# How is gas 'subsidized' in the USA? **URL:** \ **Category:** Factual Questions\ **Created:** [August 17, 2005, 12:32pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415 "2005-08-17T12:32:57Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [August 18, 2005, 1:30am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/21 "2005-08-18T01:30:00Z")
> [@Quercus](#): > > For instance, local and state road construction and maintenance (like, plowing the road in front of your house, buying traffic lights, and maintaining bridges) . These are paid for by property taxes (local) and income taxes (state). So a property owner or worker who doesn’t drive much is paying for roads that other people are using. And people without kids are paying for public education. Forget energy. You can heat your home with wood and chunks of coal if you have to. The single most important sector of public works to our society as it is now is transportation. Look around you. No, seriously, look at almost anything within eyesight right at this moment. It got to you by rail and/or truck. And it’s almost a certainty it was on a truck at some point. Doesn’t matter if you drive. You _ **need** _ those highways for your lifestyle. Plain and simple. ---
**Author:** ![scr4](https://avatars.discourse-cdn.com/v4/letter/s/59ef9b/32.png) [@scr4](https://boards.straightdope.com/u/scr4)\ **Post date:** [August 18, 2005, 3:39am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/22 "2005-08-18T03:39:29Z")
> [@duffer](#): > > Doesn’t matter if you drive. You _ **need** _ those highways for your lifestyle. Plain and simple. Surely a truck-only highway system would be significantly cheaper than the current US highway system designed for one-car-per-commuter traffic? ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [August 18, 2005, 4:21am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/23 "2005-08-18T04:21:37Z")
Though there’s a meaningful amount of one-commuter-per-car traffic, it would be seriously stretching a point to say that the system was (solely) designed for this. Roads could be built a lot more cheaply if they carried cars alone; but (as duffer notes) truck traffic is vital and so most roads are built to handle it. ---
**Author:** ![stringy](https://avatars.discourse-cdn.com/v4/letter/s/919ad9/32.png) [@stringy](https://boards.straightdope.com/u/stringy)\ **Post date:** [August 18, 2005, 4:41am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/24 "2005-08-18T04:41:53Z")
> [@Tomcat](#): > > I had heard a long time ago that gas was somehow subsidized in the USA…which I don’t know if that means it just isn’t taxed as greatly as gas here, or if the US government actually pitches in to keep prices lower than everywhere else in the world. I won’t enter into the debate above, since I don’t have local knowledge of the US oil situation. However, when you hear environmentalists talking about how oil is subsidised, they are usually talking about tax breaks for the companies producing it, and how oil companies don’t bear the full cost of providing the product they make their profits from. An example of what is implied would be [this Q&A from Grist.org](http://www.grist.org/advice/ask/2005/08/03/umbra-oil/). In general, when the issue is raised by greenies and not people talking about the price of gas at the pump (and I think that’s the context you may have heard it in), it’s not about oil subsidies in one country compared to oil subsidies in other countries. It’s _the advantages that oil companies get when compared with oil alternatives_. Providers of alternative energy sources don’t get the tax breaks and assistance that oil companies do. They have to pay for almost everything themselves, although I believe this situation is gradually changing. ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [August 18, 2005, 4:43am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/25 "2005-08-18T04:43:35Z")
> [@scr4](#): > > Surely a truck-only highway system would be significantly cheaper than the current US highway system designed for one-car-per-commuter traffic? Absolutely. But the upfront cost would never pass. ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [August 18, 2005, 2:54pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/26 "2005-08-18T14:54:59Z")
> [@duffer](#): > > However in the rural hick states where it’s not uncommon for someone to drive 20+ miles to get to work, it can be a problem. Like New York and Maryland and Massachusets? ---
