NEW YORK (
) -- I've got a better idea than President Obama for what to do with Big Oil's big profit. Let the companies keep the profit in their pockets. But -- and it's a big but -- give them a little push with where to spend the profit, at least some of the profit -- let's call it the Big Oil profit froth, or what the government estimates is $41 billion over a decade in money the Big Oil companies are walking away with at the expense of the embattled federal budget.
As expected, Obama announced on Monday as part of his deficit reduction plan a proposal to take away Big Oil's industry-specific tax breaks, the $41 billion over 10 years that I'd let Big Oil pocket. The Obama plan is nothing new, and for the record its chances of legislative success are probably about as good as the chances of the president posing for a photo-op at White House-backed solar company
hearings in bankruptcy court.
The Big Oil tax takeaway is dead on arrival on Capitol Hill, and if you think the Big Oil tax breaks play well anywhere other than with Obama's most ardent
New York Times
Op-ed page-reading base and the environmental lobby corner on K Street, you're the one being played.
President Obama is calling for the elimination of six tax incentives for oil and gas companies, which I won't bother detailing, as well as a reinstatement of the excise tax on crude oil, and a fee on non-producing oil and gas leases. Did you just hear more than half of Congress caught between a yawn and a chuckle and go back to whitening their teeth in preparation for their next televised sound bite?
My plan covers the same five Big Oil companies targeted by President Obama --
Royal Dutch Shell
. The only difference is they get to keep that $41 billion over 10 years, but the kicker is that they have to invest it in renewable energy initiatives.
For those of you who don't now think I've gone off the deep end like President Obama after reading that last sentence, hear me out on why this plan makes sense.
Let's start with Obama. He always talks about working across the aisle (or at least until recently did) and he's fought hard to shed his anti-business stance. He wants to create jobs and build a more diverse energy infrastructure for the U.S. Well, my plan allows him to accomplish all of these goals at once. Working with Big Oil (reaching across aisle); not taking away tax breaks (pro-business); and spurring investment in diverse energy sources which in turn creates jobs through a federal mandate that Big Oil companies invest $41 billion over the next 10 years in green energy projects, technologies or companies (Obama's existing energy philosophy).
The federal government lets Big Oil decide where to put the money (within prescribed guidelines), which in turn lets Big Oil generate future profit from these investments, which in turn will provide the oil companies with even more money that the government would have tried to take away and reinvest it in even more money-making projects. It's a virtuous cycle if there ever was one that only puts a minor dent in the free markets ethic.
We've already seen how the Solyndra bankruptcy and the wasted $528 million in taxpayer money has
with his green energy agenda, so the government could fess up that it needs some help in identifying the best new energy companies. Does anyone really think the U.S. government can do a better job than Exxon Mobil in identifying green energy companies with good prospects? Here's exhibit A in answering that question from the annals of the
The enemies of Obama's tax-and-spend government will tell me this is just socialism by another name, but I say it's hard to cry foul at a federal mandate that the biggest oil companies put $41 billion into creating new job sectors, and diversifying our nation's energy infrastructure and supply sources. The plan also helps Big Oil to diversify revenue and profit for its shareholders. I know we all love our Big Oil dividends and Exxon Mobil's rapacious share repurchasing, but as a shareholder, watching the struggles of Big Oil to replace dwindling reserves should mean you want to see it do more than shake hands in bend-over-backward deals with the Russians and that shady cartel of those lucky natural resource-rich countries known as the Developing World Authoritarian Dictatorship LLC. This would be basic risk management for your Big Oil stock holding. If shale gas is it, that's not very good risk-based diversification.
Exxon Mobil spent $41 billion on one shale gas acquisition,
, in 2009, compared with this estimated decade-long profit pool of $41 billion across the five Big Oil companies. This is Big Oil chump change being put to work in a worthy capitalist experiment spurred by novel government mandate.
I only see two groups dead-set against this plan: 1) the most hardened haters of green energy who believe anything not oil and gas will be an abyss of capital losses well past the time that the last drop of oil on this planet has been burned and up until the time the sun expires, and 2) tree-huggers so all-encompassing in their embrace they can't ever see "evil" Big Oil making an investment that doesn't in some way get poured right back into crude, if not go straight into the bank account of Dick Cheney. For anybody outside these two interest groups, my plan isn't so terrible.
Which means, of course, it is terrible, but that doesn't mean when it comes to getting a fair shake on Capitol Hill the chances for my bill are any worse than President Obama's Big Oil tax takeaway. In fact, simply by way of not already being pronounced dead and buried like the Obama Big Oil tax proposal, simply by way of
being anything introduced by Obama, my plan is looking good already.
There is one problem: Big Oil and its lobbyists know that Obama doesn't have a prayer of getting Congress to agree to take away these tax freebies, so why consider any alternative. That's sound logic, but that shouldn't necessarily make any of us happy.
Almost every government has a plan in place, or at least experiments underway, in creating a 21st century energy policy that goes beyond oil and gas, except the U.S. One more bid to generate some sound bite momentum through anti-Big Oil rhetoric won't generate one barrel of future energy supply, won't solve the federal budget shortfall, and is probably hopeless as legislation, Mr. President. But that doesn't mean we shouldn't expect Big Oil to do more than what's already customary for it with the generous tax breaks Big Oil has been given by the American taxpayer.
-- Written by Eric Rosenbaum from New York