Another budget proposal, another presidential thumb in the eye of the oil and gas industry.
Remember the State of the Union boast about rising oil production? Remember the appeal for "an all-out, all-of-the-above strategy that develops every available source of American energy"? Forget all that. President Barack Obama remains as hostile as ever to the American oil and gas business.
The budget Obama proposed Feb. 13 won't do any economic harm. Congress won't pass it. The budget is important only as a political document. It's a statement of intent by a president seeking reelection. With energy, Obama's intent is unwavering. It hasn't changed in 3 years. That's the problem.
Raising taxes
Without congressional restraint, Obama would raise taxes on oil and gas companies of every size, performing work of every type, in every possible way. He would do so for the express purpose of moving the country, through spending, taxation, and regulation, away from fluid hydrocarbons and into the uneconomic energy forms he prefers.
Like every budget Obama has proposed, the fiscal 2013 plan would eliminate longstanding timing preferences mischaracterized as "subsidies" and in other ways raise taxes on the oil and gas industry. It would, for example, prohibit use by oil and gas companies of the manufacturer's tax deduction available to companies in other industries. And it would skewer US companies active abroad with punitive changes in rules governing the foreign tax credit.
The administration attempts to justify these bullets aimed at the brain of a single industry with an often-repeated falsehood: that the oil and gas business enjoys breaks that keep its tax rates especially low.
In his State of the Union speech last month, the president said, "It's time to end the taxpayer giveaways to an industry that rarely has been more profitable and double-down on a clean energy industry that never has been more promising."
In fact, the industry enjoys precious few tax "giveaways;" while subject to special rules accommodating unique aspects of its work, the industry's large companies pay taxes at average effective rates higher than those of most other industries. And against a growing record of bankruptcies by green-energy companies dependent on government subsidies, talk about the unprecedented promise of politically idealized energy lacks credibility.
As his presidential term has progressed, harsh economic reality has made Obama's energy ambitions look increasingly wayward. Yet he persists with budget proposals designed to shift money from large, commercial energy sources to much smaller sources that might never be economic.
This is a formula for uncontrolled waste of public funds. And it forces Obama to deliver indefensible assurances, such as that the heavily indebted country he represents can afford to lose billions of dollars on serial energy failures. Doubling down on "clean energy" is precisely what the US doesn't need.
And the country surely can't afford to punish an industry now—in sharp contrast with most others—creating jobs by the thousands and expanding taxable activity. Why would a president jeopardize such economic goodness? Why would he thwart a technologically driven boom in resource development that has brightened the outlook for US energy supply more than anything since the start of offshore drilling?
Political answers
Obviously, the answers are political. Obama has supporters who detest oil and gas and everything and everyone associated with them. He has supporters whose uncompetitive energy projects, even with taxpayer subsidies, face trouble in an energy market brimming with low-price natural gas. He has supporters whose progressive ideologies trap them into the fanciful energy dogmas evident in his budget priorities.
But what about Americans concerned about jobs, economic progress, fiscal responsibility, and secure and affordable energy? Obama must hope voters who harbor such balanced aspirations, and who aren't fooled by threadbare populism and environmental exaggeration, constitute a minority. His energy adventurism promises them—and most Americans—only pain.
But at least—with four budgets out of four—he's consistent about it.
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