Obama Pushes to End Oil and Gas Subsidies

For reasons passing understanding, our federal government subsidizes the fossil fuel industry, as President Obama pointed out in a letter to Congressional leaders today:

While there is no silver bullet to address rising gas prices in the short term, there are steps we can take to ensure the American people don’t fall victim to skyrocketing gas prices over the long term. One of those steps is to eliminate unwarranted tax breaks to the oil and gas industry and invest that revenue into clean energy to reduce our dependence on foreign oil. Our outdated tax laws currently provide the oil and gas industry more than $4 billion per year in these subsidies, even though oil prices are high and the industry is projected to report outsized profits this quarter.

Obama took note of the fact that John Boehner just said he might consider cutting these subsidies:

I was heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies for the oil and gas industry. Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done.

Obama gets it right in proposing that subsidies can be better used to promote 21st century clean energy technology. Nothing I have read in economics or corporate strategy suggests that fossil fuel subsidies actually increase the supply of fossil fuels.