How much government money do all of those industries get, respectively, per year from the US government?
I don’t know the answer, but are you also wanting to include tax deductions for depletion and LIFO valuations for inventories? These can be used by any industry, but they’re particularly valuable (hundreds of billions in tax savings) for oil, gas and coal producers.
Yes. I guess what I’m looking for is any break these industries get from the government.
As seen in the link DSeid posted, the federal subsidies for fossil fuels are pretty insignificant and mostly consist of tax deductions that can be taken by any major corporation with lots of expensive equipment or incentives for domestic exploration and production. It’s not a situation like in Mexico or Iran, for instance, where the actual cost of the fuel is subsidized, nor is it like most European countries where it is heavily taxed. Other than the smallish gas tax, the price of fuel in the US is actually pretty close to the market price and the cost to produce it.
That’s the simple answer, though. Now, you can argue that the oil/coal companies get a huge break in that they don’t have to pay for the environmental consequences of the exploitation and use of these resources, or that the US spends trillions on defense in part to maintain global political and economic circumstances that are favorable to the oil industry. But that’s definitely wandering into Great Debate territory. (FTR, I don’t particularly agree with either of those arguments)
Are you looking at the same link I posted? “Insgnificant”? $3.5 billion for oil and gas, more than 25% of all energy subsidies, insignificant? Perhaps a small amount of what we consumers spend on oil and gas every year but hardly insignificant. And another $2.75 billion, another 20% of all energy subsidies to coal. Only the boondoggle buy off to farmers that is corn ethanol subsidies comes even close to what those fossil fuels get. And that answer is limited to Fed dollars; states give more on top. As the cite shows Texas, as the example, gives another $1.4 billion to oil and gas all by itself.
Before you get to consideration of those “implicit subsidies” (such as the cost of their waste like CO2 etc to the rest of us) you can also think about subsidies in terms of subsidies for R&D vs operational subsidies.
For the oil use in the transportation sector it really can all be considered an operational subsidy and is at 0.5% of the total cost coming from the Feds and another 1.5% in Texas.
Here’s another cite that addresses those issues. Most of the renewable subsidies are for R&D, which is typical for an emerging technology. For its part nuclear had massive R&D subsidies in earlier days which have diminished some as it has matured as a technology; now renewables are getting that seed money. In terms of operational subsidies underwriting the actual production of the power nuclear and renewables are roughly the same.
That cite also discusses those implicit subsidies:
I have not seen any good numbers for the external costs of tailpipe emissions however.
Some think that these numbers are underestimates of the true costs:
For as big of an industry as the fossil fuel energy sector is, $3.5 billion is relatively insignificant-- it definitely doesn’t have a noticeable effect on the costs to consumers or the continued economic viability of those sources. Most of the subsidies are there to encourage domestic production and exploration. In other words, if those subsidies were suspended, we would likely just import more oil but the cost to consumers would remain the same. The effect on the oil companies’ bottom line is probably close to nil.
I think some people try to suggest that direct government subsidies is a major reason why fossil fuels are still dominant and why alternatives are not yet economically viable, which is simply not true. Though, again, this only refers to the direct subsidies and it is quite possible that if you quantify the implicit subsidies that the balance does tilt towards renewables.
Yeah a few more billion and we might be talking about real money!
If you are talking about gasoline prices then direct subsidies are indeed a small percent of the price of gasoline (well more if you include those military costs). For coal it is a larger amount but not outrageous compared to some other other sources of power.
As for the oil companies’ bottom lines, I suspect that you are right: this may be a not insignificant item in the Federal budget but its disappearance would not influence the oil companies much either way or I think change their exploration activities all that much - chump change on their scale. In fact that CSM link I gave quotes experts who claim that even tripling those subsidies would have virtually no effect on oil prices and scant effect on domestic production. (Oil industry representatives claim otherwise, what a surprise.)
I am not familiar with anyone arguing that direct subsidies are why fossil fuels are dominant. OTOH I have myself made the argument that the we do need to account for implicit subsidies, as that nuclear energy site argues. That’s part of the point of charging for carbon, whether by a direct tax or by auctioned cap and trade. Which form of energy is most cost effective in a fair competition in which no source gets any operational subsidies including implicit ones is a bit of an open question but my own take has been that fossil fuels do pretty poorly whereas renewables and nuclear do much better.
Of course for the transportation sector the issue is not the cost of the power - electricity is already much much cheaper than gasoline to run cars even before accounting for CO2 and other implicit subsidies - but the cost of the batteries so far being high enough to offset that fuel savings cost advantage unless that implicit subsidy advantage is also offset. Which is why the electrification of the transportation grid is a work still in progress.
As an aside, you also had mentioned the gas tax - that was supposed to be a user fee that funded infrastructure maintenance and has been so underfunded that it is a joke. In its current state it is also on net an implicit subsidy as it does not come close to covering the true infrastructure expenses and needs. A bipartisan Congressionally appointed committeehas proposed scrapping it in favor of a mileage tax (over a period of years) but that seems unlikely to get any traction very soon. You can click through for the whole report (large pdf) at the bottom of my link. If anything that option would help gasoline compete with EVs as the gas tax option would exempt EVs from participating in paying for road maintenance (giving them an implicit subsidy compared to ICE vehicles) and need to be raised dramatically to actually fund infrastructure maintenance, increasingly so if indeed ICE vehicles become a decreasing percentage of vehicles on the road.
FWIW.
I must correct myself. As you point out direct subsidies do play a significant role in other countries, as this NYT editorial from August discusses.
Anyone want to take a stab at analyzing the new Senate energy bill?
Ask and ye shall receive-
http://www.greenbiz.com/business/research/report/2010/07/22/green-scissors-2010