Aiming subsidies at certain energy sectors called unfair

McClatchy NewspapersMay 13, 2011 

WASHINGTON — Republican Rep. Mike Pompeo of Kansas wants Congress to just say no to all energy subsidies: wind, solar, ethanol, natural gas and, yes, oil, too.

If that sounds odd for a lawmaker who used to sell equipment to the oil and natural gas industries, and whose largest political benefactor — Koch Industries of Wichita, Kan. — is a huge international energy conglomerate, Pompeo agrees.

But he said the government shouldn't be "picking winners and losers" in the energy field by targeting special subsidies to one sector over another.

At a news conference Friday accompanied by another freshman Republican, Rep. Raul Labrador of Idaho, Pompeo said that Congress was "subsidizing particular energies trying to identify what the next great energy technology will be. I think it's both a fool's errand and bad policy when we do."

Pompeo and Labrador said they weren't following the lead of President Barack Obama and other Democrats, who've called for repealing tax breaks for the top oil companies as they earn billions in profits and gasoline prices rise above $4 per gallon.

Pompeo said that some of the tax breaks the oil industry had, such as the domestic manufacturer's tax credit, weren't aimed specifically at the oil industry but were available to manufacturers across the board.

"I don't think it's fair ... to say the oil industry is making too much money, so let's take this away from them, but we're not going to take it away from anybody else," Labrador said.

The government spent more than $18 billion on energy industry subsidies in 2009, according to a letter Pompeo sent to colleagues in the House of Representatives this week, along with Labrador and another Republican backer, Rep. Tom McClintock of California, asking for their support.

The letter from the three asked for a "sense of the House of Representatives' " resolution in backing the elimination of all "grants, direct loans, loan guarantees and tax credits aimed at specific sectors of the energy industry."

But success could be difficult. What triggered their concern was a recent bill — which has 185 co-sponsors — to offer tax subsidies to the natural gas industry.

Brian Johnson, a senior adviser on tax policy for the American Petroleum Institute, an oil industry trade group, said that it supported the lawmakers' effort.

He said that while the industry didn't receive subsidies, it did get tax credits. With subsidies, he said, tax dollars go to a certain industry, but tax credits are deductions that enable the industry to keep more of its own money.

The Pompeo measure would undercut government efforts to promote "green" energy and technologies, such as wind.

"I'm all about jobs; I'm all about growth," Pompeo said. "I wish the wind guys well. I hope someone invents the greatest battery technology and all of these things work and costs come down and we get really cool energy. But we don't need to do it with federal taxpayers' subsidies."

Tyson Slocum, the director of the energy program at Public Citizen, a nonprofit consumer-advocacy group, said that while he appreciated the "idealism" behind trying to eliminate energy subsidies, he found it shortsighted.

"There are massive embedded disadvantages against emerging technologies that have to compete against those fuels that have huge infrastructures already in place," he said. "The question shouldn't be, 'Let's get rid of all energy subsidies.' The question should be, 'Let's get rid of subsidies for mature technologies that have proved that they are profitable.' "

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