Fossil Fuel Fake Subsidies Top $5 Trillion in 2017

Guest slam dunk by David Middleton

From the ever unreliable Nick Cunningham at Oil Price Dot Com…


Global Fossil Fuel Subsidies Hit $5.2 Trillion
By Nick Cunningham – May 12, 2019


The world spent a staggering $4.7 trillion and $5.2 trillion on fossil fuel subsidies in 2015 and 2017, respectively, according to a new report from the International Monetary Fund. That means that in 2017 the world spent a whopping 6.5 percent of global GDP just to subsidize the consumption of fossil fuels.

China was “by far, the largest subsidizer” in 2015 at $1.4 trillion, the IMF said. The U.S. came in second at $649 billion. In other words, the U.S. spent more on fossil fuel subsidies in 2015 than it did on the bloated Pentagon budget ($599 billion in 2015). Russia spent $551 billion, the EU spent $289 billion, and India spent $209 billion. Emerging markets in Asia accounted for 40 percent of the total while the industrialized world accounted for 27 percent, with smaller percentages found in other regions.

The subsidy figure the IMF uses incorporates a variety of supports for fossil fuels, including not pricing for local air pollution, climate change and environmental costs, as well as undercharging for consumption taxes and undercharging for supply costs.

By fuel, coal is receives the most largesse, account for 44 percent of the global total. Oil was shortly behind at 41 percent, and natural gas and electricity output received 10 percent and 4 percent, respectively.
There is a long list of reasons why slashing fossil fuel subsidies is not only a good idea, but very much needed. The climate crisis is worsening.

[…]

Nick Cunningham is a freelance writer on oil and gas, renewable energy, climate change, energy policy and geopolitics. He is based in Pittsburgh, PA.

Oil Price Dot Com

What do I mean by “fake subsidies”?

The subsidy figure the IMF uses incorporates a variety of supports for fossil fuels, including not pricing for local air pollution, climate change and environmental costs, as well as undercharging for consumption taxes and undercharging for supply costs.

All fake subsidies.

More fakery…

The climate crisis is worsening.

And the pièce de résistance of fakery…

The U.S. came in second at $649 billion. In other words, the U.S. spent more on fossil fuel subsidies in 2015 than it did on the bloated Pentagon budget ($599 billion in 2015).

The U.S. actually spent $599 billion on national defense… One of the few things the Constitution authorizes Congress to spend money on. Almost all of fossil fuel “subsidies” consist of the tax treatment of expenses.

The U.S. government spent next to nothing on fossil fuel subsidies in FY2016.

This image has an empty alt attribute; its file name is image-6.png
$489 million is next to nothing… and about $648.5 billion short of the IMF’s fake subsidies. Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2016

The expenses involved in extracting a depleting resource have to be written off as the resource is produced (depletion allowance). Some capital expenditures are allowed to be written off as expenses, rather than capitalized over time. When we drill wells, tangible drilling expenditures (items with salvage value) have to be capitalized. Intangible drilling expenditures (services and materials with no salvage value) can written off as expenses. According to the most recent EIA analysis of energy subsidies, fossil fuels received almost no net subsidies…

Click to enlarge.

The FY2016 numbers actually reflect a negative subsidy for natural gas and petroleum liquids. They also indicate that the solar subsidy has “fallen” to $4.19/mmBtu. The subsidy for solar power is about 1/3 higher than the wellhead price for natural gas.

112 thoughts on “Fossil Fuel Fake Subsidies Top $5 Trillion in 2017

  1. Astonishing that these individuals lack the basic analytical skills and are unable to recognize these alleged “fossil fuel subisdies” are utter figments of immagination somehow possess the superior intellectual capicity to ascertain the validity of climate science.

      • Turn that around.
        It is what the government doesn’t take that is the subsidy.

        • John says: “It is what the government doesn’t take that is the subsidy.”

          It is what the government doesn’t take from one industry that it takes from a typical industry that is the subsidy. After the oil crises of the 1970’s, the government offered tax breaks – subsidies – for oil from unconventional domestic sources. This may have encouraged the development of fracking.

          Saudi Arabia imposes (or imposed) a large tax – fully deductible – specifically on oil companies in place of charging a higher price of oil – a expense that is only partially deductible. When the US tax code allows full deductibility of this foreign tax credit, is this a subsidy?

          The main problem with this article is calling the absence of an appropriate Pigou tax a “subsidy”. To my knowledge, no goods in the US are charged a Pigou tax, and calculating an “appropriate Pigou tax” is a highly uncertain and controversial process. (Tobacco and alcohol are charged extra “sin taxes”, unrelated to the actual damage they do.)

          However, just because we shouldn’t refer to the absence of a Pigou tax as a “subsidy” doesn’t mean we should totally ignore the large and controversial current and potential future damage caused by the use of fossil fuels, especially coal.

          • I take your conclusion to task. …”doesn’t mean we should totally ignore the large and controversial current and potential future damage caused by the use of fossil fuels, especially coal”

            Let’s just make sure you weigh the benefits… Since lack of these benefits is hugely devastating. The problem with complaining about only the negative, without understanding the damage caused by going back to more pleasing to leftists, idea of burning dung, cutting trees for firewood etc, is that we devastate people’s lives.

          • Mario: You are absolutely right. When we weigh the damages caused by fossil fuels, we need to consider the damages – including higher costs – caused by their replacements, and the cost of doing without some energy. In theory, if we could impose accurate Pigou taxes on all alternatives, economic forces would select the lowest cost alternative. However, accuracy is unlikely and we traditionally don’t adopt this approach.

