There was an oil spill on Capitol Hill recently, when the truth about tax giveaways to the oil industry spilled from House Speaker John Boehner's mouth. Asked why the oil industry should continue to receive $4 billion in tax giveaways while Congress cuts programs for people in poverty and the House prepares to vote next week on legislation to expedite offshore development without new safety requirements, the speaker sprang a leak.
Oil and gas producers are "gonna pay their fair share in taxes and they should," Boehner told a reporter for ABC News, opening the door to ending subsidies that have benefited the oil companies at taxpayers' expense since the 1920s.
This is the same industry that fights safety inspections, complains about environmental safeguards critical to protecting wildlife refuges and community water supplies, pressures Congress to gut environmental laws and blocks attempts to ensure that the taxpaying public gets fair value through royalties when they exploit our public lands.
President Barack Obama was right to seize on the momentum of Boehner's remarks, calling on Boehner and Senate Majority Leader Harry Reid to "take immediate action to eliminate unwarranted tax breaks for the oil and gas industry," while instructing the Justice Department to investigate price gouging from oil companies.
Reid has stated his intent to hold a vote on the subsidies once the Senate returns to work after the Easter recess.
The case to end the subsidies is hard to ignore, especially when the oil companies' quarterly profits are announced, as they were over the last few days. In the first three months of the year, oil and gas companies have raked in billions in profits. Exxon Mobil led the pack, earning more than $10 billion in the quarter, followed closely by Shell with nearly $9 billion. BP, scarcely a year after being partly responsible for the worst oil spill disaster in U.S. history, made more than $7 billion in earnings, despite trying to hold back research money into how extensively the shellfish industry has been harmed by the spill.
While the global price of oil is skyrocketing because of unrest in the Middle East and speculators on Wall Street, oil companies are pulling massive profits by taking oil from American lands.
According to the federal government's Energy Information Administration, the average cost to produce a barrel of oil in the United States is approximately $30.
So when oil companies sell a barrel for triple the cost — $100 or more, as they have been for months - the oil industry is pocketing at least $70, and passing the cost on to the consumers.
To add to the case against oil subsidies, look no further than Capitol Hill, where the ongoing budget battle is putting critical spending at risk. In that environment, where severe cuts to environmental protection programs, education and programs like Medicare are being threatened, there's no place for the oil industry giveaways that cost taxpayers $40 billion each decade.
These subsidies cannot be defended. With the evidence against them piling up and oil companies reporting huge profits, the tide finally may be turning against the subsidies. Let's hope that as momentum builds to end giveaways to big oil, it will be the beginning of an energy policy that relies less on an industry that rakes in huge profits while it takes from Americans on their tax returns and at the pump.
This article from Wilderness Society President William H. Meadows originally appeared as an op-ed in the Houston Chronicle.