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US Pays $4B In Oil Subsidies Yearly, Despite Record Oil Co Profits

offshore oil rig

The White House has revealed that U.S. taxpayers pay $4 billion a year in oil subsides, despite oil companies continually making record profits.

Obama stated that, “It’s outrageous and it has to stop. A century of subsidies to the oil companies is long enough. It’s time to end taxpayer giveaways to an industry that’s never been more profitabe, and use that money to reduce our deficit, and double down on a clean energy industry that has never been more promising”.

The Obama Administration has come under fire from Republicans attempting to blame it for the current situation of rising gasoline prices. Market speculation, and the growing threat of military conflict with Iran have nothing to do with the price of oil though, right? It’s something Republicans tend to ignore when it comes to gas prices.

Even Obama seems unwilling to draw attention to the Iran situation. Instead, he has explained in his weekly address that there is no quick fix to the problem of high gas prices. Obviously in campaign mode, Obama reiterates what he said in his recent State of the Union address, that his administration continues to help develop new sources of “American–made energy”.

Obama also refers to his political opponents’ unrealistic plan for $2 per gallon gas, by drilling for as much oil as possible domestically. He points out that “the American people aren’t stupid”,  adding that people know it’s not a plan but rather a bumper sticker, and his administration has already significantly increased domestic oil drilling during its term.

Obama says that the U.S. cannot just drill its way to lower gas prices, and that the only way to avoid oil price spikes is to have an “All-of-the-above strategy that develops all of the available sources of American energy including: oil, gas, wind, solar, nuclear, biofuels, and more”. A strategy needs to be pursued that aims to decrease the amount of oil used. That is the only real solution, he maintains.

Having said that, he goes on to say that his administration is producing more oil today than in the past eight years. In 2010, dependence on foreign oil was less than 50% for the first time in more than a decade. However, the use of wind and solar energy has also nearly doubled.

The Obama administration is advocating, instead of $4 billion in annual taxpayer subsidies to oil companies, a system of renewed tax credits that encourages new investments in clean energy.

Do you think taxpayer–funded subsidies for the oil industry should be cut and redirected to the emerging clean energy industry, or perhaps used to pay down the ballooning deficit?

Image CC licensed by Steve Jurvetson: Offshore oil platform

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