          • Frank: in theory you are right. In practice I fear giving more power to government to control or better stated take away freedom. Look at how the government is now picking winners and losers. It’s a very slippery slope and I am against it given politics. Look at FISA abuse look look at Solyndra… of which I have some direct knowledge of.

          • Mario: I too fear crony capitalism and giving more power to a government frequently isn’t very rigorous or accountable. If we chose to do something to limit CO2 emissions, please make it a uniform carbon tax that is fully and equally rebated to every citizen; instead of a patchwork of regulations, government subsidies, and a government-manipulated market for emissions permits.

            “FISA abuse”, however, is a red-herring. It is customary in search warrants and some other legal documents to use non-specific language when describing those not suspected of crimes. This wasn’t withholding information as many claim.

            “Source #1, who now owns a foreign business/intelligence firm, was approached by an identified U.S. person, who indicated to Source #1 that a U.S.-based law firm had hired the identified U.S. person to conduct research regarding Candidate #1’s ties to Russia (the identified U.S. person and Source #1 have a long-standing business relationship.)” “The identified U.S. person hired Source #1 to conduct this research. The identified U.S. person never advised Source #1 as to the motivation behind the research into Candidate #1’s ties to Russia. The FBI speculates that the identified U.S. person was likely looking for information that could be used to discredit Candidate #1’s campaign.”

            The rest of the FULL PAGE footnote discussing Steele is still redacted. Like everyone else, Mr. Trump is not mentioned by name. The same thing is true in legal documents in the Cohen case. Although mostly redacted, the full footnote describing Mr. Steele is known to be a full page long.

            If Papadopoulos or other campaign official had gone to the FBI in April 2016 and told them what he learned about a possible crime – Russian hacking of Democrats – then there likely would have never been a Russia investigation. The Trump campaign, however, wanted such crimes to continue so they could benefit from them. The press, of course, routinely consorts with all sorts of criminals (leakers) and traffics in stolen secret documents, but they arguably are informing the public.

            FWIW, to remind himself of the dangerous power he wielded, Comey allegedly kept a copy of Robert Kennedy’s signed authorization of surveillance of MLK on the desk where he signed search warrants, and had the blackmail that resulted made a part of the curriculum taught to new FBI agents.

          • Frank: I do not think any Carbon Tax is needed, nor do I think a carbon tax will have an effect on climate. Your idea will, however, make energy and everything made from energy in our lives, more costly, which will hurt poor people the most. So, really big disagreement between us here.

            Your second point about FISA abuse, sounds like you clearly do not understand what actually transpired.
            Papa D’ was fed a line about “Dirt on Hillary” that the CIA pushed to him, and then another spy tried to collect that info. They claimed Papa D’ was colluding with Russia, when in fact he had no contact with Russia. None. No charges. The second spy was through FBI getting an agent to deliver him $10k, and then they arrested him at the DC airport hoping to find that $10k before he could declare it through customs. Oh, and the FBI did not find what they were looking for, because Papa’ left money in Greece with his lawyer.

            The whole illegal spying thing is unwinding and you will see that not only were we right that Trump did not collude, but that there was collusion, and it came from our FBI, CIA, NSA and Democrats to affect a presidential election and then to change the results of the election.

            You do not have a clue of how bad the FISA abuse is, and the spying on a political adversary.

          • If Papadopoulos or other campaign official had gone to the FBI in April 2016 and told them what he learned about a possible crime – Russian hacking of Democrats – then there likely would have never been a Russia investigation.”

            Patently false. The “investigators” that instigated this investigation instigated said investigation solely because OrangeMan, no other reason was necessary, as is already evident from the get-ahead-of-the-indictments reporting/opinion pieces we are seeing now in the NYT, CNN, MSNBC, ATUS*, etc…, and THAT is where the crime took place!

            FWIW, AFAICT no one in the Trump campaign knew anything about hacked DNC or hacked HRC or anything else before the general public knew. Study the dates in the testimony, and the dates of articles based on “leaks” in the MSM, and create your own timeline, if you wish.

            *ATUS = All The Usual Suspects

          • Frank, you have been poisoned by the sources you list. That is why you do not understand what I had written. I cannot help you. I also can see your hatred in your ad hominem attacks on presumably President Trump. You cannot accept the results of the Mueller report, and you cannot accept that the report found no collusion, conspiracy and no obstruction… which is funny. As if one could obstruct the investigation of a crime that never happened.

            The tide has turned and you do not like it.

          • It is what the government doesn’t take from one industry that it takes from a typical industry that is the subsidy. After the oil crises of the 1970’s, the government offered tax breaks – subsidies – for oil from unconventional domestic sources. This may have encouraged the development of fracking.

            Tax breaks definitely encouraged the development of frac’ing “shale” formations. Other measures like royalty relief for deepwater leases in the Gulf of Mexico during the 1990’s definitely encouraged this…

            This doesn’t cost anyone anything…

            There are two economic hurdles that a field must clear to be eligible for a royalty suspension. If, after reviewing the application, the Secretary determines that the new production would be economic while paying Federal royalties, then royalty obligations will not be suspended. Further, a determination that no amount of royalty-free production would make the new production economically viable also disqualifies the field from a royalty suspension. Alternatively, if the field would not be economic while paying Federal royalties but some amount of royalty-free production would make the new production economically viable, the field would qualify for at least the minimum suspension volume. Should production from a field not be economic with a royalty suspension volume equal to the mandated minimum, the Secretary must determine the precise volume of royalty-free production which would make the production economic.

            https://www.boem.gov/Deepwater-Royalty-Relief-Economic-Model/

            The suspended royalties aren’t paid by other companies or other industries. The otherwise uneconomic production wouldn’t have occurred without the royalty relief.

