CAP en Español
Small CAP Banner

Conservatives Power Big Oil, Stall Cleaner Natural Gas Vehicles

SOURCE: AP/M. Spencer Green

T. Boone Pickens developed his “Pickens Plan” in 2008 to dramatically reduce U.S. oil use by fueling vehicles with natural gas. The plan, however, has recently come under fire from a number of conservative and right-wing organizations and legislators.

    PRINT:
  • print icon
  • SHARE:
  • Facebook icon
  • Twitter icon
  • Share on Google+
  • Email icon

A number of conservative and right-wing organizations and legislators have recently launched public opposition to oilman T. Boone Pickens’s proposal to increase the number of natural-gas-fueled vehicles in the United States. They cloak their opposition to this proposal in economic theory, opposing the program because such subsidies would “distort the competitive process that so capably yields affordable and viable products,” in the Heritage Foundation’s words. At the same time, however, these same institutions and individuals fervently support outdated or unnecessary tax breaks for Big Oil companies even though these subsidies distort the same marketplace. Not surprisingly, these same entities receive significant funding from Big Oil companies.

Every president since 1974 put a premium on reducing America’s dependence on oil, particularly from other nations. Former oilman and President George W. Bush went so far as to proclaim that “America is addicted to oil” in his 2006 State of the Union address.

Responding to this patriotic call to reduce our oil dependence, longtime Republican donor Pickens developed his “Pickens Plan” in 2008 to dramatically reduce U.S. oil use by fueling vehicles with natural gas. The heart of the plan would create tax incentives for companies to purchase natural-gas-powered medium and heavy trucks, and buses. In addition, it would encourage the construction of refueling infrastructure to provide natural gas to centrally fueled fleet vehicles.

Pickens noted that this bill is about U.S. energy security, plain and simple:

The legislation is designed to help jump-start a natural-gas vehicle industry in the United States, which would provide new jobs ranging from design engineers to toolmakers to manufacturers to those who maintain the vehicles. Transportation uses two-thirds of our nation’s oil. About one-third of all oil is consumed by the 8 million heavy-use trucks on our highways. If our nation can switch to a fleet powered by natural gas, of which we have a century’s worth here at home, our dependence on OPEC can be cut significantly.

The essential elements of the Pickens Plan were incorporated into the New Alternative Transportation to Give Americans Solutions Act, or the NAT GAS Act, which was introduced by bipartisan groups of senators and representatives in the previous two Congresses. The legislation would jump-start the use of natural-gas-powered heavy-duty trucks by giving tax incentives to purchasers and manufacturers of natural-gas-powered vehicles.

The NAT GAS Act is an oil-dependence reduction plan with support from both sides of the aisle. Its politically diverse sponsors are Congressmen John Sullivan (R-OK), Dan Boren (D-OK), John Larson (D-CT), and Kevin Brady (R-TX). The bill, H.R. 1380, was introduced in April with 185 House cosponsors.

“For American’s energy independence, establishing a viable second transportation fuel is a game changer,” said Rep. Brady. He added that “targeting business fleets and cargo trucks that offer the greatest promise, this bill creates a strong five-year window to build, buy and refuel natural gas vehicles here at home.”

This bill would provide significant benefits if the vehicles use cleanly produced natural gas. A Center for American Progress analysis determined that a transition to natural gas trucks and buses could reduce oil use by at least 1.2 million barrels per day by 2035 or sooner if the NAT GAS Act were adopted and implemented. The Senate Democratic Policy Committee notes that “the natural gas industry … estimated that this program will create more than 100,000 direct manufacturing and labor jobs and more than 450,000 indirect jobs.”

President Barack Obama publicly endorsed the Pickens plan for natural gas vehicles on March 30. Noting earlier bipartisan efforts to pass a similar bill, President Obama said that the “potential for natural gas is enormous. … last year, more than 150 members of Congress from both sides of the aisle produced legislation providing incentives to use clean-burning natural gas in our vehicles instead of oil. And that’s a big deal.”

