Cutting “Subsidies” to Big Oil Is Political Sleight of Hand

by Marita Noon on May 9, 2011

in Blog, Features

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Between the time this is written and the time you read it, gas prices will have undoubtedly risen again.  They have been on an upward spiral for months and not likely to drop long term without some bold, decisive action as was taken on July 14, 2008. Instead of encouraging the development of our own natural resources, politicians of both parties  are once again betting that we will not notice if they play the antibusiness card—but 2011 is not a year for politics as usual and the rules have changed. This is no longer a back-room game. It is the poker channel. People are watching.

With their cards close to the vest, Max Baucus (D-Mont.) and Harry Reid (D-Nev.) are bluffing. They want America’s citizens to believe their hand is filled with spending cuts—cut subsidies from big oil companies. Somehow we are supposed to think this will lower gas prices?

Part of their bluff is to use the term “subsidy”—which in the house-of-cards economy/debt crisis they’ve built translates to spending. Concerned Americans do not want more spending, they want cuts. We’ve anted up all we can. Politicians are betting we’ll fall for the deception.

But for those of us who are watching, the tell is there. The so-called “big oil companies” don’t get subsidies. They do get the same type of tax deductions on their expenses and some of their up-front costs that every industry gets. Their dramatic wins are in the headlines now. Loses are huge too—though usually not front page news. Last month, it was announced that Shell Oil had to scrap their Alaska drilling plans (which would have provided more domestic energy) due to an EPA decision to withhold permits. Shell had spent five years and $4 billion on plans to explore. Will the EPA reimburse them for their loss? No. But they will receive some tax benefits, the loss is held against their wins—just like every other business. They know they win some, they lose some. It is all factored into the game plan.

But who is the real loser? The American citizen who wants lower gas prices. If the cost of doing business is lower, and the resource development is encouraged, the savings is passed on at the pump. When costs continue to escalate and business is forced to fold their hand—even when it could be a full house, we lose.

The way the energy game is being played now is that the house always wins—with the house being government, not business. A company can, as Shell did, make big investments based on their hand as they see it (geology and seismic data indicates the gamble is worth it) and then the dealer calls the shots. Sorry.

Because we are playing dealer’s choice, other more expensive, less competent players get the advantage. Renewables do get subsidies—like $6 billion for the corn ethanol industry. Electric cars are subsidized to the tune of $7,500 for each vehicle sold—and this is just on the retail end. American taxpayers are forced to buy in even though we know we are drawing dead.

Next week, Harry Reid is dealing once again. He is expected to hold a vote on the Baucus plan which they claim will “end billions of dollars in wasteful tax breaks for large, multinational oil and gas companies while investing in cleaner and cheaper domestic energy sources.” The dealers are picking the winners and losers. If the above quote from Baucus’ website was honest, it would say that they are singling out one industry because it is currently making money (who will be next?) and giving money to more expensive energy sources.

If the game was fair, and we eliminated tax deductions and subsidies altogether—great! Then everyone would need to stand on their own merits in every industry. But that is not going to happen with this hand. We’ll need a different dealer.

But we, the American taxpayers, do not have to sit idly by and watch. We can let them know we are watching. We can participate. We can force politicians to play for us. It is our money they are playing with.

Call their bluff. The hand they are holding will increase the cost of doing business for America’s domestic energy providers and that will result in higher gas prices not lower. Who do they think they are fooling?

Politicians, like poker players, are known to have a few cards up their sleeve.

Known as the voice for energy, Marita Noon is the Executive Director at Energy Makes America Great Inc. the advocacy arm of the Citizens’ Alliance for Responsible Energy—working to educate the public and influence policy makers regarding energy, its role in freedom and the American way of life. She is a popular speaker, a frequent guest on television and radio, her commentaries have been published in newspapers, blogs and websites nationwide, and she has just completed her twentieth book: Take Away Energy, Take Away Freedom. Find out more at

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