            Saudi Arabia imposes (or imposed) a large tax – fully deductible – specifically on oil companies in place of charging a higher price of oil – a expense that is only partially deductible. When the US tax code allows full deductibility of this foreign tax credit, is this a subsidy?

            No. It is not a subsidy. When a US company earns money in another country and pays taxes to that country’s government, only the net income is taxable.

  2. oil and gas have been hated for decades for being profitable This type of tendentious reporting is not new yet will be the guppy feed the left will swim to

  3. I have been arguing with Leftists for years, over the meaning of subsidies. Nice piece!

    I would like to know what are the net revenues (taxes) from energy industry by source paid to the US government.

    • ExxonMobil pays more in State and Federal taxes than the entire industry receives in subsidies.

      • Thx David. I have been telling people as much, but would like hard numbers on how important their revenues are to the operation of our country. Again thank you!

        • Somewhere I have a spreadsheet of all the taxes ExxonMobil paid one year. It was something like $3 of taxes for every $1 of after-tax net income.

          • Impressive… would love to see a New Post on that subject.

            I once had an argument with the financial controller of our company where he believed Exxon’s gauging caused high gas prices. So I downloaded their current 10k report and had him calculate how much lower gasoline prices would be if Exxon reduced their pricing such as to make zero profit. The reduction of gas prices, based on his calculations, ended up less than 2 cents per gallon. Then I asked again, so do you still think they are gauging consumers? He said, “Well, yes I believe somehow they are.” I concluded that logic was not enough to convince people once they have made up their minds.

          • I actually did have a 2017 post on this…

            In FY 2009, ExxonMobil paid $25.9 billion in “sales-based taxes” and $34.8 billion in “other” taxes.  After all operating expenses, XOM had $34.8 billion in pretax earnings. They paid $15.1 billion worth of income taxes on the $34.8 billion. ExxonMobil does not generate much revenue from gas station sales ($1.8 billion in downstream earnings). Most of its “sales based” taxes were sales taxes on goods and services that it purchased in conducting its business.

            Other taxes: $34.8 billion

            Sales-based taxes: $25.9 billion

            Income taxes: $15.1 billion

            Net income: $19.3 billion

            State, local and national/federal governments confiscated $75.8 billion in “profits” from ExxonMobil’s business activities in 2009… Those governments invested $0 in their take of XOM’s “profits.”

            ExxonMobil earned $19.3 billion from its business activities in 2009… ExxonMobil’s owners had to spend $291.3 billion in order to earn $19.3 billion.  With their total tax take of $75.8 billion, governmental entities made $4 for every $1 that ExxonMobil made in net profit.

            When profitable, oil companies pay an effective tax rate US on income of ~40% to ~45%. Their effective tax rate on income earned outside of the US is ~60% to 65%. The effective income tax rate on most US corporations is ~15%… About 1/3 the effective rate on the oil industry.

            Most of ExxonMobil’s income taxes are paid overseas because  most of their income occurs overseas. Large oil companies like ExxonMobil tend to earn most of their income overseas because they can generate a lot more gross revenue. Unlike these United States, countries like Angola and Brazil were smart enough not to put their geological provinces with the potential for giant oil discoveries off limits to exploration.

            Why are “utility investors and renewable energy investors… like oil and water”?

          • ExxonMobil pays a dividend of about 4% that, in general, is taxed.
            Also, many folks do not understand their retirement income is related
            to the wealth generated by these sorts of companies.

            I’ve found most folks do not comprehend the size of these companies.
            Thus, the numbers sound big, as though that in itself is bad.
            The same sort of scale issue happens when they see the tons of
            ice lost from Greenland. Scale, as a technical concept, is not well understood.

          • People also have trouble with apparently large percentage changes in very small numbers.

            My calculation of ExxonMobil’s tax bill did not include the government’s take on the dividends they pay out or capital gains from stock sales… Or the income taxes collected from their employees.

          • John F. Hultquist
            May 16, 2019 at 7:03 am

            ExxonMobil pays a dividend of about 4% that, in general, is taxed.
            Also, many folks do not understand their retirement income is related
            to the wealth generated by these sorts of companies.
            *********************
            BINGO
            this is something I always stress and people like to ignore.
            now in the US we are mostly a 401K type of retirement plan its really important, and even pensioners here are affected as pension plans invest to cover their payouts.

          • David Middleton, it would also be instructive to add employee taxes, income and all other kinds to governments. I would say an instructive thing to do would be to compute from all this what the governments and the economy would lose if it were all shut down.

            We get to see the terrible costs to consumers of renubles but consumer taxes would gave to be raised if the O&G companies dtopped sm”subsidizing ” governments.

          • David,

            The real subsidizers are most, if not all, of the OPEC nations and others that keep their domestic oil prices well below world prices in order to maintain civil order. There would be riots if domestic prices rose toward world prices.

          • JanE Christoffersen, replying to David Middleton.

            The real subsidizers are most, if not all, of the OPEC nations and others that keep their domestic oil prices well below world prices in order to maintain civil order. There would be riots if domestic prices rose toward world prices.

            Rather, the true high cost of today’s oil “prices” is CAUSED by the artificial taxes, fees, royalities, and contracts paid BY the oil companies’ TO the royalty and goernments of the oil-rich nations. MidEast, US, Canada, UK-Norway (too), Indonesia, OPEC and Mexico and Venezuela and China (future South China sea island production), etc.

