President Obama’s Fake Fossil Fuel Infatuation

President Obama pretends to be for energy independence — he lies.

President Obama’s crush on oil and gas was short lived.

On January 24, he angered his green base when, in his State of the Union address (SOTU), he stated that he is directing his “administration to open more than 75 percent of our potential offshore oil and gas resources.” He also called for “every possible action” to develop “a supply of natural gas that can last America nearly one hundred years.”

Greenpeace’s reaction: “President Obama announced a potential environmental nightmare when he called tonight for more than 75% of offshore oil and gas resources to be exploited.”  Time’s Ecocentric blog chastised him for barely mentioning even the words “climate change.” Others felt that his “cheerleading” for greater shale gas drilling risked the enthusiastic support of environmentalists and accused him of selling out the environment for re-election. Over all, the SOTU “left many eco friendly people more than a little unhappy.”

Not to worry. His infatuation with fossil fuels was merely a short-lived crush.

Days after touting oil and gas in the SOTU, President Obama released his proposed 2013 budget. While the Financial Times declared that “everybody knows it has no chance of passing,” they did acknowledge that it does offer “a foretaste of the priorities he would pursue in a second term.” And, the foretaste will bring his green base back into the tent and “sets up a fight with the oil and gas industry.”

President Obama has frequently attempted to raise taxes on the oil and gas industry, and that theme is repeated in the budget—and some exclusively single out the oil and gas industry. One such tax hike proposal involves the Section 199 manufacturer’s deduction, which was part of the American Jobs Creation Act passed by Congress in 2004, as an incentive to retain manufacturing and production jobs in the US. Section 199 allows a deduction equal to a percentage of net income from production activities in producing new products such as manufacturing, producing, or growing tangible personal property, production of a qualified film, architectural engineering services, and production of electricity and natural gas. While other industries will be able to keep their 9% deduction, the oil and gas industry is already only allowed 6%, but under the proposed budget, Section 199 would be totally repealed for oil and gas companies. So much for the “fairness” rhetoric and American independence from foreign oil and gas.

Generally unique taxes are used to punish undesirable activities. The so-called “sin taxes” are levied on cigarettes and alcohol, gambling, and vehicles believed to emit excessive emissions. While the proposed repeal of the Section 199 deduction for oil and gas development is not a new tax, it does single out one industry for punishment because the administration perceives its activity as “undesirable.”  Repealing Section 199 is just one of the changes the President would like to impose which would cause US oil and gas producers’ federal taxes to climb by nearly $27 billion over 10 years—an increase that will be reflected in gasoline prices.

Clearly, the SOTU crush is over, replaced by the original lover: green—who briefly fell out of favor, due to the likes of Solyndra, et al.

Within the President’s proposed budget are startling spending increases for the Department of Energy, the Department of Interior and the Environmental Protection Agency.  The increases include $310 million for the SunShot Initiative, designed to make solar electricity cost-competitive with traditional energy—without subsidies—by 2020 and $95 million for wind energy technologies. Additionally, among the priorities the President would like to pursue is the extension of the Production Tax Credit (PTC) for wind energy which Congress specifically did not include in the payroll tax extension bill—leaving wind energy lobbyists predicting the demise of the industry—and the extension of the Treasury Cash Grant Program (Section 1603 of the American Recovery and Reinvestment Act) that expired at the end of 2011.

While greens describe Section 1603 as a program that “provided grants in lieu of tax credits to small renewable companies,” free market, fiscal conservatives—who don’t like subsidies in the first place—would be outraged if they understood how the program is really used. The PTC gave owners of wind turbines a tax credit of 2.2 cents per kilowatt-hour (kWh) of electricity produced during the first 10 years of operation. A 50 MW installation operating at an average capacity factor of 30% would generate 131,000,000 kWh per year. The owner would receive a PTC of $2,891,000 per year or $28,910,000 over 10 years. However, Section 1603 allowed the turbine owners to take a “cash grant” equal to 30% of capital costs up front ($100-120 million, 30% = $30-36 million) that came directly from the US Treasury—whether or not the turbine ever produced any electricity. This removes the performance risk for the developer and allows projects with a marginal net capacity factor to get built—even though, like Solyndra, the project doesn’t attract enough private investment. Plus, the cash grant is a “grant,” not a loan. The government doesn’t expect any money back. With the money taken up front, rather than annually based on actual production, turbine owners do not have the incentive to keep up the costly maintenance, and the turbines can eventually be abandoned. Additionally, much of the money is given to foreign companies—not “small renewable companies.”

