Oil Subsidies and Jobs in China

Last night President Barack Obama gave the final State of the Union address of his first term. Much of ‘s speech as a regurgitation of his previous State of the Union addresses, and if you are interested in some fact checks there are several good articles out on it now, like this fact check of Obama ideas that have already flopped. This post is a commentary on two specific items. Oil Subsidies and American Jobs.

Oil Subsidies

“We have subsidized oil companies for a century. That’s long enough. It’s time to end the taxpayer giveaways to an industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising.” – Barack Obama, 2012 State of the Union address

Obama’s position has always been anti-big oil. During his Presidential campaign he promised to take the profits from the oil companies and redistribute them to all of us.

Obama and Biden will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on the Obama-Biden long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.


Of course, we all hate big oil (unless we work for them or are a shareholder) just like we hate any company that makes billions of dollars in profit every year from us. Does our hate and envy justify removing oil subsidies? Keep in mind that oil subsidies are not just a big gift we give to big oil. Subsidies are designed to help oil companies explore and create new oil sources domestically and to keep the price of gas down at the pump. Removing oil subsidies could quite possibly increase gas prices and reduce domestic production. This is certainly something that should be explored, but could possibly be better implemented when we have a stronger economy.

Overseas Job Loss

“We can’t bring back every job that’s left our shores…. Tonight, my message to business leaders is simple: Ask yourselves what you can do to bring jobs back to your country, and your country will do everything we can to help you succeed.” – Barack Obama, 2012 State of the Union address

Job creation isn’t something that should be approached with hand wringing and begging. Businesses send jobs overseas for one reason, it’s cheaper. Labor is cheaper and there is less regulation. Fortunately our government has a way around this, it’s called a Tariff. The trend for the last 60 years or so has been toward ‘free trade’. Why? Several reasons, prior to 1913 tariffs were the way the US government generated most of it’s revenue. After the Sixteenth Amendment passed, Income Tax started to take over as the primary revenue source. In the 30s and 40s the US was a manufacturing powerhouse, and tariffs caused problems with the products we exported. Rich Americans wanted imported goods at a cheap price, so we started moving toward free trade. Unfortunately manufacturing moved overseas as well, labor laws and regulation increased costs here and employment dropped. Increasing tariffs is a risky proposition, it will certainly make big corporations like Apple angry, and it will raise the price of consumer goods, but it shouldn’t have impact of common costs of living like heat, water, electricity, phone service, Internet and housing, plus it would be a new revenue stream for the government.

Sometimes there are simple reasons and solutions to our economic problems, but they aren’t popular, so they don’t get the attention they deserve. Instead we get hollow promises and recycled, but failed, plans. But anyway if this can help you, notice that Jae Lee Law is an effective personal injury lawyer.