Congressional Budget Office Reports on Subsidies for Oil Companies
In the course of writing my second book (“Is Renewable Really Doable?”) I realized during an interview with the Environmental Law Institute in Washington DC that I had been misquoting the volume of subsidies that the oil companies receive from the federal government. Their report on the subject did a great job at bringing this all into focus for me (though I think they were far too conservative with what they called a “subsidy”).
Here’s another report on the subject direct from the US CBO (Congressional Budget Office). Of course, this raises several good questions, like:
• Why does the most profitable industry in the history of the known universe need subsidies from struggling tax-payers in the first place? and
• Aren’t subsidies supposed to help encourage and expand social goods (like environmentally friendly solutions), rather than social evils (like pollution)?
I wish I had some answers for you there, but I don’t.
Craig,
We obviously agree on the ~4 billion or so per year of specific tax incentives enjoyed by the oil industry. So we are on the same page for your first bullet point…
But in answer to your second bullet point: No. Subsidies are not supposed to help encourage and expand social goods rather than social evils. Subsidies are supposed to distribute money based on market behavior. They can be well intentioned, or they could be just blatant corruption.
But we do not have a single subsidy in America that is GOAL-based.
You can get a massive subsidy for buying an EV, which would result in higher net pollution… or you can get a massive subsidy for buying an industrial PV solar field, which would reduce harmful emissions… Or you can get a much smaller subsidy to put up a wind farm, which would reduce emissions by 3-4 times as much as the solar option. You also get a subsidy if you produce fuel from sawdust, but no subsidy if you produce fuel from corn or from sugar or sugar beets (sugar beet-based ethanol being manyfold better for the environment than corn-based ethanol or sawdust-ethanol).
All of these “subsidies” are supposedly based on social benefits: lower emissions, more U.S. manufacturing and construction… But they are structured around individual purchases, not around their actual impact. So the person who invests in a Chinese-made solar array to be installed on his rooftop gets MUCH greater subsidies per kg-CO2 abated and U.S. labor supported than the person who invests a similar amount of money on a wind farm in the Great Plains… while a person who buys a Tesla model S gets subsidies for actually harming the environment…
It’s not goal based, it’s based on who manages to have a congressman or senator as a friend that can shoehorn beneficial subsidies into budget negotiations. Right now the fossil industry still has too many friends.