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Roland Hwang’s Blog

Ending oil subsidies can pay for Energy Security Trust

Roland Hwang

Posted February 13, 2013 in Moving Beyond Oil, Solving Global Warming

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In his State of the Union speech, President Obama proposed the creation of an “Energy Security Trust” to find clean alternatives to fuel our nation’s cars and trucks. We think that’s an excellent idea. One way to support this goal is to simply eliminate the staggering $8 billion we as taxpayers have to fork-over to the over-subsidized oil and gas industry every year and use a portion of the savings to fund the trust.

Oil companies do not need or deserve help from the government. With the five largest oil companies (BP, Exxon, Shell, Chevron, and ConocoPhillips) earning an astounding $118 billion in profits last year, clearly these companies are too mature and too profitable to justify $8 billion in government support. What a waste. 

Momentum is growing to end these wasteful programs and not a minute to soon.  Just today, U.S. Senator Robert Menendez (D-NJ) reintroduced legislation with 16 cosponsors that would repeal tax subsidies for the “Big 5” oil companies and raise $24 billion in savings over 10 years.  Last week Rep. Ed Markey (D-Mass.), Ranking Democratic Member of the House Natural Resources Committee, introduced similar legislation, HR 601.

Our dependence on oil is the largest source of our carbon pollution for the U.S.. Besides fueling unpredictable and dangerous weather events, oil is at the root of $50 billion in annual heath costs and another $515 million in property damage from oil spills.  High and volatile oil prices drain our pocketbooks and drag down economic growth. More unnecessary waste.

Since the transportation sector is responsible for 70 percent of our oil dependence to reduce high costs to health and property, we must make our cars and trucks more fuel efficient and replace oil with cleaner fuels. The good news is options are available now, like electricity and advanced biofuels that do not compete with food.

Last year, the President took the single biggest step to cut our nation's oil dependence and carbon pollution when he doubled fuel efficiency standards for cars and light trucks. Ending oil subsidies and funding clean alternative is the common sense next step to reduce our dangerous oil dependence and put taxpayer dollars to better use.

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Comments

MichelleFeb 16 2013 02:39 PM

Question for you, Roland. The Fed government subsidizes corn ethanol at $0.50 a gallon. I think that comes to a lot more than the 8 billion oil co's supposedly get.

We already know that ethanol from corn is an inefficient way to make fuel. Isn't that just as bad as subsidizing oil companies? Shouldn't they phase out corn ethanol subsidies while keeping subsidies for ethanol produced by more efficient methods?

I don't think oil co's need subsidies, either, but changing the ethanol subsidies would make a much bigger difference.

Roland HwangFeb 17 2013 04:37 PM

Great question. As my colleague Sasha Lyutse points out in her December 2011 blog, the unnceccesary and wasteful corn ethanol subsidies expired at the end of 2011 (see http://switchboard.nrdc.org/blogs/slyutse/out_with_the_old_in_with_the_n.html).

The vast majority of Americans think we need clean and renewable alternatives to dirty and limited fossil fuels. Eliminating the subsidies for corn ethanol is a good start.

The next common sense step is for Congress to do the same for oil subisidies. Unfortunately, the oil industry is even more powerful lobby than the corn ethanol industry and has successfully defended its subsidies for many years. Furthermore, the oil industry has launched attacks on any policy that would require them to invest in cleaner alternatives, including California's landmark clean fuels pollution standard (see my colleague Simon Mui's blog http://switchboard.nrdc.org/blogs/smui/oil_industry_attacks_californi.html).

Rhea AndersonFeb 18 2013 02:16 PM

Making cars and truck more efficient is good but not enough. It's high time we reinvested in passenger railways and other forms of mass transportation.

Roland HwangFeb 18 2013 07:30 PM

Thanks for your comment. My colleagues Kaid Bienfeld, Deron Lovaas, Rob Perks, Amanda Eaken and Justin Horner lead our work on advocating for better planning and more funding for transit as critical strategies to cut oil use and carbon pollution. We are working in Washington D.C.. California and other states on this issue, and I encourage you to read their blogs on Swichboard if you want to learn more about our work.

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Switchboard is the staff blog of the Natural Resources Defense Council, the nation’s most effective environmental group. For more about our work, including in-depth policy documents, action alerts and ways you can contribute, visit NRDC.org.

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