            See, the “price” needed to pay the “out-of-the-ground costs” are a certain amount for every well: drilling and exploration, research and geology, pipelines, infrastructure and shipping, tanks, pumps, power to pump the crude, refine it, etc.

            But EVERY COUNTRY charges a lot of money ON TOP OF that “actual cost of production”; and all of that money goes to the governments that use it to subsidize their country’s people and governments (artificially lowering pump prices for gasoline and heating oil, paying for social programs and buildings and retirement pensions and whatever else the politicians want to spend.

            Oil is not “worth” $35.00 or $45.00 or $65.00 or $105.00 dollars per barrel. Oil MUST CHARGE 65.00 or 45.00 or 75.00 per barrel to pay the 45.00 or 65.00 or 72.00 per barrel in taxes that governments collect.

      • David, If there are real subsidies for the fossil fuel industry, as the charts in Table 3 say then, being real, however small, the subsidies can be specified.
        * What are those ‘direct expenditures” of 19 million for coal and 111 million for petroleum?
        * What are the ‘tax expenditures’ of 906 million and (940 million) respectively?
        * Do the () around 940 indicate a negative amount? If so, what does that mean?
        * Are the ‘research and development’ amount monies paid to corporations to encourage research or tax write-off allowed to offset the corporations’ expenses for pursuing the activity?

        • The tax expenditures include the percentage depletion allowance, the deduction of intangible drilling costs, the deduction of some geological and geophysical expenses and other costs of doing business.

          The parentheses indicate a negative subsidy… Basically, oil & gas were taxed more than they would have been without the “subsidy.”

          Funding of carbon storage and sequestration (CSS) projects, particularly the successful use of CCS for enhanced oil recovery (EOR) at West Ranch oil field, SW of Houston, is an example of direct expenditures.

          I think most of the R&D goes to universities or funds government R&D, made available to industry. The Gas Research Institute and other government-academic-industry cooperatives might fall under R&D.

      • Because that statement does not contain values it must accepted as anecdotal and therefore lacks credibility.

    • Whenever anything about the cost of gasoline, or the oil companies comes up many people switch into a weird sort of angry mode and begin to complain about price gouging, suppressing patents on internal combustion engines, corruption…you name it. They do the same with insurance companies, utilities, banks, grocery stores, and on and on ad nauseum. The average person, as George Carlin observed, is pretty stupid; and half the population are more stupid yet.

      I wouldn’t worry much about stupid people except they might vote using the same sorts of thought processes.

      • Well… agreed somewhat. But this guy is not stupid. Not everyone we disagree with (and for good reason) is dumb at all. There is something else going on. Belief… belief needs not reason sometimes.

        Anyway, I have a corollary to your post, which drives ‘dumb’ P.C. people crazy.

        “Fact, 50% of people are below average intelligence.”

        Mic’ drop!

        • Only if you define average as the median and not the mean. And the mean is what most people think of as average.

          I suspect that if you used the mean of IQs, the number might be closer to 60%, but you would need a lot of data to figure it out. Or it might be 30%.

          Plus, you know, IQ is a rather subjective measurement at best, and meaningless at worst. I scored 90 on “verbal” IQ (I’m good with words, but slow, and the test is timed), and 115 on “numeric” IQ and 265 on “visual-spatial” IQ, which reflects absolutely nothing other than that I spent three years studying crystallography at a very good university. Big deal. Still managed to get a PhD though.

          • Uhm… It’s not funny when you get specific… So the assumption is a normal non skewed distribution… then it does not matter.

          • PS Smart Rock: I did score 137 on an IQ test AFTER my head injury. Never took the test before it. So, I cannot claim I am a genius… nor would I had my IQ made it to 140 or higher. Anyway, I do not know of any IQ tests that can be scored as high as 265… I assumed it topped out in the 180’s for an adult.

          • Nope, at least for the tests I am aware of. Those are “normalized” to 100 and 90 to 110 is about 68% of the raw scores or +/- I standard deviation.

          • You beat me to it, I was just about to make the same comment! I think someone may have pointed this out to good-ol’ George, cuz I saw a video clip of him where he said, “…about half the people are even dumber than that!”

            I was still going to give him the benefit of the doubt and assume in a population as large as “all people” the mean and the median would work out so close to the same as to make no difference, but you may be correct on the skewed distribution, since the IQ scale does not employ negative numbers (for the reeeeeeeelly stupid), and on the upper end, well you can’t do better on a test than answering ALL the questions correctly so how can you put a number on how smart they really are? So even in a population as large as “all people”, the mean could be skewed by those off-the-scale brilliant people like Leonardo da Vinci or Albert Einstein such that there is a wide variation between the mean, the median and the mode.

  4. This whole report from the International Monetary Fund on so-called Fossil Fuel Fake Subsidies comes straight from the voluminous vaults of Global Warming/Climate Change Alarmism’s Central Office. It is so misleading that it deserves some sort of award for high fabrication.

    • Is there a Goebbels Award somewhere for the most egregious propaganda produced in any given year?
      This IMF bs would be a certainty for the prize.

    • What I can’t tie together is why an International Monetary Fund would want to willfully seek to deceive and misinform the entire planet with rank bias and blatant propaganda against economically-developed countries that use a lot of energy which they then use to make the planet so a much better, even for useless parasite organizations like the IMF?

      A curious case of shooting oneself in the foot? Or is there a method in their madness? Or is it a case that these guru money specialists are so completely unaware of the facets of the tax give and take structures of private businesses and Govt that they just don’t know mucho about mucho in reality?

