President Obama can rightfully be accused of many things — but not a rigid adherence to consistency. As he inaccurately rails against the oil and natural gas industry's “unfair” tax breaks, he's doling out billions to that industry's competitors. The recent fiscal cliff deal included 12 different “tax extenders” for green energy projects. The total cost to taxpayers is $18.1 billion over the next decade.
The package includes some ridiculous tax breaks. It tosses $59 million at cellulosic biofuels, which are manufactured from wood and grass. It earmarks $7 million for the purchase of electric motorcycles. It reinstates a credit for the creation of renewable fueling stations that could total $30,000 per facility. This is just the president's latest effort to bolster green energy. His stimulus bill included $90 billion in handouts for green energy projects.
These funds weren't restricted to tax breaks. The handouts also included loans, loan guarantees, cash grants and interest subsidies. After all, a tax break doesn't help much if a company isn't making money. The Heritage Foundation recently learned that 34 green tech companies getting federal largesse have either gone bankrupt or are headed toward insolvency.
Yet Obama routinely complains that the oil and natural gas sector benefits from “special” tax treatment. Democrats regularly call for the elimination of these supposed favors to raise new revenues. But these companies don't get special breaks, just standard benefits available to all businesses. Essentially, the oil industry takes advantage of four types of breaks.
One has to do with intangible drilling costs. Energy companies can deduct the costs associated with drilling, just like other companies can deduct the costs associated with research and development.
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