Report Finds Oil Subsidies Higher Than Ethanol
A new report from the Environmental Law Institute (ELI) finds that federal subsidies for fossil fuels are twice that of renewables.
According to a summary on the ELI report store website:
The largest U.S subsidies to fossil fuels are attributed to tax breaks that aid foreign oil production, according to research released by ELI. The study, which reviewed fossil fuel and energy subsidies for Fiscal Years 2002-2008, reveals that the lion’s share of energy subsidies supported energy sources that emit high levels of greenhouse gases. Fossil fuels benefited from approximately $72 billion over the seven-year period, while subsidies for renewable fuels totaled only $29 billion.
The report found that about $16.8 billion in subsidies went to corn-based ethanol over the seven year time frame with most of that coming from the blenders tax credit.
ELI Senior Attorney John Pendergrass says the report indicates a lack of support for more environmentally friendly energy sources. “The combination of subsidies—or ‘perverse incentives’— to develop fossil fuel energy sources, and a lack of sufficient incentives to develop renewable energy and promote energy efficiency, distorts energy policy in ways that have helped cause, and continue to exacerbate, our climate change problem,” Pendergrass said in a press release. “With climate change and energy legislation pending on Capitol Hill, our research suggests that more attention needs to be given to the existing perverse incentives for ‘dirty’ fuels in the U.S. Tax Code.”
4 Comments »
Ron Steenblik
What is interesting is that the authors decided NOT to convert the total ammounts into $ per unit of energy. Others, of course, can easily do that. Using such metrics, the rate of subsidization of fossil fuels is far, far smaller than for corn ethanol — which is not to defend subsidies to either of these energy sources. What is also interesting is the way that the authors have classified the subsidies: those that they consider to be “climate protecting” include subsidies to carbon capture and storage, and to renewable sources of electricity. Subsidies to corn ethanol appear in the bottom half of the graph, along with subsidies to fossil fuels.
SacramentoE85
Ron, it is interesting also that these subsidies for fossil fuels do not include the costs of the U.S. military protecting foreign sources of petroleum, as well as shipping routes. That would equate to 100’s of billions of dollars ANNUALLY. They may not be called subsidies, but they do the same exact thing. Otherwise the oil companies would have these huge expenses for themselves, which would equate to $5 to $10 per gallon of fuel produced…
If all subsidies for all fuels were removed (including military), the renewable fuels would win hands-down.
Ron Steenblik
Sacramento E85. Got a source for that hundreds of billions of dollars cost of protecting foreign sources of petroleum annually? (And how do you apportion them: to only U.S. imports, to all exports from the Middle East?) The subsidy expert, Doug Koplow, who has written extensively on subsidies to the oil industry has estimated that were oil companies to pay private security services for the protection of their supply lines that the cost would be in the low TENS of billions of dollars a year, not HUNDREDS of billions of dollars a year. The United States consumes around 300 billion gallons a year of petroleum products. If we were to estimate that the cost of the “protection services rendered” to foreign oil were $30 billion a year, then that would work out to $0.10 per gallon on top of the subsidies estimated by the ELI (which pertain to natural gas as well as oil).
I assume, however, that you are in the camp of people who argue that all foreign military expenditure is in the service of protecting oil supply lines. I am not in that camp. Let me ask you two questions:
(1) How much has biofuel use in the United States reduced that military expenditure so far?
(2) How much less would the United States be spending overseas if somehow the country stopped importing oil from everywhere except perhaps its immediate neighbors, Canada and Mexico? Do you really believe that it would pull its forces out of the Middle East and Afghanistan any faster? Do you really believe that the U.S. military presence is all about, and only about protection of petroleum supply lines — that it has nothing to do with protecting Israel, containing Iran (from which the United States buys no petroleum), transforming Iraq into some semblance of a market-based democracy, and preventing Afghanistan (from which we buy no petroleum) from imploding?
Russ
Not to defend any fuel subsidy, but
($72 billion) / (300 billion gallons x 7 years) = 3 cents a gallon subsidy for oil.
($16.8 billion) / (34 billion gallons corn ethanol) = 49 cents a gallon subsidy for corn ethanol.
More detail about the military subsidy conspiracy theory can be found here:
http://home.comcast.net/~russ676/desiremore/biofuelmyths1.htm#bookmark14
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