A bill promoting natural gas vehicles was first introduced in 2008 by archconservative Sen. James Inhofe (R-OK). The first NAT GAS Act was soon introduced by bipartisan coalition including Senate Majority Leader Harry Reid (D-NV) and conservative champion Tom Coburn (R-OK). There was little conservative opposition to this bipartisan proposal until very recently. Interestingly, most of the conservative opposition to the NAT GAS Act has surfaced only after President Obama publicly supported the Pickens plan.

Chief among those who are pushing conservatives in Congress to drop their support for the NAT GAS Act are—not surprisingly—the Koch brothers. Charles Koch has been loudly vocalizing his opposition to the “misguided suggestion that the natural-gas industry should receive enormous new subsidies.” Pickens’ spokesman Jay Rosser noted that the Kochs “have to bet against the plan. They import and refine $2 billion of OPEC oil every year” at Koch Industries’ refinery in Corpus Christi, TX.

Despite the obvious contradictions with the company’s public opposition to big government handouts, Koch Industries has lobbied for and received a vast array of subsidies from the federal government over the years.

Rep. Mike Pompeo (R-KS), a freshman in Congress who was the top recipient of Koch-related money in the 2010 elections, has been leading the conservative attacks against the NAT GAS Act. Rep. Pompeo maintains that he is opposed to “using taxpayer dollars to support targeted interests within the energy sector” despite his vote to protect billions in federal subsidies for Big Oil. The connection between the $79,500 in campaign funds he collected from the Kochs in the last election cycle and his outspoken opposition to natural gas vehicles seems like more than just a coincidence.

The new efforts of right-wing organizations to oppose the NAT GAS Act are paying off, convincing co-sponsors to take the unusual step of publicly withdrawing their support for a bill that they previously cosponsored. Reps. Tim Griffin (R-AR) and Glenn Thompson (R-PA) withdrew their names as sponsors on May 26, joining Reps. Todd Akin (R-MO) and Steve Pearce (R-NM), who dropped their backing earlier in the month. Rep. Thompson had also been a co-sponsor of the 2009 version of the bill.

Pickens’ spokesman Rosser argues against this emerging conservative theme that investments in natural gas vehicles pick energy winners. He said that “this isn’t about picking transportation fuel winners. It’s about picking national security over terrorism and OPEC (Organization of Petroleum Exporting Countries).”

Despite their new opposition to incentives for natural gas vehicles, the conservative organizations and legislators still defend tax loopholes for Big Oil companies that 74 percent of Americans oppose. Could it be that the organizations that receive millions in Big Oil money are going after support for natural gas vehicles to appease their oil company financers? And that legislators dependent on Big Oil campaign cash are doing the same?

There is evidence that legislators who receive more campaign contributions from the oil industry are more likely to support retaining oil tax loopholes. In the House’s May 5 vote to reject a measure to debate legislation to end some oil company subsidies, analysis by the Public Campaign Action Fund showed that “House members who voted to continue the subsidies received, on average, five times more money in 2010 from oil and gas interests.”

And after the Senate’s recent 52-48 vote failed (60 votes needed for passage) to pass S. 940 to cut oil subsidies and reduce the deficit, a Center for American Progress Action Fund analysis found that the 48 senators who sided with Big Oil took in more than $21 million in career oil contributions, while the 52 senators who sided with the American people received just $5.4 million in contributions. That means pro-oil senators received, on average, more than four times as much oil cash as those who voted to end the subsidies.

High oil and gasoline prices in 2011 continue to exact a high toll on American families and the economy. They are another reminder—as if one was necessary—that it is imperative to reduce our dependence on this single fuel that powers our transportation system. The NAT GAS Act would make a small investment to reduce the oil burned in trucks and buses, and replace it with domestic natural gas when produced with protection for air, water, and climate.

Unfortunately, many conservative organizations and politicians would prefer to keep us hooked on oil, ostensibly to avoid subsidizing one particular fuel. Still, they keep singing Big Oil’s song with their defense of $40 billion in tax subsidies, thereby subsidizing one particular fuel.