**Author:** ![constantine](https://avatars.discourse-cdn.com/v4/letter/c/3bc359/32.png) [@constantine](https://boards.straightdope.com/u/constantine)\ **Post date:** [August 19, 2005, 3:05am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/27 "2005-08-19T03:05:12Z")
> [@Xema](#): > > It will depend on how you define subsidy. > > [Dictionay.com](http://Dictionay.com) has this as their primary definition: “Monetary assistance granted by a government to a person or group in support of an enterprise regarded as being in the public interest.” > > Is direct monetary assistance provided? No. Is indirect assistance that involves the expenditure of money - such as plowing snow - provided? Yes. I’m usually a big fan of [dictionary.com](http://dictionary.com), but this definition of “subsidy” is far narrower than the one used by most mainstream economists. In fact, the activity of driving an automobile is subsidized in the following crucial sense: the person driving does not pay all, or even close to all, of the costs generated by driving. As noted above, under the current system, everyone pays for the roads, and law enforcement to enforce traffic regulations, whether they drive or not. One way that is often proposed to address this issue is to increase the gasoline tax, since the amount of gasoline used is a pretty good proxy for these other costs that are incurred by driving a car. So, strictly speaking, gasoline is not subsidized, but driving is. If you want to say it’s an indirect subsidy, rather than a direct subsidy (as in a cash payment) that’s fine, but whether a subsidy is direct or indirect is not particularly relevant to the underlying issue of whether those who drive a lot pass along the costs of their activity to those that don’t drive as much (or not at all). As it happens, they do. I hasten to add that “subsidy” by itself is not a nasty word (imho anyway). I don’t have kids, but I “subsidize” parents with kids in public schools because my tax dollars help support those schools. I don’t have a problem with that “subsidy” but I think it’s helpful to recognize that it is a subsidy. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [August 19, 2005, 3:22am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/28 "2005-08-19T03:22:33Z")
> [@scr4](#): > > Would it be accurate to say that, while gasoline itself is not subsidized, automobile travel _is_ subsidized by the government? No. At least not any more than public transportation which is paid for outright by the government. ---
**Author:** ![duffer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duffer/32/1026_2.png) [@duffer](https://boards.straightdope.com/u/duffer)\ **Post date:** [August 19, 2005, 3:29am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/29 "2005-08-19T03:29:34Z")
> [@Balthisar](#): > > Like New York and Maryland and Massachusets? You’re right. I forgot to mention the areas that have busses, trains, subways… ---
**Author:** ![scr4](https://avatars.discourse-cdn.com/v4/letter/s/59ef9b/32.png) [@scr4](https://boards.straightdope.com/u/scr4)\ **Post date:** [August 19, 2005, 3:29am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/30 "2005-08-19T03:29:45Z")
> [@msmith537](#): > > No. > > At least not any more than public transportation which is paid for outright by the government. Er, so it _is_ subsidized, but only to a lesser extent? 😕 If you insist on the “no”, could you explain why **constantine** ’s explanation is incorrect? The way I see it, if the highway system were privatized, fuel taxes would not pay for them, and they would have to charge tolls. That means it _is_ currently being subsidized by the government. ---
**Author:** ![Grelby](https://avatars.discourse-cdn.com/v4/letter/g/a5b964/32.png) [@Grelby](https://boards.straightdope.com/u/Grelby)\ **Post date:** [August 19, 2005, 4:10am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/31 "2005-08-19T04:10:33Z")
A small point, since this has come up a couple times: the very idea that fuel taxes even _begin_ to pay for highway construction and maintenance is laughably absurd. Highway construction costs are all over the map, but [this site](http://www-pam.usc.edu/volume2/v2i1a3s2.html) gives the average cost of interstate highways per mile, weighted for both urban and rural highways, at $20.6 million. “Other highway construction” ranges from $1 million to $5 million on average, but there are exceptions with considerably higher costs (Boston being particularly notable at well over $1 _billion_ per mile). Here’s a [government table](http://www.fhwa.dot.gov/steam/table1.htm) that seems to indicate that these numbers are in the right ballpark, although I’m having a hard time telling if I’m even reading this chart right. Here’s a table of [gas tax revenues by state for the year 2000](http://www.taxpolicycenter.org/TaxFacts/TFDB/TFTemplate.cfm?Docid=78&Topic2id=80). I’m not going to tackle the numbers in every state, but let’s take Massachusetts. The Big Dig, an enormous underground highway construction project in Boston (which incidentally provides enough material for millions of Pit threads) will cost - so they say - $14.4 billion dollars by the time of its completion, which is - so they say - to be this year. If we break that down by year from 1983 to 2005, it comes to an average $650 million dollars per year, give or take a few hundred thousand. From that tax policy chart, I can clearly see that Massachusetts pulled in about $652 million in gas tax revenue in the year 2000. That’s barely enough to cover the average Big Dig cost for that year. The Big Dig is hardly the only highway construction project going on at once in Massachusetts, so it seems pretty clear that gas taxes could not possibly pay for all highway construction and maintenance, and probably not by a long shot, either. You could argue the semantics as to whether or not this kind of thing constitutes a subsidy or not, but there is money coming from the government (and therefore out of the pockets of the people) to cover a large portion of the cost of driving in this country. Because it’s germane, here’s a site that I found while googling for cites: [True cost of driving](http://www.commutesolutions.org/calc.htm). Blah blah, biased and has an agenda, etc, uses one average for all vehicles indiscriminately, take with a grain of salt. That said, it is pretty interesting. ---
