In the recent State of the Union Address, President Obama called for an end to oil and gas subsidies, the third time he has done so since taking office in 2009. The President’s FY 2012 budget, submitted today, includes the elimination of nearly $4 billion of incentives annually for the oil, gas and coal industries. Unfortunately, all previous attempts to reduce or eliminate these incentives have met the same fate: bipartisan opposition and heavy lobbying from fossil fuel groups. In spite of the uphill nature of the battle, the President hopes that current demand for reduced spending will result in a different outcome.
In addition to competing with the large dollar discrepancy between industry incentives, most renewable energy subsidies face annual reauthorization debates in Congress, whereas fossil fuels have for years been expressly written into law. For example, the extremely successful 1603 Cash Grant faced serious opposition during the lame duck session of the 111th Congress, and only finally garnered inclusion as a compromise among politicians. On the other hand, fossil fuel subsidies face no annual scrutiny, flying under the rader of the public. The short-term authorization of renewable energy subsidies leads to market and price instability, making fossil fuels a more sure bet for investors.
Unsurprisingly, the oil and gas industry contends that the subsidies actually go in the other direction: from fossil fuel companies to the federal government, in the form of taxes and royalties. Other industry members claim the elimination of subsidies will reduce investment and slow down vital domestic exploration. Secretary of the Interior Ken Salazar, however, disagrees with the industry’s assertion:
“All you have to do is look at record profits in the oil and gas world over the last several years and, in my view, you’re going to continue to see a great interest in oil and gas because it’s an essential part of our economy today…I think the oil and gas industry will do just fine.”
American fossil fuel subsidies can be traced to the rise of OPEC and the 1973 oil embargo. At the time, these subsidies raised fears that the United States was too dependent on foreign oil and needed to increase domestic energy production. But policies that might have made sense when Richard Nixon was president and oil was $3 a barrel are drastically outdated today. The Environmental Law Institute conducted a 
