Big Oil’s Billions in Tax Perks Survive Fiscal Cliff Deal

<a href="http://www.shutterstock.com">Bjorn Stefanson </a>/Shutterstock

For indispensable reporting on the coronavirus crisis and more, subscribe to Mother Jones' newsletters.


Everything was supposed to be “on the table” in the crafting of deal to avert the so-called fiscal cliff. But in the end, congressional Democrats and Republicans skipped over some of the most glaring tax perks and giveaways. Case in point: Congress didn’t touch billions of dollars a year in freebies to the oil and gas industry that pad the profit margins of companies such as ExxonMobil and BP.

The final fiscal cliff deal does not touch oil and gas subsidies, confirms Rory Cooper, a spokesman for House Majority Leader Eric Cantor (R-Va.). Ending the costliest tax breaks for oil and gas companies would have raised tens of billions of dollars in revenue. Trimming just a handful of these breaks for the big five companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—would’ve raised $24 billion over the next decade. President Obama’s 2012 budget proposal called for ending 13 breaks benefiting oil and gas companies of all sizes; it would have saved $46 billion over 10 years.

There was a window of time around the November elections when it looked as if these subsidies might, just might, face even the slightest cuts. At the first presidential debate, Mitt Romney, whose closest allies included the head of the oil lobby, said oil subsidies were on the table if corporate taxes were lowered. Rep. Fred Upton (R-Mich.), chair of the powerful House energy and commerce committee, said in a debate that he’d end all energy subsidies, including those for oil and gas. And a week after the election, House Speaker John Boehner (R-Ohio) refused to rule out trimming oil and gas subsidies as part of a fiscal cliff deal.

But oil and gas giveaways have a knack for surviving even the fiercest fiscal showdowns. (See: Congress’ 1986 tax-reform battle.) Because they’re baked into the tax code, the industry and its lobbyists only have to defend their billions in perks; the wind and solar industries, by contrast, must fight and claw to extend the breaks they receive, which include expiration dates. The fiscal cliff deal also preserved tens of billions of dollars in tax credits for renewable energy production and research.

“We’re certainly not asking for anything on Capitol Hill,” a staffer with the American Petroleum Institute, the oil industry’s top lobbying shop, told the AP in late November. And he wasn’t lying: the industry doesn’t necessarily want anything new from Congress. It just wants to keep what it already has.

Which is exactly what happened in the fiscal cliff drama. The oil and gas industry preserved its bountiful status quo so that the billions in breaks continue to flow. Game, set, match, Big Oil.

THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

We Recommend

Latest

Sign up for our newsletters

Subscribe and we'll send Mother Jones straight to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate

We have a new comment system! We are now using Coral, from Vox Media, for comments on all new articles. We'd love your feedback.