In these days of federal budget-cutting (and high gas prices), it was only a matter of time before subsidies for oil companies came under closer scrutiny. That moment has come. Chatter has been building for a few weeks and things came to a head this past Saturday, when President Obama used his weekly address to make the case for putting an end to the $4 billion that U.S. taxpayers contribute to the oil industry. However, it’s important to note that President Obama did not present the issue as a savings of $4 billion to trim the deficit. Instead, it’s $4 billion that could be better invested in clean, renewable energy.
The Problem with Profitable Oil Companies
President Obama made it clear that he has no problem with profitability. After all, profitability clears the way for future investments — but that is precisely the problem when it comes to the U.S. oil industry. Aside from significant environmental and public health issues, the continued development of oil resources has become a national defense liability. Transitioning out of petroleum fuels – both foreign and domestic – has become a top priority for the Department of Defense. In the context of national security, taxpayer support for the oil industry is alarmingly counterproductive. Conversely, investment in clean energy is a national security investment, just as taxpayers support weapons programs, training, emergency preparedness and other needs related to national defense and public safety.
President Obama’s Case for Ending Oil and Gas Subsidies
In his address, President Obama called for ending both oil and gas subsidies, not for ending oil and gas production. The way he framed it is in terms of investing in the past or investing in the future. As he said in his State of the Union address, it’s a choice between “yesterday’s energy” and new energy that can create new businesses and new jobs, while improving national security. In case there are any doubts, Obama affirmed his support for public investment in alternative energy by stating in part, “I refuse to cut things like clean energy that will help America…by growing our economy [and] that will help make America more secure.”