While the debate rages on about how to fund the battle against climate change and renewable energy projects, it seems U.S. oil companies have enjoyed substantial financial windfalls on top of existing generous subsidies through tax loopholes the failure of government departments to collect royalties. The problem isn’t confined to the USA either.
The New York Times reports Interior Department officials have told the House Interior and Related Agencies Appropriations Subcommittee that old technology, sub-standard interagency communication and an ageing royalty relief law have played a role in the failure to collect tens of billions of taxpayer dollars from oil companies.
The Interior Department says it does not have access to industry real-time data on production and well activity in the Gulf of Mexico and the current collections system does not respond to industry conditions, resulting in underreporting.
It’s not a situation unique to the USA – last month we reported on the discovery of a $600 million a year Australian oil production tax loophole.
The enviable financial position that fossil fuel companies find themselves in is due in part to tax payer assistance. While tax relief for fossil fuel companies isn’t taken from our hip pockets and pay packets directly as such, the shortfall in government revenue has to come from somewhere – it translates to less in the way of essential services and the high levels of taxation that Australians endure.
It’s a position that Big Oil and Big Coal have maintained for many years, even though these industries have been well established for decades. It also comes at the expense of the environment and fast-tracking of clean, renewable energy technologies such as solar power which would bring down the price of renewables even faster.
U.S. President Barack Obama recognised this in his recent State of the Union Speech when he said of oil companies and their subsidies: "I don’t know if you’ve n noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s."
Image credit: GetUp
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