Big Oil Shakes Down US Taxpayers
Last week, oil company executives testified to Congress about energy policy in the wake of BP’s ongoing disaster in the Gulf of Mexico. A casual observer may have thought we were transported to an alternate universe. At one session, Representative Joe Barton of Texas apologized to BP for what he called a White House “shakedown” (because President Obama demanded a $20 billion escrow account from BP to ensure that damage claims will be paid). Mr. Barton didn’t just get his politics wrong, he got the petroleum-powered math all fouled up too.
As suggested in this blog two weeks ago and by many others since, BP may face bankruptcy over this debacle when it goes to court with victims all the way from the Gulf to New England for a growing list of damages. The President’s escrow account is a prudent measure to ensure that at least some victims are compensated. But “shakedown” could apply to what the oil industry has done to the American taxpayer for decades.
In a recent ten year period, for example, oil companies lavished Congress with nearly $200 million in campaign contributions and reaped one hundred times that figure from the US Treasury in return. Perhaps Representative Barton was himself a “victim”, shaken down to defend the industry in exchange for the reported million dollars in contributions to his own political campaigns.
What else did Big Oil get from this kind of political shakedown? Direct tax breaks like the “depletion allowance” (oil companies can write off diminishing oil reserves, which they obviously did nothing to create in the first place); defending oil around the globe (the Iraq war alone now exceeds $1 trillion and thousand of lives); and health care costs related to inhaling toxins from petroleum and combusted oil that are astonishingly similar to smoking-related illnesses and deaths, to name just a few.
Many have called for ending these absurd subsidies at a time when we need to diversify our energy mix and specifically reduce oil consumption in the face of global competition for a diminishing natural resource and the growing concerns over climate change. In fact, it was that topic which provided the other Alice in Wonderland moment in Congress last week.
Conoco-Phillips CEO Jim Mulva called on Congress to impose a price on carbon. While other oil execs defended their taxpayer-subsidized wealth and boasted that they would never have made the mistakes that led to the Deepwater Horizon blowout, Mulva spent the bulk of his testimony to call on the federal government to “establish a clear and transparent price for carbon.” Essentially, he was asking to be taxed or to have carbon fees imposed through a cap-and-trade system, which are the two primary ways of accomplishing his request, sort of a reverse shakedown.
Nor is this anything new for Mr. Mulva. In 2008, he and I were part of a team of energy advisors who debated these issues for then-Senator Obama and he strongly advocated then for stable markets that featured a predictable price on carbon. Sadly, he is alone in the oil industry, as his brethren continue to deny the problem and delay solutions. Although the House has passed legislation to do what Mr. Mulva suggests on carbon, Senate Majority Leader Harry Reid seems intent on scuttling a cap-and-trade bill for now, locked in a tight race for reelection and unlikely to take up controversial issues before the November elections.
So the oil industry continues to shakedown the US taxpayer for subsidies; make at least one member of Congress feel sorry enough for them to apologize as their product gushes into the Gulf and wash over the nightly news; and manage to escape any cost for their contribution to altering the global climate. If we’re not living in some alternate universe and this really is the USA in the 21st Century, it may be time to restart that plan to colonize Mars and hire a moving rocket before it’s too late for the economy, the environment, and the treasuries of planet Earth.