These brief samples of President Obama’s priorities, as outlined in his proposed budget, highlight the flaws of his ideology. Instead of building on strength, it builds on failure. Renewables have repeatedly proven that they are more expensive than traditional fuels and are unwanted—requiring mandates and government programs to create an artificial market. There are thousands of abandoned wind turbines rusting in the wind. There were no buyers for Solyndra. Their stock of solar tubes were tossed in the trash. Fledgling companies from all segments of the renewable industry have gone bankrupt. They were surviving solely on subsidies and couldn’t compete without the frequent cash infusions. Yet, the budget promises them billions more—good money thrown after bad.

Meanwhile, the abundant and affordable fuels: oil and gas, are being singled out for punishment as if they are “undesirable.” The increased costs will be added to the growing gas prices, which punish the consumer and hurt our sputtering economic recovery.

Regarding the budget, the Financial Times aptly concludes that President Obama resorted to “gimmicks that will add further complexity” to the tax code. “At some point, however, he will need to produce a more serious document than this.”

Like his fossil fuel infatuation, the President budget is not serious—it is a fake budget.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.

 

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Comments

  1. Well said!! Of course Obama's budget is a "fake budget" just as insincere as his purportedfavoring of fossil fuels in the SOTU. If this proposed budget even comes to a vote in the Senate I would be extremely surprised if even his own party supported it.

  2. He is ruining this country on purpose. We all know that. Is this what the people of this nation want? Think about the country for a second and not the Government handout…… Just get to work and most of all, give a damn for a change.

  3. There it is folks, saying things to make you vote for Obama and more good news coming our way. Then after the election, Excutive Order to stop all exploration and hand the energy over to the EPA for the better of mankind.

  4. Isn't it amazing how many utterly stupid people there are out there voting?,

    • when considering gun control.

      The world's largest army … America's hunters!
      A blogger added up the deer license sales in just a handful of states and arrived at a striking conclusion:
      There were over 600,000 hunters this season in the state of Wisconsin. Allow me to restate that number. Over the last several months, Wisconsin's hunters became the eighth largest army in the world. More men under arms than in Iran. More than in France and Germany combined. These men deployed to the woods of a single American state to hunt with firearms, and no one was killed.
      That number pales in comparison to the 750,000 who hunted the woods of Pennsylvania and Michigan 's 700,000 hunters, all of whom have now returned home. Toss in a quarter million hunters in West Virginia and it literally establishes the fact that the hunters of those four states alone would comprise the largest army in the world.
      The point? America will forever be safe from foreign invasion with that kind of home-grown firepower.
      Hunting — it's not just a way to fill the freezer. It's a matter of national security.
      *************************************************
      My own two cents on this: That's why all enemies -foreign and domestic- want to see us disarmed.

  5. Guess…You got that right . You seen the youtube video on talking to the Obama voters 2008? They had no clue on anything. They only knew Obama.

  6. Once the payoffs were given out like George Soros the $2billion to drill oill in Brizil and 1/2 billon to Solinda, $2million to build a Bio fuel plant he didn't need and then ordered thousands of gallons of fuel at $14.00 per gal. 3 times the going price., and on.
    We are going to be paying for geneations while he is in Kenya. Hilary Clinton would be No better.

  7. Obama is destroying this nation with his green crap. Its time for us to start putting these politicians in jail for this kind of destruction. hes willing to punish us for using oil or gas in our cars while making us pay for his bad ideas like electric cars and solar panels. To him and his eco nut jobs we are just open wallets to tax. Its long past time for us to hold these crooks to account. Hes violated the constitution and our laws that he dont like. since the rule of law is there to ignore lets ignore his above the law bull and put him ass in jail for the crimes hes done. And the lying politicians that have covered for this thug and lying thief. they all need to be prosecuted right along with him. Its time for us to say we've had enough of his above the law crap and hold him and the rest accountable. they have all had a hand in spending us into debt that will take us years to dig out of. now its time they pay for their crimes. 5 trillion is debt is not just over spending its treasonous. And it time we did something about it.

