Big Oil's allies in the Senate once again blocked an attempt to revoke billions of dollars in subsidies for the oil industry. In a vote largely divided along party lines, the Senate's Republican leadership chose to support handouts for multi-billion-dollar companies that have a monopoly on our transportation system.
Government estimates show that the oil and gas industry receives about $4 billion every year in taxpayer money. (Let's be clear--the $4 billion figure represents direct subsidies, and doesn't include the indirect subsidies we pay in the form of military support, increased health care costs from pollution, environmental damage and the like.) Many of these direct subsidies date to a time when the industry was in its infancy, and the government was eager to foster its growth by helping shoulder some of the risks faced by entrepreneurs.
But now oil and gas is a fully mature--and highly profitable--industry. As a whole, the industry raked in $137 billion in profits in 2011, while one company alone, Exxon Mobil, took in $41.1 billion in annual earnings. In fact, for every gallon of gasoline you purchase, $1.22 goes directly to the profits of Big Oil.
It’s time to redirect our precious taxpayer dollars where they are needed most. But Big Oil isn’t ready to give up its government handouts. It spent $146 million on lobbying elected officials last year, and now Congress has voted to continue the industry’s taxpayer-funded bonus.
What do the American people get out of the deal? We’re stuck with high prices at the pump and precious few alternatives, because our outdated transportation system is almost entirely dependent on oil. Instead of reinvesting in and rebuilding our transportation system, we're continuing to funnel cash into a mature, highly profitable industry that essentially holds us hostage.
Continuing to subsidize the oil industry, which already has a monopoly on the United States transportation sector, is not in the national interest. It merely prolongs our dependence on oil, and puts American drivers in a bind every spring and summer when gas prices spike, and we have no choice but to pay up at the gas station.
Revoking oil subsidies, according to a 2011 Congressional Research Service report, would have little to no effect on gas prices. As economists have been saying for years, gas prices reflect a multitude of factors that are beyond our control. On the other hand, what high gas prices can do, with complete reliability, is boost oil company profits. Even BP, which recently settled one the multiple lawsuits it faces regarding the Deepwater Horizon oil disaster for nearly $8 billion, reported profits of $21.7 billion last year.
Oil companies have been enjoying this privilege for far too long. Big Oil is not an industry that needs help to grow. Recapturing some of these century-old subsidies and investing them in better transportation options – like public transit, more efficient vehicles, fuel alternatives such as cellulosic biofuels and electricity, and more bike and pedestrian paths will help us break free from the oil industry monopoly.
Unfortunately, Big Oil's hold on Congress is proving just as difficult to break.