The Real Subsidies are Not for Oil

In the President’s alternative reality business expenses are subsidies and subsidies are investments.

President Obama opened his May 14 weekend address with:

Without a doubt, one of the biggest burdens over the last few months has been the price of gasoline.  In many places, gas is now more than $4 a gallon, meaning that you could be paying more than $60 to fill up your tank.

So, the President feels your pain at the pump in the form of increased voter hostility.  But the spike in price is the inevitable, even intended result of his policies and ideas.

From the beginning of his Presidential campaign four years ago The Obama’s position on oil has been consistent: he wants less of it.  He has consistently scorned oil and natural gas as, in his words, “yesterday’s energy sources.”

Obama went on to repeat once again his objection to oil company profits, which are less than government’s share of we pay at the pump, and to allege once again that the oil companies were receiving “subsidies” from the government.

The American people shouldn’t be subsidizing oil companies at a time when they’re making near-record profits.

Obama hopes your mental picture will be one of government passing out subsidy checks to Exxon or BP.  But it turns out there are no subsidy checks. This is a tax issue.

The money in question – Democrats claim its a nice round $4 billion each  year but nobody really knows – was not given to oil companies by the government.  It did not come from taxes paid by others.   It’s a portion of what the oil companies received from customers in exchange for petroleum products produced and delivered as a result of hiring thousands of people and investing billions in drilling, pipelines, refineries, ships, and new technologies.

What Obama calls a “subsidy” is in fact the difference between what he thinks oil companies should owe in corporate income tax and what they are required to pay under current tax law.  Perhaps there is a logical argument for a tax increase on oil companies, even though it could result in even higher prices at the pump.  But Obama hasn’t made such an argument.  Instead he has tries to deceive us with the term “subsidy.”

The President’s very next sentence was about real subsidies, checks the government passes out to transfer real money from tax payers to politically favored corporations:

As a nation, we should be investing in the clean, renewable sources of energy that are the ultimate solution to high-gas prices.  That’s why we’re investing in clean energy technology, helping businesses that manufacture solar panels and wind turbines…

For more than thirty years government has “invested” in alternative energy schemes, mostly in the form of direct subsidies to private companies.  So far, those “investments” have yielded little.  Alternative energy is not yet viable, dependable or cost effective.

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