I bet most people who follow politics believe big oil gets huge subsidies -- in part, because that's what Barack Obama says. Sure enough, oil is subsidized, and all oil subsidies should be ended, totally and immediately. But unlike, say, ethanol, nuclear, solar, wind, geothermal, electric cars, or any other form of "renewable" energy, oil doesn't get direct gifts or even targeted tax breaks from the federal government.
Former Sen. John Sununu has a good op-ed today in the Boston Globe about oil subsidies. He points out that the biggest "oil subsidy" Obama talks about is really a "domestic production" tax credit, benefitting domestic oil drilling, coal mining, and chopping down trees as well as manufacturing. Congress created this subsidy after the WTO made us repeal an export subsidy in the tax code.
The entire domestic production tax credit should be repealed, and replaced with across the board cuts in corporate income tax. But Obama just wants to knock the oil companies off this little subsidy wagon, letting the foresters and coal miners stay on.
Sununu runs through other tax breaks oil companies get, some of which are broad-based, some of which are targeted. But the real oil subsidies are not on Obama's chopping block: paving roads and fighting wars in the Middle East and Northern Africa. In fact, with his stimulus, his infrastructure stimulus, and his invasion of Libya, Obama has doubled down on the biggest oil subsidies.