By Ben Geman - 02/13/12 04:42 PM EST
President Obama’s new budget proposal calls for the repeal of billions of dollars in oil-and-gas industry tax breaks.
The proposal would nix roughly $39 billion worth of tax breaks over a decade, but the plan is largely a political statement because the administration in all probability lacks enough support in Congress to kill the incentives.
The White House, countering oil industry arguments, said in its fiscal year 2013 proposal that nixing the incentives would not discourage domestic energy production.
“Removing these lower-priority subsidies would reduce greenhouse gas emissions and generate $38.6 billion of additional revenue over the next 10 years, an amount that represents only a small percentage of domestic oil and gas revenues — about one percent over the coming decade,” it adds.
Obama has been pushing the tax plan for years, but recent votes in Congress have fallen well short of the support needed to pass amid resistance from Republicans and oil-patch Democrats, and the industry has lobbied fiercely (and successfully) to maintain the incentives.
But the budget blueprint makes clear that the White House plans to use the proposal as part of its larger message on green energy.
“Repealing fossil fuel tax preferences helps eliminate market distortions, strengthening incentives for investments in clean, renewable, and more energy efficient technologies,” the budget plan states.
It would raise an estimated $11.6 billion over a decade by ending the industry’s ability to claim a lucrative deduction on domestic manufacturing income and an estimated $13.9 billion by ending oil companies’ ability to write-off certain drilling costs, among other repeals.
The plan drew immediate pushback from the oil-and-gas industry.
“Increasing our taxes would push oil and natural gas investment overseas and diminish job-creation and economic activity here at home,” American Petroleum Institute CEO Jack Gerard said in a statement.
“After a handful of years, we would see less domestic energy production — particularly of natural gas — more imports, fewer new jobs, and, eventually, depressed tax, royalty and other revenues,” he said.