Fossil Fuel Subsidies

Garth asks:

Craig, just a question concerning fossil fuel subsidies. EXACTLY what is paid or tax credited in the fossil fuel industry?

I have two ways of answering this:

1) If you want an extremely carefully done and conservative approach, here’s your man: a report that I quote frequently done by the Environmental Law Institute, and its accompanying graphic.

2) If you want a more expansive though less specific laundry list, here’s one:

• Construction bonds at low interest rates or tax-free

• Research-and-development programs at low or no cost

• Assuming the legal risks of exploration and development in a company’s stead

• Below-cost loans with lenient repayment conditions

• Income tax breaks, especially featuring obscure provisions in tax laws designed to receive little congressional oversight when they expire

• Sales tax breaks – taxes on petroleum products are lower than average sales tax rates for other goods

• Giving money to international financial institutions (the U.S. has given tens of billions of dollars to the World Bank and U.S. Export-Import Bank to encourage oil production internationally, according to Friends of the Earth)

• The existence of the U.S. Strategic Petroleum Reserve

• Construction and protection of the nation’s highway system

• Relaxing the amount of royalties to be paid – apparently, we get about 40% of revenues from oil on public land vs. 60% – 65% in most other countries

• Not forcing the industry to deal with the “externalities” – healthcare costs, long-term environmental damage, etc. — costs that are becoming increasingly clear and subject to quantification

• Waging war wherever the U.S. deems it needs to in order to maintain access to foreign oil