Oil industry helps ease the new load on US taxpayers

Congress has allowed the oil and gas business to ease the extra load taxpayers will assume from the vote-winning part of the economic rescue package signed into law Oct. 3.

That’s one way for an industry to look at being singled out for tax increases.

The Emergency Economic Stabilization Act of 2008, providing for the public purchase of hundreds of billions of dollars’ worth of distressed loans, didn’t pass until Congress packed it with vote bait.

It added, for example, the Energy Improvement and Extension Act of 2008 (EIEA), an array of energy gifts President Bush threatened to veto when it first appeared in May. Having latched onto a bill widely seen as the last defense against financial-system collapse, however, this monument to the corruption of US energy policy is now law.

The Joint Committee on Taxation of Congress estimated the costs.

During 2009-18, it said on Oct. 1, “energy production incentives” will cost the national treasury $10.9 billion. These are new and extended tax breaks for exotic energy forms such as wind and geothermal and for conservation and carbon-mitigation projects. “Transportation and domestic fuel security provisions,” including help for biofuel and cellulosic-ethanol plants, electric vehicles, and alternative-fuel service stations, will cost $2.6 billion over 10 years.

And the 10-year price of the EIEA’s “energy conservation and efficiency provisions” will be a tidy $3.5 billion.

Part of what Congress takes from taxpayers to make producers of uneconomic energy happy, the oil industry will give back.

When the manufacturer’s tax deduction rises to 9% for most American businesses in 2010, it will stay at 6% for oil and gas companies. The 10-year take for taxpayers (and cost to shareholders of the companies involved): $4.9 billion.

Adjustments in rules about tax treatment of non-US oil and gas production will cost the industry $2.2 billion. And an increase in the excise tax rate for the Oil Spill Liability Trust Fund will cost $1.7 billion.

On balance, the EIEA will cost taxpayers $61 billion through 2018. The whole package added to the emergency measure to win passage will cost $110.4 billion.

But who’s counting?

(Online Oct. 10, 2008: author’s e-mail: [email protected])