      I guess we can all decide the truth for ourselves given we’ll not find out another way what the motive and thinking was behind this IMF ‘dump’ of brown info-stuff. At least Oil Price Dot Com was there to catch it in their little mit and dutifully report the approved message.

  5. Its perplexing how those who lack the basic analytical skills to recognize how bogus the claims of “fossil Fuel subsidies” somehow possess the superior intellectual capacity to ascertain the validity of climate science.

    FWIw – these studies claiming governments provide oil companies with massive subsidies are so riddled with errors, they are complete jokes.

  6. ” including not pricing for local air pollution, climate change and environmental costs, as well as undercharging for consumption taxes and undercharging for supply costs.

    With that kind of magical thinking, anything can be justified.
    Food at the grocery store is obviously subsidized, because is not taxed (in most jurisdictions).

    When you can promote yourself as the definer of what is “undercharged”, and no one objects to such an absurd proposition, anything can be rationalized. This is the Emperor’s New Clothes absurdity, whereby every is told to ignore their lying eyes and believe what the weavers are saying about the “finest cloth” ever made now clothes the Emperor.

    So ignore your lying eyes about all the CO2 pollution coming out of the tailpipes of cars, and submit to $3/gall gas tax so it cost $6/gallon gas in order that the Progressives have more of your money to spend on their path to power.

  7. Greenies love to confuse tax breaks and subsidies. But they are different. A tax break is when a business keeps earned money; a subsidy is a when a business is given money. The result may be the same to the government’s income, but not the same to the business. A tax break requires money to be earned first whereas a subsidy requires you to be politically connected. Tax breaks reward success; subsidies reward political connections.

    • Thank you Wade for clearing up the misconception. Since wind farm operators receive a PTC (production tax credit) they are not getting a “subsidy.” So according to you wind farms are not subsidized!!!

      Same holds true for solar installations.

      Isn’t it a good thing that green energy is not subsidized?

      • Mike actually wants you to believe that the PTC is the only subsidy that wind and solar receive.

        Despite what Wade wrote it isn’t unreasonable to consider a tax break that none of your competitors receive to be a subsidy.

        PS: You don’t have to earn a profit in order to benefit from tax credits. If your tax credit exceeds what you owe in taxes, you get a check for the difference.

        • Tell us MarkW what other “subsidies” do wind farms get? Loan guarantees do not transfer cash into the hands of the wind farms, so that is not a “subsidy” per the definition.

          • The numerous states the require their utilities to supply a certain portion of the electricity from “renewables” is, in my opinion, a subsidy to the price of renewable energy. Without the requirement, no utility would mess with solar or wind. The business requirement of those same utilities to provide a steady supply of energy requires that utility to pay for the backup generating capacity which also subsidizes the “renewables” since THEY should have to provide that backup.

            There have been many posts here at WUWT discuss the backup that issue.

            Remove all requirements for WHERE energy comes from and let the market decide. Start by blocking all lawsuits attempting to block legal, approved installations.

            BTW: Another “subsidy” specifically for wind is the allowance to kill birds that you and I could be prosecuted for if we were caught shooting them while hunting. If they had to track how many they killed (at their expense) and pay a penalty for the slaughter, imagine the cost. I include that as a “subsidy”

          • By far the biggest is the requirement that utilities have to buy all the electricity they generate, whether they need it or not.

            Loan guarantees mean that they can borrow at a reduced rate. If you think loan guarantees are free for the guarantor, you probably believe that a tax credit isn’t a subsidy.

          • Mike Borgelt: You can define “subsidy” as tightly as you like, words mean nothing more or less than eggs such as yourself decide. For eggs like me, solar and wind would barely exist if not for the advantages provided by gov’ts. Some commenters above note how Cunningham’s article is math challenged, but they don’t get it. Cunningham doesn’t write for folks who understand math, he writes for folks like you!

      • Tax credits are NOT the same as tax deductions. Credits are taken off the amount of tax you owe. Deductions are taken off the income earned before taxes are even calculated. A $1000 deduction does not reduce reduce the tax owed by $1000. A credit does so there is a subsidy to a credit but not a deduction.

    • But this is worse than confounding tax breaks and subsidies.
      If the government did not award a subsidy or allow a tax break it would have more money in the treasury it could spend on something else. They are real dollars that you can count.

      However, “not pricing for local air pollution” is pixie dust. As noted you can make up any price/cost you want for not doing something.

  8. For Wind and Solar, one has to account for the unrecovered Endangered Species fines for “Takes” that are not counted in their subsidies. If Wind Farms had to pay for the actual endangered species Takes, they would be shut down immediately.
    Now that is a true unequal application of the law.

    • My employer’s “take” limit for desert tortoises is 4 per year. That’s killed, injured, annoyed, distressed, etc. If the ESA and Migratory Bird Treaty Act were enforced against wind and solar on a level playing field with every other industry, the wind and solar plants would face such large penalties they’d have to just sign themselves over to the government to settle the penalties.

    • Trump said last night in a speech that if you wanted to see a Bird Cemetary just walk under any windmill.

  9. I work for a large petroleum company and I have never seen any evidence whatsoever that my company – or any petroleum company – receives any money from the government. We get taxed like mad, and have to abide by regulations (which cost $$$), but we do not receive any funds from the government – any layer of the government (Federal, state, or local). The company I work for is an international company that has assets in the USA, Canada, and Mexico. Even in Mexico (where the petroleum industry is nationalized), we do not get money from the government. We pay lots of money to the governments of the USA, Canada, and Mexico.

    • The odd cousin to the oil patch is the coal bed methane exploration. They get some subsidy.

