Huelskamp: 'Big Oil bandits' are really just folks
Most tax subsidies go to mom-and-pop oil-well owners
By Rep. Tim Huelskamp
The Washington Times
7:05 p.m., Thursday, May 12, 2011
While the White House clamors about "Big Oil" and industry profits as the culprit for high gasoline prices, President Obama has once again demonstrated his lack of economic sophistication and understanding of current law.
Instead of proposing cuts as a solution to Washington's overspending addiction, the president and Democrats think the federal government just needs to collect more money. Their new source of revenue is the American consumer, whom they will tap through new taxes on the gasoline they consume. Believing that driving is a luxury, this administration proposes higher taxes as a means of generating revenue and changing behavior. The administration frames these taxes as levies on oil and gas companies, but what industry exists that does not pass higher taxes on to consumers? Certainly they are not just going to eat the obligation.
The administration argues that big oil and gas companies receive more than $4 billion in subsidies annually, but such an allegation could not be further from the truth. Since 1975, the percentage depletion tax credits have not been available to large companies (though they can still expense a part of their intangible drilling costs). In reality, it is the small drillers who benefit most from these tax credits. These are the one- or two-well owners in places like my home state of Kansas, who are pursuing their right to free enterprise. These are the mom-and-pop operations looking to build a small nest egg or send their children to college. These aren't the large corporations the president characterizes as ill-intentioned and money-hungry.
Independent drillers are not only the lifeblood of the second-largest industry in Kansas, they also are responsible for nine of 10 new wells in America and two-thirds of American oil. In an era in which we are striving to reduce foreign dependence and deal with high unemployment at the same time, it really does not make much sense to punish domestic drilling - a solution that kills two birds with one stone.
Gasoline isn't a "necessary evil." Rather, it is an essential component that allows our economy to function effectively, efficiently and productively. There are so many ironies associated with the president's animus toward oil.
He wants to stimulate the economy with road and bridge projects, yet he wants to make it more expensive for people to drive on those roads. He wants to subsidize the auto industry courtesy of the American taxpayer, yet he wants to make it more expensive for Americans to drive those cars. He wants to enhance domestic manufacturing in order to repay the unions, who delivered his victory, yet he wants to increase the costs of transporting those manufactured goods.
The answer is not electric cars, either. Consumers in my district won't be buying them anytime soon. First, the median annual household income there is just above $42,000; the Chevy Volt costs $41,000. Second, the administration is hostile toward the sources of energy we have in western Kansas to power those cars. The EPA is standing front and center in the way of new power-plant construction, but that's a story for another day.
Hostility toward American oil producers is undeserved, but economic aggression toward them is even more egregious. And using these independent producers as a conduit for extracting taxes from consumers is unjust.
Rep. Tim Huelskamp is a Republican from Kansas.