President Opens Offshore Drilling But FY2011 Energy Budget Removes
Fossil Fuel Subsidies! ...Huh?
Published March 31, 2010, 12:18 am, CST
by Diane W. Collins
dcollins@marketingweb.com
President Obama announced he would open 
offshore drilling 50 miles out along the East coast, Gulf of Mexico and in the Alaska region while protecting certain areas considered important to fishing and tourism. However, the drilling will not start until 2012. And whether drilling proceeds at all will be dependent upon studies between now and 2012 as well as the "interest" of oil companies to drill offshore.
Although we applaud the move forward we believe in "trust but verify." The President needs votes for a new, revised "cap-and-trade" legislation currently being devised. In addition the EPA will announce their new regulations with regard to "greenhouse gases" tomorrow. Further, the FY2011 White house budget called for ending the subsidies to fossil fuel companies costing them approximately $39B, as we have reported in the past. The policy was articulated in the President's budget for the Energy Department:
"The Budget also eliminates funding for programs that provide inefficient fossil fuel subsidies that impede investment in clean energy sources and undermine efforts to deal with the threat of climate change."
According to the Associated Press, the Budget measure imposes about $39B in tax increases on oil, gas and coal companies over the next decade. So our question is this. If offshore drilling depends in part on the interest of oil companies to drill and their tax subsidies for becoming involved in projects that are less profitable have been removed... is this merely a maneuver for votes on cap-and-trade? Once again, it is the President's promise today for a potential benefit in the future. Congressmen beware.
We applaud President Obama for his recognition of the need to end foreign oil dependence calling it a national security issue; and his understanding that transition to cleaner energy can not be accomplished by destroying our current energy paradigm. However, the President will need to restore the subsidies to encourage companies to drill. Much more on this later.