    • An aside, where does plastic come from?? hint, it's a petroleum product and we use tons of it in shrink wrap. I work at a distribution center and we re-bale it there's so much

  8. Why hasn't Obama been impeached or even arrested and sent before a Military Tribunal?

    An illegal SSI number is a felony. Why is he allowed to have an illegal SSI number?

    Why was he allowed to protect jihadist Hasan who wounded more than 30 and also slaughtered a dozen unarmed troops in Fort Hood? Obama ordered a ban on words such as jihadist, terrorist, etc., in the investigative data. He also ordered that the defense would be "work stress."

  9. Someone mentioned those who had no clue about Obama during the 2008 campaign, but they said they would vote for him. Some actually were asked if it was okay with them that Obama had chosen Sarah Palin as a running mate. Actual responses, "Oh, that's okay with me." Some also were asked if it was okay with them that Obama was pro-life, and they said that was okay too. And each one of those people assured the interviewer that they were going to vote for sure–for Obama.

    Some whites voted for him because they thought it was time to have a black president. Makes me wonder who they would vote for if someone considered of the yellow or brown race was Obama's opponent. What a dilemma for them. Or would they simply decide it would be nice to have a yellow or brown president for a change. (Those color depictions are for clarifying my comments only, not with any intent at derogation.)

    May voters remember, next time, that the brains are not in the skin color.

    • Nor is a quality in far too little availability – character! We've forgotten in all our "down-sizing" of people that character, values, allegiance, and all those "stuffy" qualities do make a difference.

  10. patrioticnut says:

    Who can't see what he has been doing all along? Sorry to say but it is the same ones who will never read this or any article that shows it. They will continue to support him and will surely vote for him again. You just can't fix stupid and continuing to try borders on insanity so lets just write them off, leave them in the dust bin with Obama and fix our republic. Support your state and ask that your state legislature pass the Balance of Powers Act.

  11. John Stewart says:

    Does anyone really think this was a state of the union speech? If so they should get off the yellow brick road so as not to get hit by the political bulldozer.
    That was nothing more than a campaign speech for the hearing impaired.

    • Though I'm not a fan of Karl Rove, he said it best; Obama "can't do the job of being president, he doesn't have it in him for the day to day work of the office, he's good a campaigning and that's about all."
      That – - and vacationing!!

  12. Things that bother me: global money coming into Obama's war chest "under the radar" and secondly, the growing presence of Islam in our country. The former based on the billions of Muslims world-wide who want Islam to run the former "Christian" USA and the latter based on the POTUS being Muslim of his own admission in word and behavior.
    As elsewhere, Islam has been patient for 14 Centuries, is emerging in Egypt, Libya, Syria, and elsewhere riding in on the coattails of "democracy" and "the freedom of the people".
    Jeremiah Wright is into "Black Liberation Theology" fitting a "Christ" into the mix only if he's totally and solely for blacks, Obama still can't wrap himself around the basic doctrine of Jesus Christ, that being the Trinity, man a sinner, Christ the Savior, and Salvation in Christ alone and access to the Father through Christ alone. He's not the brother of Satan, he was and is sinless, and he's coming to judge the world, Christian at the Bema Seat and non-Christian at the Great White Throne.

  13. LukeAppling says:

    Obama is hell-bent on destroying America as the 60's radicals who permeate his administration have been doing for years in their classroom propaganda to schools and colleges all over America. The idea is to collapse the economy through outrageous laws and regulations to prohibit any fossil fuels and use "green jobs" to rid ourselves of the gas, oil, nuclear, in favor of much more expensive solar, bio, wind, hydrogen, electric[run by coal] all of these forms have been halted all over the world because of the excessive costs and the failure to be readily available every day. With no oil or gas and cap & trade taxes added to the $5,000,000,000,000 Obama has added to our national debt in three years he is helping destroy america while his administration and czars are laughing at us in the shadows.

  14. LIES>>>LIES!! Every word is scripted & a LIE! But the Dumb-down Obummer lovers don't know any better!! What a disgusting display of a man & to think he is in charge makes me ILL!! Micelle is still vacationing & parties still at OUR White House, the hell with America…now he's singing for votes!! GIVE ME A BREAK…..NOV. CAN'T COME FAST ENOUGH…GET HIM OUT!!

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