Do Oil Companies Get “Subsidies”?

During his State of the Union speech last night, President Obama said “We have subsidized oil companies for a century. That’s long enough. It’s time to end the taxpayer givaways to an industry that’s rarely been more profitable, and double down on a clean energy industry that’s never been more promising.”

The President was stretching the definition of the word “subsidize” beyond anything reasonable here. Perhaps it wasn’t quite a lie, but it was a very creative use of the word.

What Obama and other leftists mean when they accuse US oil companies of getting “subsidies” is that most of the biggest oil companies don’t pay much corporate income tax in the US, because they make most of their profits (and pay most of their corporate taxes) in the nations where the oil is produced.

US oil companies actually pay higher effective corporate tax rates than most American companies. In 2009 Exxon surrendered nearly half its pre-tax to the tax collectors. The problem for big-spending liberal politicians is that the US government is not taking nearly as much of this money as the liberals would like.

President Obama no doubt envies the Mexican government, which nationalized the entire oil industry in 1938. The Mexican government gets every dime of oil revenue produced; something that would obviously be more to President Obama’s liking.

The truth is that governments don’t subsidize oil companies anywhere. They don’t give  money to oil companies, they take money from the companies. The only question is how much. Oil companies make their money producing and selling the stuff that quite literally fuels our modern lifestyle.

It’s interesting that the President didn’t single out General Electric for getting “subsidized.” GE, whose CEO is an Obama crony, paid zero in corporate taxes last year, on earnings of several billion dollars.

The companies that get true “subsidies” are politically correct and politically connected companies like Solyndra, which rake in half a billion dollars in taxpayer money, and spent some of it on donations to President Obama, before going out of business. The President was playing an interesting game when he called for actual subsidies to unprofitable “green energy” companies without using the word. It’s left to the discerning listener to decipher what he was talking about when he said he wants the government to “double down on a clean energy industry.” What he meant was actual subsidies, meeting the dictionary definition of the term.

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