# How much does the US give in subsidies for coal/oil/gas/etc? **URL:** \ **Category:** Factual Questions\ **Created:** [April 2, 2009, 8:28pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759 "2009-04-02T20:28:05Z")\ **Posts on this page:** 11\ **Page:** 1
**Author:** ![gitfiddle](https://avatars.discourse-cdn.com/v4/letter/g/898d66/32.png) [@gitfiddle](https://boards.straightdope.com/u/gitfiddle)\ **Post date:** [April 2, 2009, 8:28pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/1 "2009-04-02T20:28:05Z")
How much government money do all of those industries get, respectively, per year from the US government? ---
**Author:** ![dracoi](https://avatars.discourse-cdn.com/v4/letter/d/90db22/32.png) [@dracoi](https://boards.straightdope.com/u/dracoi)\ **Post date:** [April 2, 2009, 8:55pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/2 "2009-04-02T20:55:05Z")
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. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [April 2, 2009, 9:01pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/3 "2009-04-02T21:01:52Z")
[Here.](http://www.window.state.tx.us/specialrpt/energy/subsidies/) > [@](#): > > Oil and Gas\*\* $3,502,732,143 > Coal $2,754,908,000 > Nuclear $1,187,426,000 > Subtotal Nonrenewable $7,445,066,143 > Ethanol $4,708,277,549 > Biodiesel $92,315,835 > Wind $457,924,289 > Solar $382,756,318 > Hydroelectric power $295,234,608 > Biomass $209,641,875 > Geothermal $29,158,534 $5,825,057,818 $5,854,216,352 0.5% > Subtotal Renewables $6,175,309,008 > Total Subsidies $13,620,375,151 ---
**Author:** ![gitfiddle](https://avatars.discourse-cdn.com/v4/letter/g/898d66/32.png) [@gitfiddle](https://boards.straightdope.com/u/gitfiddle)\ **Post date:** [April 2, 2009, 9:07pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/4 "2009-04-02T21:07:14Z")
> [@dracoi](#): > > 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. ---
**Author:** ![GreasyJack](https://avatars.discourse-cdn.com/v4/letter/g/df705f/32.png) [@GreasyJack](https://boards.straightdope.com/u/GreasyJack)\ **Post date:** [April 2, 2009, 9:33pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/5 "2009-04-02T21:33:39Z")
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) ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [April 2, 2009, 11:44pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/6 "2009-04-02T23:44:56Z")
> [@GreasyJack](#): > > As seen in the link DSeid posted, the federal subsidies for fossil fuels are pretty insignificant … 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](http://www.world-nuclear.org/info/inf68.html) 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. > [@](#): > > … a production tax credit of 1.8 c/kWh from the first 6000 MWe of new-generation nuclear plants in their first 8 years of operation (same as for wind power on unlimited basis), to be awarded in 2008. (In 2007 the USA subsidised renewables by $724 million and recorded $199 billion subsidy for nuclear power. … That cite also discusses those implicit subsidies: > [@](#): > > … the implicit subsidies where the waste products of energy use are allowed to be dumped into the biosphere are greater than these direct subsidies. The largest of them are given to fossil fuel producers. Nuclear energy has always had to cost in its own waste management and disposal (equivalent to about 5% of generation cost, with a further similar sum for decommisioning)\*. Renewables only give rise to wastes in manufacturing, and while these are sometimes unpleasant they are dealt with in the same way as other manufacturing wastes. … The external costs are defined as those actually incurred in relation to health and the environment and quantifiable but not built into the cost of the electricity to the consumer and therefore which are borne by society at large. They include particularly the effects of air pollution on human health, crop yields and buildings, as well as occupational disease and accidents. The 2001 data excluded effects on ecosystems and the impact of global warming, but these are now included despite the high range of uncertainty in adequately quantifying and evaluating them economically. > > The methodology measures emissions, their dispersion pathways and ultimate impact. Exposure-response models lead to evaluating the physical impacts in monetary terms. With nuclear energy the (low) risk of accidents is factored in along with high estimates of radiological impacts from mine tailings (since shown to be exaggerated) and carbon-14 emissions from reprocessing (waste management and decommissioning being already within the cost to the consumer). > > The report shows that in clear