Obama budget would end oil industry tax breaks, hike royalites

In unveiling his $3.8 trillion spending plan for the U.S. government on Wednesday, President Barack Obama revived his longstanding attack on oil industry tax breaks and formally launched a plan to pay for alternative vehicle research with drilling dollars.

While the tax plans are dead on arrival on Capitol Hill — where lawmakers have rejected similar proposals many times before — they drew outrage from oil and gas industry leaders who said Obama was seeking to use the sector as a piggy bank.

The Obama Budget Drains Tax Breaks for Big Oil

President Barack Obama’s budget proposal for fiscal year 2014 would eliminate $39 billion of special tax breaks for Big Oil companies over the next decade as part of comprehensive business tax reform. These companies earned billions of dollars in recent years due to high oil and gasoline prices and do not need additional support from taxpayers. These tax breaksemerged over the past 100 years to help the then-nascent industry develop, and they relieved the oil and gas industry of $466 billion in tax payments to the federal treasury between 1918 through 2009, according to DBL Investors. Now that the oil and gas industry is fully developed and mature, President Obama’s budget would end this century of largesse.

America’s Most Obvious Tax Reform Idea: Kill the Oil and Gas Subsidies

In a world where $100-a-barrel oil is here to stay, there’s no need to pad the industry’s bottom line.

When Saudi Arabia’s longtime oil minister, Ali Al-Naimi, opens his mouth, the world listens. Yesterday, during a speech in Hong Kong, he delivered a message that U.S. policy makers in particular would do well to take note of. The days of $100-a-barrel crude, he told the crowd, are here “for the foreseeable future.”

If he’s right, one thing that shouldn’t be around for the foreseeable future are the outdated tax credits that protect oil and gas companies, which will be plenty profitable in a world of $100-a-barrel oil. If Democrats and Republicans are looking for safe ground to set up camp for the budget negotiations, let’s start with these $7 billion-a-yearsubsidies.