The House of Representatives is poised Thursday to play Robin Hood with energy policy.
It aims to cut $14 billion in federal oil and gas tax breaks and other benefits over the next 10 years and give them instead to renewable-energy programs.
Such a change would represent a noticeable trim in government support for the oil and gas industry at a time when it is trying to boost domestic production. It would provide a huge boost to renewable energy industries as they try to replace fossil fuels with cleaner energy that's also domestically produced.
Nevertheless, the proposed cuts go only so far. Even if the House's new clean-energy legislation becomes law, the oil and gas industry will remain by far the largest recipient of federal energy largesse, receiving by some estimates four times the money of the next largest recipient: the nuclear industry.
That prospect has many renewable-energy advocates and budget hawks pushing for more cuts even as conventional-energy experts warn of the fallout from the current round of proposed rollbacks.
"What the Democrats have cut is a big number," says Steve Ellis, a spokesman for Taxpayers for Common Sense, a Washington watchdog group. But "if you look at the whole universe of federal oil and gas breaks, it's a much larger number than this legislation cuts."
"If Congress imposes these additional costs on the companies, it just makes them more likely to look overseas," responds Mark Kibbe, senior tax-policy analyst for the American Petroleum Institute, a lobbying arm of the oil industry in Washington. "If you make these changes, you decrease US production, US jobs, and increase US reliance on imported oil."
Congress envisions slashing $14 billion – an average of $1.4 billion a year – over the next 10 years. This includes cutting $7.7 billion in tax incentives and toughening royalty-payment rules to bring in $6.3 billion that otherwise would flow to oil and gas companies.
The proposed cuts, when adjusted for inflation, would total per year roughly a third of the $3.6 billion in tax incentives the oil and gas industry got in 2005, the Government Accountability Office reported in September.