Do you have a list of tax breaks that oil companies receive? Example: They don’t pay tax on the first 15% of their profits. Are there others for drilling etc.? It seems that all renewable energy enterprises should get at least the same tax breaks and maybe better, perhaps pay no taxes on their profits so that they can pass the savings on to the consumer. –Aloha, Dean L., Kalaheo, HI
Dean, Tax bills are thousands of pages long and the benefits to our domestic fossil (coal, natural gas, and petroleum) and nuclear industries are way too numerous to relay here.
In my April Q&A, I advised that most of the tax breaks that the Congress passed in the 2005 Energy Bill went to the traditional energy industries with some as long as 16 and 20 years, compared to the two-year tax extensions the renewable energies received.
The Bill also increased U.S. energy imports and emissions. According to a November Associated Press article, the Democratic Congressional majority has already announced their intention to “repeal:
— Tax breaks for refinery expansion and for geological studies to help oil exploration.
— A measure passed two years ago primarily to promote domestic manufacturing. It allows oil companies to take a tax credit if they choose to drill in this country instead of going abroad. Over 10 years, the production tax credit saves oil companies $5 billion, and the refinery measure and exploration credit a total of about $1.4 billion, according to Congressional Budget Office estimates. Other oil tax breaks probably will go unchallenged.”
According to a 2005 study sponsored by five advocacy groups (Friends of the Earth, US PIRG, Public Citizen, Earth Track, and taxpayers for Common Sense), their calculations of cumulative federal research programs are:
“Federal energy supply R&D expenditures, 1948-1998 – Total federal expenditure (2003 dollars) Nuclear energy, $74 billion (56%); Fossil fuels, $30.9 billion (24%); Renewables, $14.6 billion (11%); Energy efficiency, $11.7 billion (9%).”
In September 2005, the U.S. Government General Accounting office issued a letter on petroleum subsidies estimates by both the Congressional Joint Tax Committee (JTC) and the U.S. Department of Treasury (DofTreas):
— Table 2: Revenue Loss Estimates for the Excess of Percentage Over Cost Depletion, Oil and Gas (adjusted to 2000 dollars) Total $81.679 (by Joint Tax Committee) $82.085 (by U.S. Dept of Treasury) (in billions of dollars).
— Table 3: Revenue Loss Estimates for the Expensing of Exploration and Development Costs, Oil and Gas Dollars in millions: Total $54.580 by JTC $42.855 by DofTreas. Data was adjusted for inflation by GAO (in billions of dollars).
— Table 4: Revenue Loss Estimates for the Alternative (Nonconventional) Fuel Production Credit: Total $10.542 by JTC, and $8,411 by DofTreas (in billions of dollars).
— Table 6: Revenue Loss Estimates for the Credit for Enhanced Oil Recovery Costs (in 2000 dollars) Total b $0.482 by JTC and $1,002 by DofTreas (in billions of dollars).
–Table 5: Revenue Loss Estimates for the Oil and Gas Exception From Passive Loss Limitation (in 2000 dollars) Total b $1,065 by JTC.
While I continue to hear most recently from Democratic and Republican Congressional leaders that the renewable energy and efficiency tax credits will only be extended again for another two years when they come back into session in 2007, I must continue to question why U.S. taxpayers continue to subsidize mature energy companies, in mature energy markets with mature energy technologies at literally tens of billions of dollars per year?
These tax subsidies to these mature industries distort the market against the newer energy technologies, and sustain pollution and energy imports — more than any other industrialized country. This needs to stop and Congress needs some backbone to increase these clean energy incentives for 10 years. — Scott