      They drill shallow wells and product ends up in Natural Gas pipelines.

      Big Oil is a tax remission machine. Everything from front end purchases of offshore leases to collecting taxes at the pump. Offshore and domestic royalties on federal properties are massive. Under Sarbanes-Oxley laws, if they get a subsidy, they are in deep legal trouble if it is not reported in their annual report.

      Funny how wind farms cry and the states pay for the grid. Big Oil pays for it’s own gathering and distribution systems.

    • The odd cousin to the oil patch is the coal bed methane exploration. They get some subsidy.

      They drill shallow wells and product ends up in Natural Gas pipelines.

      Big Oil is a tax remission machine. Everything from front end purchases of offshore leases to collecting taxes at the pump. Offshore and domestic royalties on federal properties are massive. Under Sarbanes-Oxley laws, if they get a subsidy, they are in deep legal trouble if it is not reported in their annual report.

      Funny how wind farms cry and the states pay for the grid. Big Oil pays for it’s own gathering and distribution systems.

  10. Turning the tables around we need to regulate and sanction wind farms that are within eyesight of national forests and other federal lands. Further, the costs of electric distribution lines and right of way permits to nowhere need to be fully accounted for. I also want to know the AGI income distribution of those that have claimed the solar and EV tax credits to date. Remember a credit is not a deduction.

  11. I think subsidies are bad. Let’s get rid of subsidies and use the power of the net to crowd fund investment. I know where I’ll put my money.

  12. Those brainless people compiling these Fake Subsidies always ignore the property tax that the coal, oil and gas industry pays for their assets, property and infrastructure. For example more than 50% of your electric bill comes from the taxes paid to county, municipal, city, state and federal taxes. The same property, e.g. oil, that is depreciated is also taxed by several of the taxing entities. Property tax is not avoided by depreciation.

  13. By all means, let’s stop these “subsidies” they talk about for all energy production.

    Bring the various producers of the raw materials, and the makers of solar panels, into compliance with proper environmental standards, proper worker health standards, and (especially) union scale pay.

    $1,000 per watt sounds about right for an “unsubsidized” price to “solarize” your house.

  14. This may be worth of attention:
    Stock up on the old fashioned incandescent light bulbs!
    “The French Agency for Food, Environmental and Occupational Health and Safety (ANSES) warned exposure to an intense and powerful LED light is ‘photo-toxic’
    The basic technology for producing a white light combines a short wavelength LED such as blue or ultraviolet with a yellow phosphor coating.
    The whiter or ‘colder’ the light, the greater the proportion of blue in the spectrum.
    EVERYONE should wear factor 50 suncream with five-star broad spectrum protection, to block UVA and UVB light, as well as iron oxides, which protect against blue light, says Dr Andrew Birnie, a consultant dermatologist and skin cancer specialist”
    At night? inside house or out with the LED street lights? That sounds a bit extreme.
    If true far more demanding to humans than global warming.
    https://www.dailymail.co.uk/health/article-7032303/LED-lights-irreversibly-damage-eyes-French-health-authority-warns.html

    • It’s utter nonsense. Blue light is blue light. Whether it comes from the sun, from an incandescent bulb or from an LED doesn’t make one iota difference.

      Incidently, blue leds make high res TV screens possible. Are they telling us not watch TV.

    • Ultra violet radiation causes sun tans, not blue light.
      If you want to worry your pretty little heads about Ultraviolet light, you should be panicking over fluorescent bulbs, which deliberately create UV in order to excite the phosphor coating in order to make visible light.

  15. So it is worth examining the basis of these claims. The depletion allowance has long been cited as a giveaway to the fossil fuel industry, but every business gets to depreciate its capital investment. It’s just that oil, gas and mining companies get to do it based on percentage depletion of the resource rather than by some other method.

    The Rocky Mountain Institute claims in part that “the military costs of forces whose primary mission is intervention in the Persian Gulf” is a subsidy to the fossil fuel industry.

    An International Monetary Fund (IMF) report on fossil fuel subsidies claims that they amounted to $5.3 trillion globally in 2015. They claim that most of this arises from countries setting energy taxes below levels that fully reflect the environmental damage associated with energy consumption; so, even if the costs they claim are accurate, they are subsidies to consumers, not to fossil fuel companies.

    However, the IMF’s claims are highly specious. First, the claim of environmental damage resulting in higher health care costs has nothing to do with carbon dioxide (CO2) emissions. CO2 is essential plant food, and is not a health hazard. These claims have to do with mercury, sulfate or other emissions, which have been greatly reduced in our own country since passage of The Clean Air Act. But, a big problem with those estimates, as pointed out by Dr. Alan Carlin in his critique of the Environmental Protection Agency’s CO2 endangerment finding, is that they use the linear, no threshold assumption in calculating health effects. That assumption basically asserts that if 100 aspirin is a fatal dose, then of 100 people taking one aspirin, one will die.

    The skepticalscience and thinkprogress web sites claim that losses due to extreme weather are subsidies to the fossil fuel industry. However, the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) concludes that there is no increasing trend in extreme weather. We went nearly 12 years since hurricane Wilma in 2005 without a cat 3+ hurricane make landfall in the United States. There is a slightly decreasing trend in the trend in the number of F3 – F5 tornadoes since 1950, and there were no F4 or F5 tornadoes in the US in 2018 for the first time since record keeping began in 1950.

    IPCC author Laurens Bouwer, in a study published in the Journal of the American Meteorological Society in 2011, states that increased losses are due to increased development and the increased value of property at risk.

