Rhetoric Vs. Action

Obama’s talk doesn’t match his walk on energy policy

AP Images
March 23, 2012

President Obama has said he wants to encourage more oil production in the United States, but his administration’s own policy statements appear to contradict his claim.

Each of Obama’s budget requests over the past four years has included a provision to eliminate a federal tax subsidy for domestic oil producers, formally known as "intangible drilling cost" (IDC) expensing.

Each year, the Treasury Department has offered an official rationale for this proposal in its "General Explanations" report on the president’s budget, using language that suggests the administration’s professed enthusiasm for domestic drilling may be less than sincere.

"The expensing of IDCs, like other oil and gas preferences the Administration proposes to repeal, distorts markets by encouraging more investment in the oil and gas industry than would occur under a neutral system," reads the Treasury report on the president’s fiscal year 2013 budget. "This market distortion is detrimental to long-term energy security and is also inconsistent with the Administration’s policy of supporting a clean energy economy, reducing our reliance on oil, and cutting carbon pollution."

By actively pursuing a policy that, in the administration’s own words, is designed to promote less investment in domestic oil and gas production, President Obama appears to be undercutting some of his own claims.

"We want to encourage production of oil and gas, and make sure that wherever we've got American resources, we are tapping into them," Obama said Wednesday in Nevada.

Earlier this week, a non-partisan congressional study found that 96 percent of increased domestic oil production since 2007 took place on non-federal land outside the president’s control.

Obama has been struggling of late to assuage mounting public concerns over fuel prices that have reached record highs. To that end, he has tried to appear more supportive of domestic oil production that his previous rhetoric would suggest, for instance, by announcing his support for a portion of the Keystone XL oil pipeline from Canada, despite his earlier threats to veto the entire project.

Obama was singing a different tune in February when he unveiled his most recent budget request.

"We need to reduce our dependence on foreign oil by ending the subsidies for oil companies, and doubling down on clean energy that generates jobs and strengthens our security," he said.

The domestic oil and gas industry has vocally opposed Obama’s effort to eliminate IDC expensing, claiming that doing so would significantly reduce production in the United States. An independent report prepared for the American Petroleum Institute in August 2010 predicted a total loss of up to 250,000 barrels per day by 2017, or "more than 10 percent of U.S. productive capacity."