**Author:** ![JohnT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnt/32/15048_2.png) [@JohnT](https://boards.straightdope.com/u/JohnT)\ **Post date:** [August 19, 2005, 4:17am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/32 "2005-08-19T04:17:35Z")
> [@Tomcat](#): > > … I had heard a long time ago that gas was somehow subsidized in the USA…which I don’t know if that means it just isn’t taxed as greatly as gas here, or if the US government actually pitches in to keep prices lower than everywhere else in the world. > > -Tcat It’s not so much that gas is subsidized as _driving_. From tax breaks on large vehicles to 300 billion (almost) transportation bills to a Federal gas tax of just .33/gallon (barely $.09/liter) to tax deductions for mileage used for businesses, the act of owning a car is heavily subsidized by the Federal and State governments. ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [August 19, 2005, 6:56pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/33 "2005-08-19T18:56:58Z")
> [@JohnT](#): > > … to tax deductions for mileage used for businesses… I question whether this should be considered a subsidy. The IRS says that a business owes taxes on its profits, which are defined as income minus the cost of producing that income. If a business can show that driving was a necessary part of doing business, that becomes a valid part of their costs (i.e. it’s deductible). Allowing this isn’t a subsidy, any more than allowing rent or salaries they paid to be included among their costs is. Allowing a business to count more than their actual business-related driving costs would be a subsidy. ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [August 19, 2005, 7:05pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/34 "2005-08-19T19:05:20Z")
> [@Grelby](#): > > Here’s a table of [gas tax revenues by state for the year 2000](http://www.taxpolicycenter.org/TaxFacts/TFDB/TFTemplate.cfm?Docid=78&Topic2id=80). Note that this site says it’s talking only about state taxes collected - federal taxes are omitted. > [@](#): > > I’m not going to tackle the numbers in every state, but let’s take Massachusetts. The Big Dig, an enormous underground highway construction project in Boston (which incidentally provides enough material for millions of Pit threads) will cost - so they say - $14.4 billion dollars by the time of its completion, which is - so they say - to be this year. An interesting example to be sure, but probably not typical - few projects on this scale are underway at any one time. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [August 19, 2005, 7:45pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/35 "2005-08-19T19:45:30Z")
> [@scr4](#): > > Er, so it _is_ subsidized, but only to a lesser extent? 😕 If you insist on the “no”, could you explain why **constantine** ’s explanation is incorrect? Because the roads are a sunk cost that has to be paid for regardless if cars are powered by gasoline, hydrogen, nuclear or Unobtainium. Roads were around long before gasoline powered cars. They will be around long after. By definition, roads are not “subsidized” because they are a service provided by the government. A subsidy is something governments give to private industries that they deem to be in the public good. Roads and interstates also provide a considerable benefit to the whole economy. The fact that the government taxes gasoline is also not consistant with the definition of a subsidy. Most of this is a matter of semantics anyway. The question is really “does the government provide incentives to drive gas powered cars instead of using public transportation or converting to alternative fuel sources?” I say, in general, no. There are currently no viable alternatives to owning and driving a gas powered automobile unless you live in an area with extensive public transportation. And public transportation pretty much is always an unprofitable venture. ---
**Author:** ![Bryan\_Ekers](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bryan_ekers/32/183_2.png) [@Bryan\_Ekers](https://boards.straightdope.com/u/Bryan_Ekers)\ **Post date:** [August 19, 2005, 11:05pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/36 "2005-08-19T23:05:56Z")
The OP may be thinking of ethanol subsidies, which were analyzed (though not fully understood) by [the mighty Cecil himself](http://www.straightdope.com/columns/031128.html). ---
