Reducing Tax Breaks For Big Oil a Big Mistake?

While gasoline prices are about 30 cents less per gallon than they were a month ago, many motorists are feeling pain at the pump during an economy that seems stuck in neutral.

So when Big Oil starts complaining about proposed tax hikes while continuing to post huge profits, it might be hard for some to feel sympathy.

But Bernard Weinstein believes that reducing tax breaks on oil and gas companies is only going to make it too expensive to produce energy domestically while at the same time keeping the U.S. reliant on producers in sometimes unstable regions of the world. Plus, consumers would only see prices rise.

“We do need comprehensive energy policy not only for economic growth but for national security,” Weinstein said during a special luncheon hosted by the New Tampa Chamber of Commerce and held at the this afternoon. “I believe the best assurance for energy security is to develop and maintain a complete portfolio of domestic energy resources. It’s also not inconceivable that given the right set of policies, the United States could not only produce its imports but could become a significant exporter.”

Weinstein is the associate director of Southern Methodist University’s Maguire Energy Institute. The American Petroleum Institute, the largest oil and gas industry trade group, sponsored Weinstein’s speaking engagement.

The Senate Financial Committee last month grilled the CEOs of the five biggest oil companies to talk about profits, something that Weinstein called “political theater” to win sympathy with frustrated consumers. Weinstein also spoke of the “standoff” that is currently taking place over energy policy in this country.

“You’ve got the Senate, which has approved a bill hiking taxes on Big Oil but the House won’t pass it,” he said. “The House has passed bills demanding more offshore drilling and speeding up the permitting process that the Senate won’t pass.”

It has been a volatile year so far for the oil industry, no doubt. There is a lot of political infighting over energy policy here at home, plus turmoil in the Middle East and North Africa. Meanwhile, prices crept up again to $100 a barrel and gasoline has shot past the $4-a-gallon mark in many parts of the country.

“If there ever were a time that we should be concerned about energy security and energy policy, it’s right now,” Weinstein said.

But reducing tax breaks for oil companies to help with a budget deficit will only mean higher prices for consumers -- many of whom are already struggling, Weinstein said.

The call for renewable energy is growing ever louder in this country. Many see green energy as a viable way to wean the U.S. off foreign oil while at the same time nurturing a burgeoning industry.

Yet Weinstein said domestic energy production of fossil fuels is what is really needed. “I’m not anti-renewables … I’m just saying you cannot base a long term energy strategy on so-called green energy,” he said. “It won’t get us where we need to go.

“The other thing is with all of the shale gas that’s being discovered and produced,” he added, “renewables just aren’t that competitive.”