Even worse than this hypocrisy is that these organizations and legislators would continue handouts to a 20th century dirty technology rather than shifting to a 21st century emerging fuel that the rest of the world is rushing to adopt. There are only 112,000 natural gas vehicles on our roads but 12 million worldwide. This will grow to 50 million in a decade. If conservatives’ efforts to protect Big Oil are successful, it will harm our economy, our competitiveness, our security, and our environment.

The chart below lists the organizations and legislators who support Big Oil tax subsidies but oppose investments in natural gas vehicles, their contributions from the oil industry, and their statements in support of Big Oil and against natural gas.

Groups that support Big Oil loopholes and oppose natural gas vehicles

Oil industry support

On subsidies for Big Oil

On the NAT GAS Act

Americans for Prosperity

David H. Koch Charitable Foundation $1,000,000

Americans for Prosperity opposes any changes in the tax code that target specific industries for tax increases because some people don’t like their product or profit.”

“Americans for Prosperity opposes the use of the tax code to promote the use of natural gas as a vehicle fuel or to subsidize the purchase of natural gas vehicles. If natural gas is a worthwhile fuel source it should prove itself in the marketplace, not be handpicked by industry lobbyists and DC politicians.”

Americans for Tax Reform

Sarah Scaife Foundation $375,000

Carthage Foundation $325,000

“Oil and natural gas companies receive no subsidies—the government doesn’t pay these companies a cent to produce oil. Every deduction or credit S. 940 proposes to revoke or limit has a specific purpose common throughout the tax code.”

“Congress and regulatory agencies have piled on rules and regulations in an attempt to nudge, or force, Americans to use lawmakers’ preferred energy sources.”

Competitive Enterprise Institute

Exxon Mobil $1,690,000

Sarah Scaife Foundation $2,865,000

David H. Koch Charitable Foundation $315,000

“Whether the depreciation allowance tax is good tax policy is one thing. But it does lower the cost of producing oil. If you raise the price of production, that increase would be passed on to somebody. He [President Obama] is desperate to blame somebody else. He is unwilling to say that’s how supply and demand operates, so he just shifts the blame to the oil companies because they are the easiest target for political demagoguery in the world.”

“Providing subsidies for every aspect of natural gas-fueled vehicles will only lead to a bloated industry of little help to energy consumers. Washington is no match for the free market when it comes to determining the most promising energy sources.” – Open letter to Congress, May 24, 2011, signed by CEI Senior Fellow Malco Lewis.

The Heritage Foundation

Exxon Mobil $385,000

Charles G. Koch Charitable Foundation $78,000

Ending all energy subsidies, including those for oil and gas, would be good for American taxpayers and consumers. However, Congress should not punish the oil and gas industry with targeted tax hikes, nor should it reward other parts of the energy industry favored by the Administration.”

“Subsidies funnel money toward projects that have little market support and offset the private-sector costs for investment that would have been made either way. … the fact that other transportation fuels receive government support is not a good reason to continue or expand special treatment for natural gas.”

60 Plus Association

“The 60 Plus Association … has spent close to $600,000 on such television spots. … the ads are part of a greatly expanded national role for the group … benefiting from what Republican sources describe as an influx of funds from the billionaire brothers, David and Charles Koch.” – Politico, October 15, 2010

“It is absolutely mind boggling that President Obama and the Senate Democrats are seeking to raise taxes and make U.S. industry less competitive in this atrocious economic climate where millions cannot find work. But oil companies make an easy target and divert attention away from the fact that Obama’s energy policies are directly contributing to over $4 a gallon gasoline.”

“Tax incentives like these allow government to decide which energy sources thrive or fail—and thereby distort the market. America’s experience with a number of similar energy subsidies dating back to the 1970s has shown that businesses benefiting from these incentives become reliant on government handouts in order to stay in business, causing the price of the subsidy to rise over time and leaving taxpayers to support industries for decades.” – open letter to Congress, May 23, 2011, signed by 60 Plus Association Chairman Jim Martin.

