The Cato Institute’s Jerry Taylor and Peter Van Doren argue that Republicans should take up the President’s offer to eliminate subsidies for the oil and gas industry. Indeed, limited government conservatives should do the President one better, and call for the elimination of energy subsidies across the board. I doubt the President would accept this offer — but no more than I doubt Republicans would offer it in the first place.
UPDATE: Some argue that the “subsidies” to oil and gas development are not subsidies at all, but rather the same sorts of tax deductions that all industries get. Yes and no. One of the subsidies at issue is the manufacturing tax credit which oil and gas companies get on the same terms as all other manufacturers. I would agree it does not make sense to single out oil and gas companies and repeal the tax credit only for them, but I don’t think the tax credit makes sense in the first place for anyone. But other examples are subsidies, pure and simple. The best example is the percentage depletion allowance which, as applied in some cases, enables oil companies greater depreciation than the value of the initial investment. No extractive industries get no such benefit, nor should they. It makes no sense to allow a company to deduct as depreciation more than they invested, and there is no reason why any specific industry should receive this sort of special treatment. It’s worth noting that this allowance primarily benefits smaller oil companies, not oil giants such as ExxonMobil or BP, but it is a subsidy nonetheless.