5 Replies to “Leave ExxonMobil ALOOOOOONE…..”

1. Out of curiosity, what’s the justification for only eliminating the tax subsidies for the largest five producers? (And how will this reduce gasoline prices for consumers?)

   As you know, I think we should get rid of all energy subsidies, without regard to how politically correct the recipient is, but I find the focus on five companies a bit troubling and hard to justify.

   Also, fwiw, the vote was pure symbolism. As TPM reported, the measure would be unconstitutional as passed as revenue-raising measures must originate in the House.
   http://tpmdc.talkingpointsmemo.com/2011/05/doh-democrats-oil-subsidy-repeal-bill-is-actually-unconstitutional.php

2. Jon, if you think that GOP Senators voted against this bill out of constitutional scruples, then I’ve got a bridge in Brooklyn to sell you.

   You’re right, of course, that the subsidies should have been eliminated for all producers, but I wasn’t aware that the new libertarian orthodoxy is that unless all market-distorting subsidies are eliminated, none of them should be.

   The theory, I suppose, is that stopping the subsidization of oil production would encourage the search for alternative fuels over the long run. Given the insigificance of these subsidies to the oil producers’ bottom lines that’s a hard argument to rest the bill on; the better arguments are 1) subsidies are bad unless there are public goods or externalized benefits; and 2) as long as the Republicans are going to be screaming about the deficit, maybe the place to start are oil company subsidies instead of health care for low-income kids. But low-income kids don’t vote Republican, I suppose.

3. I don’t think GOP Senators voted against this bill on constitutional scruples. But I don’t think Senator Reid scheduled the vote because he is seriously trying to eliminate these tax breaks either.

   I stand by my view that all such subsidies should be eliminated, and would support getting rid of all oil subsidies today, either alone or in combination with the elimination of other energy subsidies. But this bill would do neither, and targeting a handful of companies within a given industry for the elimination of a subsidy is problematic. It’s bad enough when politicians pick winners and losers industry-by-industry; worse when they do it firm-by-firm. Moreover, the worst oil subsidy in the tax code — the percentage depletion allowance — would not have been affected as it is only available to smaller producers.

4. Jon, of course you’re right that Harry Reid isn’t deeply worried about oil subsidies. But the fact of the matter is that he brought up a bill to get rid of them. That leaves supposedly free-market, deficit-hating Republicans with two options. Either they can 1) hypocritically obstruct the bill to protect their contributors, and then whine when someone calls them on it; or 2) vote in favor of the bill, depriving the Democrats of a talking point and not incidentally do the right thing. They’ve decided to be whining hypocritical obstructionists. Hey, it’s your party.

   As for your other point, it’s interesting to see libertarians suddenly finding reasons to oppose subsidy elimination. Getting rid of subsidies for the 5 super-major producers and leaving them for the independents if anything make more sense than allowing the super-majors to keep feeding at the trough.

5. The bill was limited to the big five because Democrats have no spine. There was a bit of chatter early on how, unlike the majors, the smaller (really, how “small” are the guys drilling scores complex wells in the Bakken formation) companies and wildcatters needed the tax breaks. (You got to hand it to the oil and gas guys, they got good PR) Though others pointed out that it’s probably not true, Dem’s rolled back.

   Naive question: Is it even legal to write a tax law that targets an individual company?

   Hopefully, something will give in the debt limit talks.

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