How the Other Guys Play

Americans want deficit cuts, and there is a new set of leaders in Congress who committed themselves last year to cutting  government spending. Among the voters who installed this new Congress, over 70 percent are unaware how much of their tax money goes to highly profitable dirty energy companies. However, when they find out, only 8 percent want it to stay that way.

After President Obama’s State of the Union address calling for a modest cut of just $4 billion in welfare for oil companies, the focus on this insanely wasteful spending has intensified. His is the right proposal, but one that will encounter very stiff resistance from entrenched interests that still very much enjoy their century-long stay in the government incubator of tax breaks, subsidies, cheap access to public property, forgiveness for wrecking that property and little meaningful oversight.

Ending their welfare queen status will take some very aggressive, strategic communicating – and a lot of message discipline. For a good example of how to do that, you need look no further than the dirty energy lobby.

Take the response to the Obama proposal by Big Oil’s top lobbying chieftain, Jack Gerard: “The federal government by no stretch of the imagination subsidizes the oil industry.”

Experts who count government largess to dirty energy would laugh at this Alice-in-Wonderland assertion. But tactically, the thing to appreciate also is the tenacious message discipline Gerard shows. Notice that Mr. Gerard’s assertion was followed in a few days by a claim from the U.S. Chamber of Commerce’s “Institute for 21st Century Energy” President Karen Harbert. “Subsidies and tax advantages for renewable energy and fuels may need to phase out eventually to level the playing field for energy sources and to curb spending [emphasis added],” according to Energy & Environment, an industry newsletter.

“Let’s give the renewable industry some predictability, and let them have a certain defined period where they know there is going to be some support there, but it can’t go on for an undefined period of time. We can ill afford that,” Harbert added.

Harbert was followed by the claim of another dirty energy welfare defender, Jack Coleman of Energy North America, LLC.

Before joining his pro-dirty energy “consulting” firm, we paid Mr. Coleman’s salary during his public “service” as a General Counsel for the House Committee on Natural Resources. There he pushed to open up the Outer Continental Shelf to oil drilling, and have us underwrite his current clients’ dirty energy boondoggles, tar sands and oil shale projects.

Mr. Coleman displayed the same dirty energy messaging discipline we can expect when  his side is faced with growing demand, they get off the dole. He was a guest  earlier this week on the nationally syndicated Diane Rehm Show. His points:

  • Oil industry welfare is “standard around the world” and “miniscule.” If we eliminate them, it will be unfair “penalizing” of the oil and gas industry vis-à-vis other industries.
  • Then, the whopper: Oil company profits “pale in comparison to the taxes they pay.” ExxonMobil just posted profits of $9.25 billion in the final quarter of 2010, and BP posted pre-tax profits of $8.56 billion.
  • “Huge subsidies” go to renewables like solar and wind.

Attempting to bring Mr. Coleman back to reality was Kate Gordon, Vice President for Energy Policy at the Center for American Progress. For cleantech advocates, Gordon’s points are worth remembering

  • Some oil and gas subsidies have been in place for 100 years, from a completely different time in American history. Oil companies now make $80 for every barrel they produce from the Gulf of Mexico. These industries are mature and extremely profitable. They don’t need taxpayer help.
  • The tax breaks for oil companies are not the same as for other industries. For instance, oil and gas producers are allowed to take a larger deduction on each barrel drilled, and the total deduction can exceed the amount of revenue the companies get from each barrel.
  • The playing field is not level in the United States, but is tilted heavily – in a wide variety of ways – in favor of fossil fuels. Oil companies have business certainty in their welfare, while smart policies supporting renewables have to be renewed every few years.
  • The largest oil companies made $1 trillion in profits in the last decade. They certainly didn’t pay $3 trillion in taxes. (Gordon was responding to Coleman’s assertion that Exxon Mobil made $11.68 billion in profits in one quarter, but paid $32.36 billion in taxes  — 3 times the profits – that same quarter.)
  • Coleman isn’t taking into account the environmental costs to high-carbon fuels or that climate change is a crisis, while other countries increasingly are. We have unlimited renewables – solar, wind, geothermal – without blowing the tops off of mountains or fracking or drilling under the Gulf of Mexico.

Listening to people like Coleman, or Jack Gerard, for that matter, brings up a mix of feelings: pity for men who want to be like Sarah Palin – obviously wrong, never self-doubting, rarely embarrassed – but who can’t wink like her. Admiration for the professionalized gusto to confidently say clearly wrong and manifestly stupid things.

Cleantech advocates in this country need to invest a lot more time and effort into advocacy and pushing back on dirty energy propaganda that’s aimed squarely at their investments and life’s work. We should look at how the other team is playing. Their game is message discipline. We should try it too. For busy cleantech executives with more urgent things than public advocacy, that might be an unwelcome message. But the choice of inaction really isn’t viable.