Oil and gas are part of U.S. energy solutions

Fable : Oil and gas companies aren't paying their fair share of taxes.

Fact : Oil and natural gas companies pay much more of their profits in taxes than other industries such as technology and financial services.

As for those billion-dollar subsidies oil and gas companies supposedly enjoy, they don't exist. The industry gets tax deductions, as any business does, but they are far less generous than those enjoyed by others in the energy sector. While oil and gas receive slightly more than 1 percent of government energy R&D funding, renewables receive 22 times as much funding.

Fable : Oil and gas industry profits are excessive.

Fact : Many lawmakers have long pushed to increase taxes on oil and gas companies.

The trouble is that oil and gas companies are not as flush as lawmakers make it seem. Like other commodity businesses, oil and gas profits are highly cyclical. According to PricewaterhouseCoopers, in all but four of the 20 years from 1987 through 2006, oil and gas companies actually earned a lower return on their capital investment than other industries. This is a key measure of comparative economic performance.

Also, while the industry's revenues can be large in good times, the costs of finding and producing oil and natural gas are always steep.

Fable : Taxing oil and gas companies will reduce the national debt.

Fact : Democrats recently proposed in a letter to House Speaker John Boehner, R-Ohio, to cut tax breaks for oil and gas companies to help pay down the national debt and restore fiscal order.

Besides the fact that oil and gas companies are already paying their fair share of taxes (see above), there is another problem with this argument, namely, the oil and gas industry is a cash cow for government already.

According to data from the U.S. Energy Information Administration, between 1981 and 2008, U.S. governments collected more in taxes from the oil industry than the industry earned in profits for shareholders.

Fable : Oil and gas are yesterday's energy.

Fact : Together oil and gas represent our largest source of energy-supplying more than 60 percent of all U.S. energy needs, compared to just 8 percent for all renewables.

Fable : Raising taxes on oil and gas companies will bring us closer to a "clean" energy future.

Fact : University of Texas researchers found that from 2000 to 2008 the oil and gas industry invested more in alternative energies than the federal government and all other U.S. industry combined.

For all the presidential finger pointing, the oil and gas industry is not the problem.

Oil and gas are necessary parts of our current energy supply and, along with renewables, will play a critical role in securing America's energy future.

If President Obama wants his new energy plan to succeed, he'll abandon energy fables and start dealing with realities.

Lawrence J. McQuillan, Ph.D., is director of business and economic studies at the Pacific Research Institute. Email comments to letters@detnews.com.