US Treasury Secretary Geithner Attacks Oil and Gas Tax Breaks - 3/12/09

U.S. Treasury Secretary Timothy Geithner told Congress Wednesday, U.S. natural gas and oil companies should not receive federal subsidies which are tax breaks, because their business contributes to global warming.

This is the sharpest attack on the oil and gas industry from the Obama administration which reinforces the White House stance on a policy promoting alternative energy sources like wind and solar.

The Obama administration’s budget will levy excise taxes on oil and natural gas produced in the Gulf of Mexico.  This would raise $5.3 billion in revenue from 2011 to 2019.  This 13% tax would only apply to oil companies that have a loophole which allows them to avoid paying royalties on the energy they supply.  The companies paying a royalty would get a tax credit.

The Obama budget will also place a $4 per acre annual fee on energy leases in the Gulf that are non-producing.  It is projected that this would generate $1.2 billion from 2010 to 2019.

Geithner said these taxes “can be absorbed” by the oil and gas companies since they have earned billions of dollars from high energy prices.

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