**Author:** ![justwannano](https://avatars.discourse-cdn.com/v4/letter/j/7ab992/32.png) [@justwannano](https://boards.straightdope.com/u/justwannano)\ **Post date:** [August 20, 2005, 5:13am UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/37 "2005-08-20T05:13:19Z")
Several years ago the government dictated a clean air act. This forced the expense of adding a catalitic converter to your automobile. The result was that poorer grades of gasoline, those containing sulphur, could be extracted from old wells considered played out and sold. A subsity? Probably not. But certainly a windfall for petro companies. ---
**Author:** ![constantine](https://avatars.discourse-cdn.com/v4/letter/c/3bc359/32.png) [@constantine](https://boards.straightdope.com/u/constantine)\ **Post date:** [August 20, 2005, 5:11pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/38 "2005-08-20T17:11:35Z")
> [@msmith537](#): > > Because the roads are a sunk cost that has to be paid for regardless if cars are powered by gasoline, hydrogen, nuclear or Unobtainium. Roads were around long before gasoline powered cars. They will be around long after. > > By definition, roads are not “subsidized” because they are a service provided by the government. A subsidy is something governments give to private industries that they deem to be in the public good. Roads and interstates also provide a considerable benefit to the whole economy. > > The fact that the government taxes gasoline is also not consistant with the definition of a subsidy. > > Most of this is a matter of semantics anyway. The question is really “does the government provide incentives to drive gas powered cars instead of using public transportation or converting to alternative fuel sources?” > > I say, in general, no. There are currently no viable alternatives to owning and driving a gas powered automobile unless you live in an area with extensive public transportation. And public transportation pretty much is always an unprofitable venture. When you drive a car, society incurs costs. You do not pay all, or even close to all, of these costs. These are not just sunk costs, but ongoing costs. You do a little bit of damage to the road every time you drive. That damage builds up over time and needs to be repaired. Everyone, whether they drive a little, or a lot, or not at all, pays for these damages to be repaired. When you drive you make it that much more necessary to have a traffic officer to monitor the road. These may seem like small effects when described this way, but they add up to huge costs for society. The governments spend huge sums, not just building roads, but maintaining them. I’ll say again that the definition of “subsidy” as a direct cash payment to a person, industry, group, whatever is overly narrow. But in any case, the important issue is the costs that you create, but do not pay yourself. Perhaps rather than get hung up on the term “subsidy” we should use the term “externality”. As I said, when you drive, you “externalize” many of the costs of driving. These costs need to be paid by the rest of society. The problem with externalized costs is that they tend to encourage overuse. People drive more than they would if they incurred the full cost of driving. ---
**Author:** ![Crandolph](https://avatars.discourse-cdn.com/v4/letter/c/7cd45c/32.png) [@Crandolph](https://boards.straightdope.com/u/Crandolph)\ **Post date:** [August 20, 2005, 5:26pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/39 "2005-08-20T17:26:27Z")
The annual R&D direct subsidies which the US federal government provides to petroleum producers alone run into tens of millions of dollars. A couple of years ago Rep. Bernie Sanders (I-VT) introduced a bill in the House to cut $25 million out of what was earmarked as a $40 million oil company R&D subsidy in order to fund a low income housing weatherizing program meant to cut fuel consumption and save some poor folks some cash. It was soundly defeated. Another huge area of petro subsidies would be the government-supported port facilities and rechanneling of rivers to aid transport of fuel. A Delaware River project here, for example, which will likely mostly benefit one refining facility, has a $350+ million price tag. As has been noted thus far in this thread, pretty much also ethanol receives that kind of subsidy. And because you need a huge amount of petroleum to move and produce ethanol, well… it’s a subsidy for ADM _and_ Big Oil. ---
**Author:** ![Crandolph](https://avatars.discourse-cdn.com/v4/letter/c/7cd45c/32.png) [@Crandolph](https://boards.straightdope.com/u/Crandolph)\ **Post date:** [August 20, 2005, 5:28pm UTC](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415/40 "2005-08-20T17:28:35Z")
> [@Crandolph](#): > > As has been noted thus far in this thread, pretty much also ethanol … …pretty much _only_ also ethanol… [Previous page](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415.md?page=1) [Next page](https://boards.straightdope.com/t/how-is-gas-subsidized-in-the-usa/317415.md?page=3)