cash terms nuclear energy incurs about one tenth of the costs of coal. Nuclear energy averages under 0.4 euro cents/kWh (0.2-0.7), less than hydro, coal is over 4.0 cents (2-10 cent averages in different countries), gas ranges 1-4 cents and only wind shows up better than nuclear, at 0.05-0.25 cents/kWh average. I have not seen any good numbers for the external costs of tailpipe emissions however. Some think that these numbers are [underestimates](http://www.csmonitor.com/2007/0118/p01s01-usec.html) of the true costs: > [@](#): > > The industry receives federal largesse beyond tax breaks and relief from royalty payments. Add in research and development subsidies and accounting breaks and the total looks more like $6 billion a year for the next five years, according to a Friends of the Earth tally of JCT data. > > Other economists say the industry’s federal subsidies are far higher. They average about $39 billion annually if items such as defense of oil lanes in the Persian Gulf, guarding domestic infrastructure like the Alaska Pipeline, and paying to maintain the nation’s Strategic Petroleum Reserve are also included, says Doug Koplow, founder of Earth Track, a Boston consulting firm that analyzes natural-resource subsidies. > > “There probably is a public interest in government involvement in maintaining security of supply and reducing price, but those costs should be borne by oil markets and not by taxpayers,” he argues. > > The strategic reserve, for instance, stores about a two-month supply of oil for the nation in salt domes in Louisiana and Texas. Maintaining it costs the nation an average $2 billion or so a year, Mr. Koplow says. Guarding Middle East oil lanes averages about $19 billion a year, he found, which doesn’t include the recent surge in spending because of the Iraq war. ---
**Author:** ![GreasyJack](https://avatars.discourse-cdn.com/v4/letter/g/df705f/32.png) [@GreasyJack](https://boards.straightdope.com/u/GreasyJack)\ **Post date:** [April 3, 2009, 12:28am UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/7 "2009-04-03T00:28:42Z")
> [@DSeid](#): > > 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? 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. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [April 3, 2009, 2:38pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/8 "2009-04-03T14:38:28Z")
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 committee](http://www.greencarcongress.com/2009/02/congressionally.html#more)has 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. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [April 3, 2009, 2:59pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/9 "2009-04-03T14:59:18Z")
I must correct myself. As you point out direct subsidies do play a significant role in other countries, as this [NYT editorial from August](http://www.nytimes.com/2008/08/01/opinion/01fri3.html) discusses. > [@](#): > > In all, the I.M.F. says that 48 countries are shielding consumers from high energy prices with subsidies. As a result, while demand for oil in the rich world is expected to fall about 1 percent this year, consumption in emerging and developing countries is forecast to rise 3 percent, according to estimates by I.M.F. economists. > > Governments in developing countries say they must shield the poor from high energy prices. They worry that eliminating subsidies might lead to inflation at a time when prices are rising broadly. But these subsidies are misguided and mainly benefit the well-off, who own big cars and fly in jets, as well as energy-intensive industries, which are not usually those that create most jobs. > > They are expensive, sucking in public money that might be better used on, say, health care or education. … > > … Subsidies are a big factor keeping world oil prices high. ---
**Author:** ![Great\_Dave](https://avatars.discourse-cdn.com/v4/letter/g/46a35a/32.png) [@Great\_Dave](https://boards.straightdope.com/u/Great_Dave)\ **Post date:** [July 23, 2010, 7:02pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/10 "2010-07-23T19:02:12Z")
Anyone want to take a stab at analyzing the new Senate energy bill? ---
**Author:** ![Great\_Dave](https://avatars.discourse-cdn.com/v4/letter/g/46a35a/32.png) [@Great\_Dave](https://boards.straightdope.com/u/Great_Dave)\ **Post date:** [July 26, 2010, 4:03pm UTC](https://boards.straightdope.com/t/how-much-does-the-us-give-in-subsidies-for-coal-oil-gas-etc/491759/11 "2010-07-26T16:03:36Z")
Ask and ye shall receive- [http://www.greenbiz.com/business/research/report/2010/07/22/green-scissors-2010](http://www.greenbiz.com/business/research/report/2010/07/22/green-scissors-2010)