge, which has eluded them for many years.
Meanwhile, Rep. Ed Markey (D-MA), the top Democrat on the House Natural Resources Committee, says the oil and gas industry is greatly exaggerating claims that it will boost the economy and add 1 million jobs by 2018.
Their trade association, the American Petroleum Institute, has been running ads touting the industry’s ability to create a million jobs if onshore and offshore drilling is expanded.
Markey says those figures, which are based on an American Petroleum Institute- commissioned study, are sharply at odds with studies by the Bureau of Labor Statistics and the Congressional Budget Office.
They found eliminating oil-and-gas tax subsidies would add $41 billion in federal revenue over the next 10 years and that more efficient drilling techniques would actually reduce the workforce 16% by 2018.
“It appears the oil lobby got what they paid for: cooked numbers to justify their untenable policy positions,” says Markey.
Read Markey’s letter to the American Petroleum Institute: