House Hearing Scrutinizes Billions of Dollars in Fossil Fuel Subsidies.
Invited Oil Execs are a No-Show.
The oil industry receives billions in subsidies even as it cuts jobs and rewards shareholders. But Congress is considering stripping them as part of the infrastructure bill.
By Nick Cunningham
onMay 19, 2021 @ 16:50
On May 19, the U.S. House Natural Resources Subcommittee on Oversight and Investigations held a hearing scrutinizing wasteful fossil fuel subsidies. Rep. Katie Porter (D-CA), who chairs the subcommittee, in v ited the CEOs of Devon Energy, EOG Resources, and ExxonMobil, as well as executives from the energy industry lobby group Western Energy Alliance. None accepted the invitation to appear before the committee.
“Devon Energy is a Fortune 500 company, and the biggest oil producer on federal land in the Lower 48 states. That should have been reason enough for Devon to be here today, answering questions with significant implications for our public lands and natural resources,” Rep. Porter said in her opening statement. “Like all oil companies, Devon gets special tax breaks intended to encourage fossil fuel production.”
But the oil industry did not show up to the House hearing to make its case. Instead, they left that to Alex Epstein, the director of the Center for Industrial Progress (CIP), a for-profit think tank that advocates for using more fossil fuels.
In his testimony, Epstein said the oil industry was being punished. The “U.S. government is actually harming America and the world by giving unjust punishments to the incredibly life-giving oil and gas industry,” he said. “We don’t have a moral obligation to shrink this industry, we have an obligation to liberate and expand it.”
Epstein’s CIP regularly promotes oil, gas, and coal and has received funding from the coal industry. Among the many of misleading claims made during his testimony, Epstein asserted that transitioning to green jobs would be immoral and a “nightmare” that would result in mass poverty. In contrast, a wide range of experts say that the clean energy transition will create millions of new jobs, and that the cost of inaction on climate change would be far more expensive.
The other witnesses at the hearing spoke to the enormous subsidies and loopholes enjoyed by the oil and gas industry. “Congress should be ensuring that extractive industries pay their fair share for resources extracted from public lands. Unfortunately, for far too long this has not been happening,” said Tim Stretton, a policy analyst at the Project on Government Oversight.
One consistent talking point from the oil industry and its lobbyists, such as the American Petroleum Institute (API), which was not present at the hearing, is that their industry benefits from the same tax benefits as any other company.
“The fossil fuel industry is fond of saying that they don’t receive any special considerations, especially in the tax code. And that’s simply not true. There are dozens of special tax loopholes that save the oil and gas industry billions every year,” Sujatha Bergen, director of health campaigns at the Natural Resources Defense Council (NRDC), told DeSmog.
According to the Environmental and Energy Study Institute, the fossil fuel industry received $20 billion in direct subsidies in 2019, 80 percent of which went to oil and gas. For instance, there is “intangible drilling costs reduction,” which allows companies to deduct from their taxes a majority of costs incurred from drilling new wells. Drillers also enjoy the “percentage depletion,” which allows them to deduct 15 percent of the revenue generated from wells, another significant benefit. Together, these items equate to billions of dollars in tax benefits annually...
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