Wednesday, February 6, 2013

Solyndra vs. Oil Subsidies

Last year I proposed that the American taxpayers should subsidize their own oil company and build their own pipeline from Canada. It's not so outrageous, after all, we subsidize the largest and best military force in the world. The Chinese subside their oil companies and the people in China pay far less for gasoline than we do.

The continuing debate about subsiding clean energy and fossil fuels.

I'm very pro about alternative sources of energy, but I'm even more anti about oil subsidies. But if the executives of Solyndra are guilty of ripping off the taxpayers, then I say, have the Justice Department prosecute them to the fullest extent of the law.

The DOE announced on February 1st that the Energy Secretary Steven Chu, who had won a Nobel Prize in physics, had offered his resignation to President Obama. He had come under intense questioning for his handling of the $528 million solar energy loan to Solyndra.

But in the United States, estimates of annual fossil fuel subsidies range anywhere from $4 billion to $52 billion every single year, depending on who you ask. But why have any and all efforts to eliminate those subsidies always been so soundly defeated in Congress? And especially when most polls approve of eliminating oil subsidies?

$52 billion is the highest credible comprehensive estimate, because it also includes the costs associated with using our military forces to defend pipelines and shipping lanes in the Persian Gulf. The $4 billion figure is the low-ball number for outright tax give-a-ways --- and is reflected in the "effective" corporate tax rates that energy companies actually pay in taxes - as opposed to the "statutory" corporate tax rate of 35%, which is rarely paid by the Fortune 500 (On their websites under "investor's relations", they brag about this in their annual reports).

Last year President Obama supported a bill in the Senate that was sponsored by Senator Robert Menendez (D-N.J) that removed subsidies for oil companies. It was voted down in a "procedural move".

After relentlessly pontificating on the Senate floor, and not too long ago, Senate Majority Leader Harry Reid (D-Nv) was supposed to reform the filibuster (to thwart Republican obstructionism), but for some unknown reason, just one day after he said he would, Harry Reid caved in and declined to do so.

Senator Menendez had only needed 60 votes to pass his bill, but it only got 51 votes to move forward. The bill would have ended oil subsidies to large companies such as Exxon-Mobil, Chevron, BP, Royal Dutch Shell, and ConocoPhillips. (Now the Senate Ethics Committee is investigating Menendez for inappropriately accepting gifts from a political donor...but with Citizens United, doesn't everybody in Congress?)

Just as with the company who made solar panels (Solyndra), when oil production was a new and fledgling industry back in 1919, the U.S. Government gave oil companies financial assistance. But the Republicans and Fox News are still bitterly complaining about the losses from Solyndra.

Last year Mitt Romney made numerous bogus claims in the October 3rd debate about the $90 billion in grants, guaranteed loans and tax breaks for clean energy projects in the stimulus bill, and Romney specifically targeted Solyndra as an example.

You compare >>> A one-time $528 million loan to Solyndra, versus a $5 billion annual subsidy to big oil companies like Exxon-Mobil, who are earning record profits -- and who have continued to receive these government subsidies every year for almost a century.

But the Republicans, Fox News and Mitt Romney don't consider that a "government hand-out"...why not?

ConocoPhillips CEO James Mulva (a Republican) said ending the tax breaks for the big oil companies would be "un-American", then refused to apologize to the American people. He also said it was "discrimination", as though he would be personally injured by some grievous and unjust wrong done to him if tax give-a-ways were repealed.

And why does Congress keep approving these subsidies, even when the oil CEOs claim they never ask for them?

And then there's nuclear energy...

Americans for Prosperity, which is funded by the Charles and David Koch (whose family fortune comes from oil refining) are one of the super PACS who led the charge against clean energy exploration. The nuclear industry was also on the attack in the guise of Exelon Corp (see their SEC filings)

It was recently reported that a politically connected Chinese industrialist is bankrolling a $350 million project at China's National Academy of Sciences to develop thorium power, which would be used to fuel molten-salt reactors, as opposed to old school uranium-fueled water reactors, and which would be much cleaner and meltdown-safe.

The technology for thorium power actually originated in the United States back in the 1960s. The Oak Ridge National Laboratory in Tennessee experimented with a thorium fuel reactor with molten-salt coolant, but it was shelved by the Nixon Administration because the Pentagon wanted to make nuclear bombs, which required the products of splitting uranium.

But the prime reason was the nuclear industry, which was totally dependent upon the standard technology, and had lobbied congress to block thorium power. (because lobbyists on K St. are paid like CEOs on Wall St.) Now China says they might have thorium power by 2020.

Besides oil, still today, even nuclear energy isn't economically viable without billions of dollars every year from taxpayer subsides. The oil and nuclear industries have just been protecting their profits and their cash cow -- us, the taxpayers in "big government" -- who have been paying for these subsidies for decades.

From 1918 to 2009, the average annual oil subsidy was $4.86 billion and the nuclear energy industry gets around $3.5 billion per year.

In one year alone, as the CEO of the [nuclear] company Exelon, John W. Rowe earned a total compensation of $12 million, which included a base salary of $1,468,077, a cash bonus of $1,573,825, stock grants of $6,341,383, and stock options of $2,236,650 (His stocks and options are taxed at the much lower tax rate as capital gains, not as regular wages -- much like Mitt Romney's $22 million annual income is taxed as "deferred interest".).

And wouldn't government subsidies also make the CEOs of Exelon and Exxon-Mobil government workers? And if so, why not just nationalize the oil and nuclear industries?)

Read The Oil Company Gusher by Robert Reich, author of Aftershock - "Let's not fool ourselves – or be fooled. There's no reason to continue to give giant oil companies a $4 billion a year tax windfall. (More here)

Can we spit H2O atoms to create pure hydrogen fuel, leaving nothing but pure oxygen as an emission?

While I was visiting a friend at UMASS in Amherst Massachusetts 35 years ago, one man said he could. But when he was supposed to demonstrate his experimental prototype to the U.S. government, he claimed his project had been sabotaged. I've heard similar stories over the years.

Could there be any reason why the gas, coal, nuclear and oil industries would NOT want alternative sources of energy? With their collective financial resources, they could still corner the market on thorium, solar panels, fuel cells and windmills --- and maybe even all the hydrogen in the world's rivers, lakes and oceans.

But even so, maybe domestic oil (America's natural resource on Federal lands) is far more profitable on the global market. Can you imagine a world with free and unlimited energy? A handful of oil executives can't.

Sign the petition to end oil subsidies

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1 comment:

  1. UPDATE: BP was sued for the oil spill that did at least $34 billion in damages to the Gulf Coast, and a U.S. judge approved an agreement for BP to plead guilty to manslaughter (that killed 11 workers) and pay a record $4 billion in criminal penalties.

    But the U.S. taxpayers have also awarded BP (through defense contracts) $2.51 billion in 2011, up from $1.04 billion in 2010. BP is among the companies that have gained from the Pentagon’s appetite for oil.

    The Defense Department, the world’s single largest consumer of energy excluding countries, spent $17.3 billion on petroleum in fiscal 2011.

    Meanwhile, U.S. taxpayers still subsidize at least $4 billion a year to big oil.