    In 2014, Warren Buffett claimed that climate change has not affected Berkshire Hathaway’s insurance business, and they have not changed the way they estimate losses. Meanwhile, Munich Re is making record profits through higher premiums by exaggerating the dangers of climate change.

  16. Huh. I didn’t realize that the U.S. federal tax of 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel in addition to state and local taxes that total about 52 cents per gallon on average was a “subsidy”. Color me stupid. I hope we start applying the same “subsidy” to wind and solar soon.

  17. You think the subsidies for fossil fuels are outrageous? The subsidies for the left are truly horrific! For 2018, the world has spent 92 trillion dollars subsidizing the left!

    The subsidy figure being used incorporates a variety of supports for the left, including not pricing for the social and individual damage inflicted on the World’s citizens by relentless fear-mongering, the blatant assault on science through the post-modern abandonment of the scientific method, the undermining of individual liberty by the enforcement of group politics, the criminal degradation of higher education and the willful spread and support of fake news, especially in regards to climate change, capitalism and Russian collusion. The largest cost to the human race, comprising 62.23% of the total subsidy, is the horrifying cost of the liberal disease of victimhood, which has now reached epidemic proportions and threatens the human race with extinction in as little as 12 years!

    Indeed, the above article and the actions of the IMF are prime examples of how widespread the disease of victimhood has become! The message is clear: You have or will offend me and that is going to cost you money! Anything I do to you is completely justified because of how much you hurt me, or may hurt me in the future. So pay up, or else!

    Victimhood is the human condition that enables all wars. It was the driving force behind communism, Naziism, the Kmer Rouge, the Rwandan genocide, and countless other examples of humanity at its worst. Victimhood is contagious, extremely debilitating and often fatal to the carriers and those around them; and the left is spreading it everywhere they go!

    • re: “Victimhood is the human condition that enables all wars.”

      I don’t think this approach was mentioned in “The Screwtape Letters” was it?

      • I have not yet read them, so I cannot speak to that. I hope to someday.

        I was introduced to the idea of victimhood as a disease in the book ‘Real Love and Freedom for the Soul, Eliminating the chains of Victimhood” by Craig Baer. It is actually a book about personal relationships, but the author spends some time describing the same phenomenon in societies. The classic example is Germany after the first world war. Germany was victimized by the rest of Europe after the war, but being a victim is not the same as victimhood. Being a victim is an event. Victimhood is a mindset that is ultimately more harmful than the original offense. Hitler seized upon the rampant victimhood in the German people and turned them into a self-righteous. killing machine intent on holocaust and world domination; actions that those noble people could only justify in a state of victimhood.

        The victim mantra is: “Look what you did to me! Look what you didn’t do for me that you should! And it is not my fault!” People possessed by the victim mentality are capable of the most horrible atrocities, justifying their actions as payback for perceived injustices. The injustices do not have to be real, comparable, related or in the past. Victimhood is also like a drug, being extremely addictive and extremely debilitating.

        Climate change legislation is driven entirely by a victimhood paradigm, founded on the idea that something bad is going to happen to people in the future. This fictitious, futuristic victimizing is then given as the justification for the illegal, immoral and irrational acts in the present, that comprise the book of climate change activism. It is the justification for huge power grabs and costly, ineffective decisions. It is justification for proclaiming that the science is settled, demonizing those who disagree and destroying the lives of anyone, by any means possible, if they get in the way. It is justification for lying, as Stephen Schneider so clearly expressed early on: “Each of us has to decide what the right balance is between being effective and being honest.” as if the two were mutually exclusive, instead of complementary. That justification for lying (or any other immoral action) is a sentiment that I am sure Hitler, Mao, Stalin, Pol Pot and so on would readily agree with, as does anyone inflicted with the disease of victimhood.

        After all, look what the did (are doing, will do) to me!

  18. Their logic is…
    If you walk to the corner store instead of take a taxi, the taxi industry is “subsidizing” you…..

  19. A company that builds or buys a wind turbine depreciates the cost of that asset over time. Do greenies consider THAT to be a subsidy?

    • To those on the left, good and evil are determined solely based on whether or not they benefit.

  20. Thx David. I have been telling people as much, but would like hard numbers on how important their revenues are to the operation of our country.
    Again thank you!

  21. Not sure about China, but fossil fuels here receive by far mostly tax breaks, which by definition aren’t subsidies. A true “subsidy” is the government giving a business money so as to become/remain viable. A tax break, obviously, let’s one keep more of their own money. Two totally different things. No surprise why the media erroneously combines the two different mechanisms under the term subsidy, so as to say “look at all the subsidies fossil fuels receive”.

  22. I’m beginning to believe that “bloated” has become an official part of “Pentagon Budget”.

    It could be cut to $10/yr, and the whinny liberals would still declare it to be bloated.

  23. Typical green lies. The fossil fuel industry is one of the most highly taxed in the world. There are mining and oil royalties, super profit taxes, environmental levies, excises (which make up a third of gasoline price at the pump here in Australia) and now carbon taxes to save the world from a problem which isn’t happening. And then the companies have to pay all the other normal business taxes like payroll tax, employee income tax, company tax etc. The tax burden would dwarf Cunningham’s fake subsidies.

  24. Only tax credits are subsidies. Someone is paying for your credit. Everything else is deferring income or expenses…regardless the take is eventually paid.

  25. “…the U.S. spent more on fossil fuel subsidies in 2015 than it did on the bloated Pentagon budget…”

    Gee, didn’t try very hard to hide his political views, did he?

    • He probably lives in one of those places that exclude anyone who isn’t a liberal, so naturally everyone he knows feels the same way.