Representatives who support Big Oil loopholes and oppose natural gas vehicles

Oil industry campaign contributions

On subsidies for Big Oil

On the NAT GAS Act

Rep. Todd Akin

(R-MO)

$47,750

Voted against rolling back taxpayer subsidies for Big Oil on March 1. Voted in favor of the GOP budget, which retained $40 billion in Big Oil tax loopholes on April 15. Voted against legislation to prohibit the Big Five oil companies from receiving tax breaks for domestic manufacturing on May 5.

Withdrew co-sponsorship of the NAT GAS Act in May 2011.

Rep. Tim Griffin

(R-AR)

$136,459

Voted against rolling back taxpayer subsidies for Big Oil on March 1. Voted in favor of the GOP budget, which retained $40 billion in Big Oil tax loopholes on April 15. Voted against legislation to prohibit the Big Five oil companies from receiving tax breaks for domestic manufacturing on May 5.

“I am concerned that H.R. 1380 might be inconsistent with my goal of simplifying the tax code by lowering the overall tax rate and simultaneously ending industry-specific incentives.” Withdrew co-sponsorship of the NAT GAS Act in May 2011.

Rep. Raul Labrador

(R-ID)

$4,000

Voted against rolling back taxpayer subsidies for Big Oil on March 1. Voted in favor of the GOP budget, which retained $40 billion in Big Oil tax loopholes on April 15. Voted against legislation to prohibit the Big Five oil companies from receiving tax breaks for domestic manufacturing on May 5.

“Energy subsidies do two things—they distort the market, leading the private sector to invest in less economical forms of energy, but most importantly, number two, they take taxpayer dollars to do this.”

Rep. Steve Pearce

(R-NM)

$1,218,192

Voted against rolling back taxpayer subsidies for Big Oil on March 1. Voted in favor of the GOP budget, which retained $40 billion in Big Oil tax loopholes on April 15. Voted against legislation to prohibit the Big Five oil companies from receiving tax breaks for domestic manufacturing on May 5.

Withdrew co-sponsorship of the NAT GAS Act in May 2011.

Rep. Mike Pompeo

(R-KS)

$291,156

Voted against rolling back taxpayer subsidies for Big Oil on March 1. Voted in favor of the GOP budget, which retained $40 billion in Big Oil tax loopholes on April 15. Voted against legislation to prohibit the Big Five oil companies from receiving tax breaks for domestic manufacturing on May 5.

“What we don’t need to do is use our tax code to subsidize them [energy sources] and pick them and favor them.”

Rep. Glenn Thompson

(R-PA)

$100,572

Voted against rolling back taxpayer subsidies for Big Oil on March 1. Voted in favor of the GOP budget, which retained $40 billion in Big Oil tax loopholes on April 15. Voted against legislation to prohibit the Big Five oil companies from receiving tax breaks for domestic manufacturing on May 5.

“My support of this act was conflicting with my desire to simplify the tax code.”

Withdrew co-sponsorship of the NAT GAS Act in May 2011.

Dan Weiss is a Senior Fellow and Director of Climate Strategy at American Progress. Stewart Boss is an Intern with the Energy team.

To speak with our experts on this topic, please contact:

Print: Allison Preiss (economy, education, poverty)
202.478.6331 or apreiss@americanprogress.org

Print: Tom Caiazza (foreign policy, health care, energy and environment, LGBT issues, gun-violence prevention)
202.481.7141 or tcaiazza@americanprogress.org

Print: Chelsea Kiene (women's issues, Legal Progress, Half in Ten Education Fund)
202.478.5328 or ckiene@americanprogress.org

Spanish-language and ethnic media: Tanya Arditi
202.741.6258 or tarditi@americanprogress.org

TV: Rachel Rosen
202.483.2675 or rrosen@americanprogress.org

Radio: Chelsea Kiene
202.478.5328 or ckiene@americanprogress.org