Bill O’Reilly’s misleading statement on Biden and fossil-fuel subsidies

On his web show, conservative commentator Bill O’Reilly took President Joe Biden to task for policies he said have encouraged higher gasoline prices.

One of the reasons that gasoline prices have recently reached record levels in raw dollars, O’Reilly said March 15, is that "as soon as Biden took office, he eliminated all subsidies for fossil fuels."

Days after entering office, Biden did issue an executive order telling federal agencies to curtail certain subsidies for fossil fuels over which the executive branch had control. However, these changes only affected a modest slice of all fossil fuel subsidies. The bulk of such subsidies can only be overturned by congressional action, not unilaterally by Biden.

O’Reilly did not respond to questions submitted through his website for this article.

Biden announced his executive order on Jan. 27, 2021. It addressed a range of policies related to climate change, including efforts to curb fossil fuel subsidies. 

Specifically on subsidies, the executive order said that federal agencies needed to "take steps to ensure that, to the extent consistent with applicable law, federal funding is not directly subsidizing fossil fuels."

Various analyses of the executive order have pointed to at least two types of subsidies that would be at risk under Biden’s order. One involves a tax deduction for payments of environmental penalties by fossil fuel companies. Another involves federal funding for the construction and maintenance of shipping infrastructure typically used by fossil fuel producers.

However, in his remarks at the event to unveil the executive order, Biden indicated that the order would not, by itself, end all fossil fuel subsidies.

"Unlike previous administrations, I don't think the federal government should give handouts to big oil to the tune of $40 billion in fossil fuel subsidies," Biden said. "And I'm going to be going to the Congress asking them to eliminate those subsidies."

There is no clear figure totaling up the annual cost of fossil fuel subsidies, because the industry and environmentalists have long disagreed on what qualifies as a subsidy. However, the lower end of published estimates suggests an annual figure of $20 billion, roughly two-thirds of which comes from federal policies and one-third of which comes from state policies.

Despite Biden’s executive order, "the lion’s share of federal subsidies remain in place," said Sujatha Bergen, director of health campaigns at the Natural Resources Defense Council, an environmental group.

In the White House’s proposed fiscal year 2022 budget, Biden urged Congress to end a number of subsidies, including tax deductions, that benefit the industry. He put these in his proposed budget because tax law cannot be rewritten by executive order, only by an act of Congress.

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One of the items Biden’s budget targeted was the foreign oil and gas exemption. This allows companies to shield themselves from taxation for the refining and transport of fossil fuels generated overseas. Backers of ending this exemption say that denying this tax break would save $85 billion in lost revenue over 10 years.

Another subsidy is a tax deduction for "intangible drilling costs." This century-old provision allows independent fossil-fuel companies to immediately deduct the costs associated with exploration and development  from drilling a new well. This is estimated to cost taxpayers $13 billion over 10 years.

A third tax break is known as "percentage depletion." It allows independent fossil-fuel companies to deduct 15% of their gross income from production. This break costs an estimated $13 billion over 10 years.

Biden’s proposed budget would also reinstate expired Superfund excise taxes on crude oil, petroleum products and untaxed crude oil, potentially generating $38 billion in federal revenue over 10 years.

Other proposed cuts in the Biden budget addressed tax breaks for "enhanced oil recovery" and for "oil and gas produced from marginal wells."

However, proposals like these to curb fossil-fuel subsidies have not advanced in Congress, even to the point of formal consideration by committees.

A Senate bill sponsored by Bernie Sanders, I-Vt., has attracted only seven co-sponsors. A House bill sponsored by Rep. Ilhan Omar, D-Minn., has 41 co-sponsors. And a House bill sponsored by Rep. Ro Khanna, D-Calif., has 11 co-sponsors.

In the Build Back Better Act, Biden and his allies proposed more than $100 billion in cuts over 10 years, Bergen said. But that bill has languished in the Senate.

"Congress tried to eliminate fossil fuel subsidies this session but oil and gas industry allies blocked progress," Bergen said. "We are hoping that Congress will move forward with those in the next iteration of legislation."

O’Reilly said, "As soon as Biden took office, he eliminated all subsidies for fossil fuels."

Biden did sign an executive order just days after taking office that required federal agencies to get rid of fossil fuel subsidies they had unilateral control over. 

However, a large majority of subsidies can only be undone with the assent of Congress, and while Biden and congressional Democrats have urged Congress to do that, they have not been successful yet.

The statement contains an element of truth but ignores critical facts that would give a different impression, so we rate it Mostly False.