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President Obama pretends to be for energy independence — he lies.

President Obama’s crush on oil and gas was short lived.

On January 24, he angered his green base when, in his State of the Union address (SOTU), he stated that he is directing his “administration to open more than 75 percent of our potential offshore oil and gas resources.” He also called for “every possible action” to develop “a supply of natural gas that can last America nearly one hundred years.”

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Greenpeace’s reaction: “President Obama announced a potential environmental nightmare when he called tonight for more than 75% of offshore oil and gas resources to be exploited.”  Time’s Ecocentric blog chastised him for barely mentioning even the words “climate change.” Others felt that his “cheerleading” for greater shale gas drilling risked the enthusiastic support of environmentalists and accused him of selling out the environment for re-election. Over all, the SOTU “left many eco friendly people more than a little unhappy.”

Not to worry. His infatuation with fossil fuels was merely a short-lived crush.

Days after touting oil and gas in the SOTU, President Obama released his proposed 2013 budget. While the Financial Times declared that “everybody knows it has no chance of passing,” they did acknowledge that it does offer “a foretaste of the priorities he would pursue in a second term.” And, the foretaste will bring his green base back into the tent and “sets up a fight with the oil and gas industry.”

President Obama has frequently attempted to raise taxes on the oil and gas industry, and that theme is repeated in the budget—and some exclusively single out the oil and gas industry. One such tax hike proposal involves the Section 199 manufacturer’s deduction, which was part of the American Jobs Creation Act passed by Congress in 2004, as an incentive to retain manufacturing and production jobs in the US. Section 199 allows a deduction equal to a percentage of net income from production activities in producing new products such as manufacturing, producing, or growing tangible personal property, production of a qualified film, architectural engineering services, and production of electricity and natural gas. While other industries will be able to keep their 9% deduction, the oil and gas industry is already only allowed 6%, but under the proposed budget, Section 199 would be totally repealed for oil and gas companies. So much for the “fairness” rhetoric and American independence from foreign oil and gas.

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Generally unique taxes are used to punish undesirable activities. The so-called “sin taxes” are levied on cigarettes and alcohol, gambling, and vehicles believed to emit excessive emissions. While the proposed repeal of the Section 199 deduction for oil and gas development is not a new tax, it does single out one industry for punishment because the administration perceives its activity as “undesirable.”  Repealing Section 199 is just one of the changes the President would like to impose which would cause US oil and gas producers’ federal taxes to climb by nearly $27 billion over 10 years—an increase that will be reflected in gasoline prices.

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