Don Briggs – Louisiana Oil & Gas Association -

Last week, before the United Nations Summit on Climate Change, President Obama took the stage setting himself up as the world leader in the war against global warming, and at the same time declaring war on US oil and gas producers.

President Obama presented his agenda, which is to strip the oil and gas industry of needed tax incentives, to the United Nations Summit on Climate Change and the G20, hoping to gain support and provide momentum in Congress where the energy package is being debated.

President Obama opened his speech by saying, “That so many of us are here today is a recognition that the threat from climate change is serious, it is urgent, and it is growing.  Our generation’s response to this challenge will be judged by history, for if we fail to meet it- boldly, swiftly, and together – we risk consigning future generations to an irreversible catastrophe.”  Obama continued by saying, “I will work with my colleagues at the G20 to phase out fossil fuel subsidies so that we can better address our climate challenge.”

With a rhetoric hinting of doomsday environmental terrorism, and under the disguise of saving the world from “global warming” President Obama encouraged the G20 to commit to:

Rationalize and phase out over the medium term inefficient fossil fuel subsidies that encourage wasteful consumption………..We call on all nations to adopt policies that will phase out such subsidies worldwide.”
The commitment of the G20 was very broad, with no dates, timetables, procedures and no real teeth.  The commitment was more to placate the President than to agree with him.  Environmentalist around the world felt it was a moment of lost opportunity.

Keep in mind, with a world in chaos, the President of the United States is pushing for measures that could have major implications on the citizens of the G20 countries in the name of “global warming”, a theory that is not embraced by all, and certainly not one many nations have the capital or the will to assume.
Phasing out “fossil fuel subsidies” has a different impact and meaning to every country.  For example, in the case of China and India, a reduction of “fossil fuel subsidies” would cause an increase in the price of a gallon of gasoline. In the United States a reduction of “fossil fuel subsidies” would be to strip the oil and gas industry of tax incentives needed to attract investment into the industry, therefore discouraging exploration.

According to a recent study by the Environmental Law-Institute, (ELI) “The largest U.S subsidies to fossil fuels are attributed to tax breaks that aid foreign oil production…….The study reveals that the lion’s share of energy subsidies supported energy sources that emit high levels of greenhouse gases.  Fossil fuels benefited from approximately $72 billion over the seven-year period, while subsidies for renewable fuels totaled only $29 billion. Of the $29 billion, $16.8 billion went to corn ethanol.

Put another way, fossil fuels, which makes up 84% of the US energy infrastructure received $72 billion in subsides in a seven-year period.  On the other hand, renewable fuels make up a mere 7% of the US energy infrastructure and received $29 billion in subsidies.

According to some independent oil and natural gas producers, their exploration budgets would be slashed by 20 – 40% if President Obama were successful in removing the incentives.  This would be another step backward in our quest for energy security.