  26. Mr. Middleton, thanks for this excellent post. I’ve wondered how anyone could simultaneously claim that fossil fuels are “subsidized” and complain about the “obscene profits” that those who sell them make. The two concepts don’t go together. I knew about the depletion allowance, but not the rest. As for “tax subsidies,” the idea that when the government decides not to take someone’s money away from them, it is the equivalent of the government giving that person money is simply obscene. It presupposes that the government has first claim on the fruits of every person’s thoughts and efforts. In other words, it institutionalizes slavery.

    • Liberals live in an upside-down world where not taking is considered a gift while at the same time, not giving is considered a taking.

  27. I would have to study economics to even begin to understand what this article is about.

    Sorry to be a total mouth breather on this one.

    Okay, that was a useless comment, of course, as far as adding anything to the discussion, but still a gauge of the comprehension skills of some WUWT fans [maybe just one — me], nonetheless.

  28. 1/. Decide on your political objectives
    2/. Construct a moral narrative on how to achieve them
    3/. Construct fake facts to justify your narrative.
    4/. Issue constant press release to the MSM
    5/. Employ ‘experts’ to further reinforce the idiocy.
    6/. Mount witch hunts against any sane normal people

  29. I see it every tax year. If I produced sand and gravel I’d get a domestic production credit. Since I produce oil and gas I am exempted and fully taxed.

  30. In all OECD nations, oil and gas companies pay the HIGHEST EFFECTIVE tax rates of all industry.

    Yet people still insist they are “subsidized”.

  31. Yes, by this logic all depreciation and expense allowances for all businesses are subsidies.

    You are a retailer. You employ two people? You write off the expense of employing them against your revenues? That’s a subsidy.

    Maybe even being allowed to write off the cost of goods bought in against revenues is a subsidy?

    Maybe the fact that you do not pay for parking spaces for your customers, maybe that’s a subsidy too?

    You sell high fat, high salt products? Like, you sell butter, eggs and table salt? Well, do you pay for the costs of heart conditions which those products give rise to? No? Well that is a subsidy too.

    My goodness, you have revenues of a couple hundred thousand a year, and you are claiming only to have a 10% return. But actually we are all subsidizing you to the tune of at least another hundred thousand, maybe as much as a million!

    Its dreadful. Why did no-one realize this before now?

  32. In the wake of the “extinction” rally in London a talk radio host was interviewing a protester who claimed, among other things, that fossil fuel industries receive huge subsidies. The interview went something like this:
    Interviewer: What do you mean, they receive subsidies?
    Interviewee: They get government subsidies.
    Interviewer: That’s just not true.
    Interviewee: It is true, I read it.
    Interviewer: What are you, saying? Oil industries are private corporations with shareholders that make profits. Are you saying the government actually pays these companies to dig oil and coal out of the ground?
    Interviewee: I don’t have that information.
    Interviewer: So in what way are they being subsidized?
    Interviewee: I don’t have the full details to hand.
    Interviewer: You don’t seem to know very much about it do you.

  33. I have a fantasy that some day people like Nick Cunningham could be made to run a real company. The results would be most edifying.

  34. Using Cunningham’s logic, every taxed American receives a “subsidy” of $25,000 per year as a standard deduction. How does that compare with Exxon and other oil companies.

  35. I’m with Robert Kernodle, you have to do better than this explanation. You are far too close to the forest to explain the trees.

    PLEASE, give us a 30 word ‘definition’ that we can whip out of our wallet and read to the Climate Frightened Dolts. We lose the debate without simple and straight forward retorts.

    Thanks in advance.

    • Easy: Tax deductions, which all companies get, are not subsidies. Subsidies are a direct transfer of money from the government to a company.

  36. I think it would useful when indicating subsidies both pos and neg be stated. Fossil fuel subsidies top $5 trillion but no mention of renewable subsidies.

    • The whole point of the article, which apparently you didn’t even bother to read was that there are no fossil fuel subsidies.

  37. The net subsidy of fossil fuels is clearly far less than zero.

    If, say, carrots or broccoli were removed from the world tomorrow, not too many people would complain, much less be inconvenienced.

    If fossil fuels were removed from the world tomorrow, or even over a period similar to the carrot/broccoli growing cycle, the result would be economic catastrophe, strife, war, starvation, and deaths running to many billions as the whole of modern human civilization collapsed and humans faced extinction.

    These people are pillocks.

  38. A $7 Trillion con-game is hard to take down when governments are the main enablers .
    Tens of thousands of fuel poverty deaths each year based on a massive fraud . Who knew ?
    It isn’t EXXON that should be sued . Crooked politicians and some bought scientists .
    Flim flam men like Gore are just exploiting the largest fraud in history .

  39. What are tens of thousands of fuel poverty deaths worth each year caused by this scam ?

  40. What subsidies to PV farm owners get?

    “Britain’s biggest solar farms get more money in taxpayer subsidies than they make from selling the electricity they produce. The plants were encouraged to get off the ground with generous handouts, funded from ‘green taxes’ on fuel bills.
    Now many of them make the majority of their cash from the subsidies.
    Some farms have been snapped up by private firms, venture capitalists and pension funds which realise they are guaranteed money-spinners, in part because of the Government-backed handouts.”

    Read the article from last weeks paper:

    https://www.dailymail.co.uk/news/article-7021119/Solar-farms-millions-taxpayer-handouts-make-selling-electricity.html

    Hopefully the table of top earners will show below…

    https://i.dailymail.co.uk/1s/2019/05/12/21/13413052-7021119-image-a-12_1557693469323.jpg

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