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Government subsidies for oil: $15 to $33 billion dollars a year
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by ishambat | January 8, 2011 at 04:31 am
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On news this week that the newly-elected U.S. Democratic congress is considering playing Robin Hood, and taking at least some money previously allocated for oil and gas and reallocating it to renewable energy, we thought it'd be useful to look into fossil fuel subsidies and how they work.
First - how much money are we talking about?
Figuring out exactly, or even roughly, how much oil companies receive in subsidy turns out to be a complicated challenge.
Greenpeace believes Europeans spend about $10 billion or so (USD equivalent) annually to subsidize fossil fuels. By contrast, it thinks the American oil and gas industry might receive anywhere between $15 billion and $35 billion a year in subsidies from taxpayers.
Why such a large margin of error? The exact number is slippery and hard to quantify, given the myriad of programs that can be broadly characterized as subsidies when it comes to fossil fuels.
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at 22:20 on January 11th, 2011
Articles like the one linked to are often their own worst enemies. Very long on rhetoric and assumption but without any quoted facts. Just because Greenpeace thinks that subsidies are at a certain level doesn't make it so.
Similarly calling the maintainence of the highway system a "subsidy" to oil is beyond stupid. Are the highways also a subsidy for the Petshop industry? Or the disposable nappy industry? Without highways neither of these could distribute their products.
We should also keep in mind that often the American figures are estimated and the situation is different for different nations. The Australian Federal goverment recieved last year $16.1 Billion in Petreoleum Excise. Company and resource rent taxation provided another $68.3 Billion.
Each State also recieves nearly 10 cents per litre in excise for every litre of petrol sold. Those States with natural resources also recieve excise on the mining and use of those. For Queensland this year, this amounts to some $3.2 Billion or around 8% of total government income for the year.
The figures above generally do not include the Company Tax paid on Oil company profits, the GST paid by those companies or the personal income tax paid by the employees of the industry, all of which would be substantial.
As a general note, it strikes me as rather good business to give a subsidy to an industry that then generates taxable revenue far in excess of the original subsidy.