A measure in the Senate to strip the US oil industry of some of the tax advantages it enjoys (some particular to their industry, others available to all businesses) was defeated in the Senate yesterday, even after the President took to the Rose Garden to publicly beat up on those bad, bad oil companies. There are a number of interesting political angles to this story.
First, the President knew he'd lose this one, but the loss--in his view--constitutes a victory. Let's fact it. Gasoline prices are his Achilles heel right now, and with Israel and Iran sizing each other up and the summer driving (read: demand) season coming, the prospect for lowering prices does not appear great. Were the Congress to call Mr. Obama's bluff and strip the breaks he sought, there would be immediate upward pressure on gasoline prices and the President would share in the blame. But he knew they wouldn't do that--he knew Republicans would reflexively vote against it, and he knew there were several vulnerable Democrats in oil states who would also vote against it. So he gets to play to his socialist, anti-business base by demonizing oil companies, without actually having to suffer the political pain of even higher prices. Two-point takedown for Obama.
Next, what was interesting to me was what would have been done with the $24B (over 10 years) generated by eliminating these tax breaks. Half would have gone to--you guessed it--subsidies and tax breaks for the "green energy" mafia. The other half would have gone to "deficit reduction". I might have been more favorably disposed to the legislation if ALL of it were targeted at deficit reduction, but the goodies in the bill for Mr. Obama's supporters in the already over-subsidized and incredibly unprofitable "green energy" industry make this look like straight up payback.
Finally, I really think energy is going to be an issue that Mitt Romney can own in this election. The President talks about an "all of the above" strategy, but his actions undercut that. Romney needs to talk about the prospect of real, tangible energy security based on reasonable growth in renewables, nuclear energy, gas, coal and oil--to include fracking and oil sands. He must make a straightforward case that the one of the very few industries with the capacity to bring us out of economic turmoil--while simultaneously increasing our energy security--is our domestic, carbon-based energy industry. That's where the jobs are, that's where the growth is, that's where energy security will come from.