When US President Barack Obama declared, in his Jan. 25 State of the Union speech, “We are part of the American family,” he didn’t mean Americans who produce oil and gas.
When he cheered, “Corporate profits are up,” he didn’t extend the good wishes to companies that supply oil products.
For the oil and gas industry, Obama has only disdain.
In an address full of high-minded generality, Obama spoke specifically about oil companies.
“I’m asking Congress to eliminate the billions of taxpayer dollars we currently give to oil companies,” he said.
A White House fact sheet explained the reference as “the approximately $4 billion/year in tax subsidies to oil, gas, and other fossil fuel producers.”
This means Obama will try yet again to repeal tax incentives such as the expensing of intangible drilling costs, accelerated amortization of geologic and geophysical costs for independent producers, and oil-company use of the manufacturer’s deduction.
These aren’t subsidies. Most of the targeted measures are timing preferences that don’t lower government revenue over time. The manufacturers deduction, half the savings supposedly in prospect, is available to companies in other industries.
Obama’s assertion that the measures represent a gift by taxpayers to oil companies amounts to crass distortion.
The president is proposing a huge tax increase on one industry. The burden would crush small independent producers, slash drilling programs of large independents, and divert spending by integrated companies to non-US projects. US oil and gas production would fall. Oil imports would rise. US jobs, incomes, and tax revenue would be lost.
Obama betrayed his dislike of the industry when, after his deception about giving oil companies money, he smirked and said, “I don’t know if you’ve noticed, they’re doing just fine on their own.”
So it’s good when corporate profits are up. But increased profits by oil companies are something to disparage, even punish.
“We are still bound together as one people,” purred the unifier-in-chief. But he didn’t mean oil and gas people.
(Online Jan. 28, 2011; author’s e-mail: email@example.com)