Sun Sets for Oil Subsidies?

In Obama’s 2011 FY budget proposal sent to Congress this week, the administration calls for eliminating more than $2.7 billion in tax subsidies for oil, coal and gas industries. As a result, more than $38.8 billion dollars in tax revenue could be generated for the federal government over the course of the next ten years.

The budget proposal also cuts funding provided through the Department of Energy for expensive petroleum exploration, including the Ultra-Deepwater exploration program (saving $50 million) and expansion of the Strategic Petroleum Reserve (saving $71 million).

With this proposal, Obama is sending a loud and clear message that the nation is moving towards a clean energy future. Overall, the budget provides over $28 billion for the DOE in 2011, a 7% increase over this year’s budget estimates. Much of this increase is for the support of renewable energy generation and advanced vehicle technologies.

For advanced vehicle technology funding, this recent increase culminates in a three-year trend. In 2009, $267 million was appropriated through the DOE for clean car research and technology deployment. In 2010, that number increased to $312 million. In the proposed 2011 budget, $325 million is earmarked for these activities.

Of course, $325 million for clean cars appears like a drop in the bucket compared to the billions in federal subsidies for the petroleum industry. Time will tell if these inclusions remain in the budget. In 2008, Congressional House Speaker Nancy Pelosi led a bill with similar provisions that passed in the U.S. House of Representatives, but failed in the U.S. Senate.

Given the economic climate of the country, giving away money to corporations that rank amongst the most profitable in the world is a testament to the continued power of the old energy paradigm. I hope that this time our elected officials have enough conviction to make the right choice.