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A Century of Subsidies for Big Oil


A miniature version of the Capitol crafted by the cake sculptors of Charm City Cakes was the guest of honor at the “Century of Subsidies” birthday party hosted today by the American Coalition of Ethanol (ACE) and Iowa Renewable Fuels Association (IRFA).  In the spirit of the “celebration,” an oil derrick sprouted from the cake’s Capitol dome, spewing hundred dollar bills to symbolize one hundred years of continuous, industry-specific tax subsidies for Big Oil. “Today’s ‘Century of Subsidies’ birthday party was not about saying every tax subsidy the oil companies get is bad,” said Rick Schwarck, President of the Iowa Renewable Fuels Association and CEO of Absolute Energy, an ethanol plant near St. Ansgar, Iowa.  “Today’s ‘Century of Subsidies’ birthday party was a reminder to policy makers that Big Oil has benefited from taxpayer support for 100 years – and not just with tax subsidies, but mandates and loan guarantees and other policies.  So when the debate heats up over the Renewable Fuel Standard (RFS) and other renewable fuels policy, the debate should be a full, fair and factual discussion that takes an honest, hard look at how federal policy has been tilted in favor of Big Oil for a century.  American consumers deserve a level playing field that does not hold back homegrown, low-cost renewable fuels options.”


U.S. Senator Chuck Grassley (R-Iowa) stated, “America needs ‘all of the above’ for its energy policy, including domestic oil and gas, renewable energy, conservation, and emission-free nuclear. Oil, gas and nuclear all receive longstanding federal support. Any changes to support for renewables should be made within a broad-based energy policy discussion. Targeting renewables outside of a comprehensive debate doesn’t make any sense when it comes to good policy, and it’s intellectually dishonest if the effort is driven by competition that receives federal support.”


U.S. Senator Tom Harkin (D-Iowa) added, “This issue comes down to one thing: supporting renewable energy and our country’s energy security, all while creating good, middle class jobs that sustain a green economy in states like Iowa. That is why keeping the Renewable Fuel Standard in place is so critical.  I salute ACE and the Iowa Renewable Fuels Association for recognizing these contributions and continuing their support at a time when it is needed the most.”


The oldest, continuous tax subsidy for oil companies was enacted by Congress in 1913, making 2013 the 100th year of federal tax subsidies specific to the oil industry.  The list of current oil specific tax subsidies includes the following:

  • Expensing of Intangible Drilling Costs
  • Percentage Depletion Allowance
  • Deduction for Tertiary Injectants
  • Geological and Geophysical Expenditures
  • Exception for passive loss limitations for oil and gas
  • Enhanced oil recovery credit
  • Marginal oil well credit


To counterbalance the “Century of Subsidies” and other policies that favor petroleum, ACE and IRFA called upon Congress to protect the federal Renewable Fuels Standard (RFS).  The RFS cracks open the petroleum monopoly to give consumers non-petroleum choices at the pump.  Consumers benefit from market access to lower cost renewable fuels like E15 and E85. “If oil companies cannot stand on their own two feet after 100 years of clinging to certain taxpayer subsidies, Congress shouldn’t hurt American consumers by repealing the RFS, a policy that helps level the playing field with oil a little bit by giving people affordable and renewable fuel choices,” said ACE Executive Vice President Brian Jennings.  “ACE members met with Congress during our fly-in this week to emphasize how the RFS costs taxpayers nothing and has succeeded in delivering benefits for all Americans.”


The American Coalition for Ethanol (ACE) is the grassroots voice of the U.S. ethanol industry, a national advocacy association for the ethanol industry with nearly 1,500 members nationwide, including farmers, ethanol producers, commodity organizations, businesses supplying goods and services to the ethanol industry, rural electric cooperatives, and individuals supportive of increased production and use of ethanol.


The Iowa Renewable Fuels Association was formed in 2002 to represent the state’s liquid renewable fuels industry. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.