President Joe Biden called for an end to all subsidies to oil and gas companies, in addition to all “other tax preferences,” in a proposal for the federal government’s 2024 budget released Thursday.
While the exact cost of oil and gas subsidies is unclear due to the myriad ways the incentives interact with the U.S. tax code, estimates typically range from $10 billion to $50 billion per year, according to Reuters. The Biden administration estimates that ending subsidies would save $31 billion annually, according to a White House fact sheet.
“The President is committed to ending tens of billions of dollars of Federal subsidies for oil and gas companies, leveling the playing field for clean energy,” the White House fact sheet reads. “Oil companies had record profits in 2022 and undertook record stock buybacks that benefited executives and wealthy shareholders, all while continuing to benefit from tax subsidies worth billions of dollars.”
The Inflation Reduction Act, a cornerstone Biden administration climate bill, offers roughly $369 billion in subsidies to wind, solar and battery production for clean energy initiatives. The cost of battery subsidies alone has been estimated to be roughly $136 billion over the next ten years by private analysts, more than four times the administration’s initial estimates.
The president’s proposed budget would invest $52.2 billion in discretionary funding to combat climate change, a $10.9 billion jump in funding from 2023, according to a White House fact sheet.
The cuts would be part of a broader movement in the president’s proposed budget to reduce the tax breaks for “special interest” industries, including real estate and cryptocurrency brokers, according to a White House fact sheet.
Biden repeatedly criticized oil and gas companies’ profits in 2022, and called for Congress to pass legislation quadrupling taxes on stock buybacks in his State of the Union address in February. Despite approving a historically low amount of drilling on federal land, the president has claimed that the spike in gas prices following Russia’s invasion of Ukraine could have been avoided if oil and gas companies had expanded production, an argument energy firms have pushed backagainst, citing record throughput at certain refineries.
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