Obama Administration Attacks Energy Producers

WASHINGTON (Reuters) ~ U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.

It was one of the sharpest attacks yet on the oil and gas industry by a top Obama administration official, reinforcing the White House stance that new U.S. energy policy will focus on promoting renewable energy sources like wind and solar power and rely less on traditional fossil fuels like oil as America tackles climate change.

"We don't believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don't think that's good economic policy and we think changing those incentives is good for the country," Geithner told the Senate Finance Committee at a hearing on the White House's proposed budget for the 2010 spending year.

The Obama administration's budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019. This new 13 percent tax on all oil and gas production in the Gulf would only affect those companies enjoying a loophole that allows them to avoid paying royalties on the energy supplies they drill. Companies already paying royalties would get a tax credit. Obama's budget would also place a $4 per acre annual fee on energy leases in the Gulf that are designated as nonproducing. The budget proposal projects the fee would generate $1.2 billion from 2010 to 2019.

Senator John Cornyn of Texas criticized the tax increases, saying they would hurt independent energy companies that provide a large share of U.S. oil and gas supplies.

"My view is that higher taxes on small and independent producers here in America will make us more dependent on imported oil and gas while we transition to cleaner energy alternatives, a goal we all share," said Cornyn. "And it will also hurt job retention and job creation in the energy sector, which provides an awful lot of jobs in this country."

Geithner said the additional taxes "can be absorbed" by the oil and gas companies, given the billions of dollars they have earned from high energy prices. "The impact of these subsidies are very small relative to revenues produced by U.S. oil and gas producers," he said.

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Oil, Gas Interests Increase Republican Donations

The National Institute on Money In State Politics has analyzed Oklahoma oil and gas interest donations since 2000 and reports Republicans have received the lion's share since 2002.

As the graph shows, Democrats topped Republicans in 2000, but in each election cycle since, Republicans have increased their advantage and in 2006, received more than double the amount given to Democrats.

The "Follow The Money" figures show the following for each election year:

2000: Total $548, 907; Democrats $327,374, Republicans $221,533.

2002: Total $1,847,251; Democrats $804,672, Republicans $1,042,379.

2004: Total $1,700,683; Democrats $581,054, Republicans $1,119,379.

2006: Total $3,298,954; Democrats $1,058,754, Republicans $2,241,299.

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Fallin Seeks To Protect Oil, Gas Industries

Oklahoma Congresswoman Mary Fallin addressed the full floor of the House of Representatives today, encouraging her colleagues to oppose legislation that would undermine Oklahoma's oil and gas industries and move the nation further away from energy independence.

Fallin instead proposed a two-part solution, acknowledging the role that both traditional and alternative energy forms can play in our future.

Fallin said, "The answer to America's energy crisis lies in expanding our oil and gas production in the short term, while investing in renewable energy sources in the long term."

The legislation backed today by Congressional Democrats, she said, would raise taxes on oil and gas companies in the United States, which would ultimately discourage domestic energy companies from further exploration. Fallin argued that this tax increase comes at a time when the U.S. most needs to increase production of its own energy resources. To not do so, said Fallin, would represent "both a national security threat and an economic threat to the nation."

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