A recent article in the Washington Post exposes the rabid consistency of Congressman Markey (D-MA). He consistently ignores economics, logic, ethics and the U.S. Constitution. As someone who spends a lot of time in Massachusetts, it’s quite disappointing to see this disposition from someone like the Commonwealth’s U.S. Senate candidate, Rep. Ed Markey.
He relishes his chosen role of long-term, lead crusader against various tax deductions for American companies -- especially American-based oil companies -- though multinationals and foreign state-owned companies get those treatments when they invest in America or elsewhere. He calls those tax treatments for U.S. companies "subsidies," but they are not grants, free loans or any such thing that he loves when they go to "green" energy companies. The article misused the title of an old Dire Straits piece. It more accurately applies to Solyndra and other subsidized, failed, "green energy" companies who got "Money for Nothing," and produced exactly that.
Markey consistently mislabels as subsidies, provisions of the tax code available to any and all companies that qualify through specific activities (research, paying taxes overseas, etc). Those companies that Mr. Markey consistently singles out for his smug criticism fuel and provide most of the feedstocks for multiple American companies and industries. They pay more in taxes than companies like Apple, GE and others with whom he has no apparent argument. In fact, the foreign income tax credit or the dual capacity provisions help all companies to offset our arduously arcane tax code and prevent double-taxing the American international oil companies as they compete here and abroad.
Double taxation would make U.S. companies less competitive in the global marketplace, leaving the Venezuelan and Chinese national oil companies to invest in American lands and waters, and to exploit and ravage Africa while American companies cannot compete strongly (and bring American technology and environmental awareness) to those areas.
The most recent foray of his long crusade goes back to 1995 and has never stopped. Mr. Markey voted against the Deep Water Royalty Relief Act in 1995, and is still angry that it became law. He still crusades to overturn it and collect (retroactively) the "lost" royalty revenues. Article 1, Section 9, Clause 3 of the Constitution says, “no bill of attainder or ex-post facto laws shall be passed” this was Founders attempt to ensure the “full faith and credit of the United States.” Mr. Markey, however, apparently feels it’s lawful and upright to negate contracts and laws. As justification he forever asks the wrong question ("how much royalty did we fail to collect?") rather than the logical one -- "did the law do what it was intended to do -- increase oil production in difficult areas?"
According to the legislative history, the law itself, and to Energy Information Administration and Congressional Research Service studies, the law sought to boost U.S. oil production when no technology existed to drill in water deeper than about a mile. Government and company officials were sure that huge oil and gas resources lay at far greater water depths; they wanted to develop those resources, which was impossible at the time.
Encouraged and incentivized by the new law, oil companies invested hugely in research; they invented and developed new systems and technologies. Those breakthroughs then enabled them to add millions of barrels of newly-recoverable oil to U.S. reserves. (One exploration well was drilled in 21,000 feet [four miles] of water and through 7,000 feet of ocean bottom to make a major oil discovery, at a probable cost of at least $1 billion.) Those government incentives were more successful than virtually any such program in the past century or more. They did exactly what President Clinton and House and Senate wanted when they enacted the law.
But Mr. Markey wants our government to go back on its word, renounce the law and its provisions after 18 years, negate it and penalize the successes it fostered by retroactively imposing $11 billion (Mr. Markey's number) in costs on companies that trusted the government and the law.
This is not just an anti-oil crusade, but it's an anti-American, a frantic anti-Constitutional disposition. Whatever happened to the sanctity of contracts, the rule of law, economics, simple logic and ethics? Really, whatever happened to ‘a deal’s a deal?’ Ask Mr. Markey.
John Rafuse, PhD is a former energy advisor in the Nixon White House and currently principal of the Rafuse Organization, a public policy consultancy.