Obama Striving to Put an End to Oil Subsidies

President Obama's proposed 2013 budget seeks to end "unfair' oil subsidies. As evidenced by his State of the Union addresses in 2009, 2010,, 2011, and 2012, the President has repeatedly tried to put an end to oil subsidies.

Treasury Secretary Tim Geithner makes the point that unfair allocation of subsidies mean that some industries like oil and gas get a huge tax break while others do not.

"Right now, companies in some industries pay two or three times the effective tax rates as companies in other industries. For example, the effective tax rate on an investment in buildings or other structures by a manufacturing company might be twice as high as the rate that applies to an oil or gas company. These subsidies distort choices about where companies should invest, and they distort the allocation of capital."

The subsidies offered to the oil and gas industries are a fundamentally important issue for renewable sources of energy that are striving for grid parity. As the President said to students at the University of Miami, “It’s time to end taxpayer giveaways to an industry that has never been more profitable, double down on clean-energy industries that have never been more promising.”

For information on the environmental elements of the Obama budget click here.

© 2012, Richard Matthews. All rights reserved.

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Oil Spills off the Coast of New Zealand and Nigeria

Oil spills off the coast of New Zealand and Nigeria continue to make the point that oil has far-reaching consequences for the environment and the economy. On December 20, last year Nigeria experienced yet another oil spill, the worst in over a decade. Prior to that The Greek cargo ship Rena that ran aground off the coast of New Zealand on October 5, and then broke in two early in January 2012. Hundreds of tonnes of oil have spilled from the ship killing hundreds of birds. The Rena is already New Zealand's worst maritime disaster, and authorities say the situation will worsen with the release of even more oil.

Ross Henderson, spokesman for Maritime New Zealand, told the BBC, "We don't yet know what amount of oil may have been released, but we are gearing up for an expected release of oil and container debris on shore, and have response teams ready to go once that starts happening."

A large amount of debris has been sighted downwind of the vessel. Maritime New Zealand expected debris and oil to start washing up on beaches.

The December 20 leak that occured during a tanker loading operation is Nigeria's worst offshore oil spill in more than a decade. The oil leakage came from a facility at the Bonga oil field belonging to Shell Nigeria Exploration and Production Company (SNEPCo). The loss of over 40,000 barrels of crude oil was traced to an export line from the field’s floating production, storage and offloading vessel.

In 1998 a similar leakage at ExxonMobil facility resulted in a horrendous spill estimated at over 45,000 bpd. In January 2012, Shell shut down its Nembe Creek Trunkline (NCTL) following another oil leak that has affected the production of 70,000 bpd.

The Bonga oil spill and other similar spills have ravaged the Niger Delta and destroyed vegetation and marine life. The Environmental Policy Implementation Agency, an arm of the United Nations, blamed the oil spills in the Niger Delta on the negligence of oil firms.

Regardless of the cause, oil spills are highly destructive to the environment and have attendant consequences on the economy.

© 2012, Richard Matthews. All rights reserved.

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State Department Hearings for the Keystone XL Pipeline

On September 26th, the State Department began a series of hearings on the Keystone XL pipeline. Two very different views were expressed at public meetings in two states on Monday. People in Kansas criticized the Keystone XL pipeline for being environmentally destructive, while people in Texas praised the pipeline.

Kansas Republican Gov. Sam Brownback said that while he supports exploring renewable energy sources like wind and solar, he also supports the Keystone XL pipeline.

Although many want clean air and water, many also want the jobs that are associated with the pipeline. However, you can't have both. Further, increasing oil supplies to the US will diminish the urgency of developing the green energy economy with all the jobs that come with it.

Other meetings are taking place this week in Montana, South Dakota, Oklahoma and Nebraska. In conservative Nebraska there is growing concern about the pipeline's effect on the Ogallala Aquifer which provides water to much of Nebraska and seven other states. A leak from the Keystone XL pipeline would threaten the state's eco-sensitive Sand Hills and pollute the vast Ogallala Aquifer.

While there were several hundred people at the hearings in Texas and Kansas over one thousand attended Nebraska's hearing on September 27th. The state's Republican governor, Dave Heineman, and two senators - Republican Mike Johanns and Democrat Ben Nelson - have led the battle against the pipeline.

A final ruling is expected by the State Department later this year.

© 2011, Richard Matthews. All rights reserved.

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