Guest Post by Willis Eschenbach
I take as my subject for this post a claim made over at Forbes Magazine, viz:
I saw that and said “Whaaaa”? My urban legend detector light started flashing bright red at that claim that we’re on the primrose path to the epocalypse.
Me, I always want to go the actual study instead of the media interpretation. In this case, the underlying study is by the IMF, the International Monetary Fund. It uses a most unusual definition of “subsidy”. Normally, subsidies are divided into direct and indirect subsidies.
A direct subsidy is money given to a producer or consumer. It’s actual cash.
An indirect subsidy, on the other hand, doesn’t involve actual cash, although it has a defined monetary value. An indirect subsidy includes things like tax rebates or R&D grants or the like.
The IMF definition, on the other hand, is quite bizarre. I’ve looked at a lot of studies of fuel subsidies, and only people with an axe to grind use one like this:
This paper updates estimates of fossil fuel subsidies, defined as fuel consumption times the gap between existing and efficient prices (i.e., prices warranted by supply costs, environmental costs, and revenue considerations), for 191 countries.
To highlight the difference between the standard definition and the IMF definition, let me give you a crystal-clear example of what the IMF considers to be a subsidy for “environmental costs” to the evil oil industries … but first I am obliged to warn you this stuff is not for the lily-livered or the faint of heart. So I’ll offer you a chance to avoid spoiling your digestion … any takers? OK, for those remaining hardy souls, one of the IMF’s many environmental subsidies is …
The cost of fixing the potholes on the road to my humble abode.
Truly. I’m not making this up. Pot-hole repair is part of their environmental “subsidy” that they claim is going to the energy companies.
And what are “environmental subsidies” when they are at home? I thought you’d never ask. Fortunately, they give examples, viz:
local air pollution mortality, broader costs associated with the use of fuels in road vehicles, and global warming
In the strange IMF parallel universe, the cost of fixing each of those is considered as a SUBSIDY TO EXXON AND SHELL! Fixing potholes as a subsidy to the energy companies! Have you ever heard such a daft thing?
Let me pause a moment here. They say that we should include “broader costs associated with the use of fuels in road vehicles”, meaning building the roads, building the bridges, and maintaining both of them.
But if you’re going to include that, how about the “broader costs associated with the use of fuels in building construction”? Buildings, like roads, are built using fossil fuels and run on fossil fuels. So … why include the costs of one and not the other?
These kinds of sort-of-related-not-really-costs are generally called “externalities”. The HUGE problem with using them is once you start to include anything but direct costs … where do you stop? Why include the cost of road construction and maintenance, but not the cost of building construction and maintenance?
From the study, the claimed reason for including the road costs is:
Environmental costs are just as real as supply costs, and undercharging for an unbiased (albeit uncertain) estimate of them is tantamount to undercharging for the true social costs of consumption.
Well … no. For many reasons. First, supply costs have an actual dollar figure to them, to the penny. Environmental “costs” do not. You can just pick a number.
Next, if your estimate is “uncertain”, how on earth would you know if it is “unbiased”.
Next, there is no rule or even rough guideline regarding what to include. Roads? Bridges? Potholes only? The possibilities are endless.
Next, if you need a clear example of how ludicrous this process is, consider the total impossibility of putting a dollar figure on the last item in their list, “global warming”. Seriously?
And finally, here is the real difficulty—in calculating the “externalities”, they are only including the external COSTS that they claim are associated with fossil fuels. They are totally ignoring the external BENEFITS of fossil fuels. Yes, there is a cost to fixing the roads, but there are also benefits.
These benefits, of course, are just as hard to put a price on as are the external costs. How much is it worth to have a good road to take me to the hospital after my seizure in November? Well … to me, a hell of a lot, although of course YMMV. I discussed this whole problem of monetizing externalities here.
And to me, this is why you should NEVER mix real costs and “monetized externalities”. One is real and very measurable. The other is an “accordion variable”, one that you can make as wide or as thin as you wish.
In other words, this IMF study has nothing to do with actual subsidies. The IMF:
• calculates an imaginary “efficient” price level that the authors think fuel would be supplied at on some kind of imaginary ideal planet,
• adds in the price of everything but the kitchen sink, e.g. they’ve added in the cost of “traffic congestion”, the cost to repair potholes, and even the imaginary cost of “global warming”,
• subtracts from that giant bulked-up number the actual price, and
• calls the difference a “subsidy”.
Yeah, when you add in highly suspect cost estimates of repairing potholes and traffic congestion and “global warming” as “subsidies” to fossil fuels, it’s easy to get up to a really, really big number. And that big number is many things. It’s impressive. It’s alarming. It scares children.
But it’s not a subsidy of any kind, direct or indirect. It’s a morass of monetized externalities, but only costs, not benefits.
For comparison, let’s look at real numbers. The US Energy Information Agency keeps records of actual subsidies. These cover both direct and indirect subsidies, viz:
• Tax expenditures: the amount of tax benefits or preferences received by taxpayers and forgone by the federal government
• Direct expenditures to recipients (i.e., both producers and consumers): the amount of grants, loans, or other financial assistance awards made directly to recipients
• Research and development (R&D) support: the amount of grants, loans, or other financial assistance awards made for R&D
• DOE loan guarantees: financial support authorized to be provided by DOE for innovative clean energy technologies that are typically unable to obtain conventional private financing because of their high technology risks.
This is the standard definition of subsidies. No nonsense about externalities. No ridiculous attempt to add in the fantasy cost of “global warming”
From Table 3 in the document linked to above, the total of direct plus indirect subsidies for oil and natural gas is about $2 billion dollars per year. For coal, it’s about $1.15 billion per year … a far, far cry from their claimed $649 billion.
Grrrr …
Intermezzo:
I took a break to go visit the ocean with my gorgeous ex-fiancée. Analyzing this kind of IMF garbage tends to angrify my blood. We went to the point out at the mouth of Bodega Bay. No whales today, big waves though. The waves are supposed to keep building for a couple days, the surf spot at Mavericks will be pounding …
We went out on the point where there is a curious kind of Stonehenge-like monument to the men and women who go to sea, and to those who don’t return. That good woman and I used to fish commercially out of this harbor, so it holds many memories for us. Here’s the monument, set up like the bow of a ship, with a boat’s steering wheel hidden on the back side of the square center stone. You can stand there, hold the wheel, and look out to sea:
And here’s the brass plaque on the center stone:
We walked out to the point, and looked out over the channel between the shore and a nearby offshore island, the narrow entry that she and I would use to bring the boat back to harbor, the passage that the sailors call “between the rock and the hard place” …
And the wind and the sea did their usual magic, soothed my blood and left me enjoying the very last day of 2019.
But I digress …
To return to the article that I’m analyzing, the headline comparing subsidies with education expenditures is very deceptive. To begin with, their calculated “subsidy” (which is nothing of the kind) is $649 billion per year. This is a huge, monumental, unbelievable exaggeration … but let’s pretend it’s real for just a moment. This is indeed about ten times larger than FEDERAL spending on education.
But what they don’t bother to mention is, the Feds are only responsible for a tiny bit of US spending on education, only about $59 billion.
Most spending on education is at the state and local level. Between Federal, state, and local direct cash outlays, we spend $1.23 TRILLION on education, about twice the amount of even their bogus figure. See here for details.
And the final problem with their analysis? It is that you cannot just look at raw subsidy numbers as they are doing. Once again, it’s a “cost/benefit” deal, and once again, they have left out the benefits. Consider: which one is better … spending $100 to subsidize the production of lots of energy, or spending $10 to subsidize a business like Solyndra that crashed and burned?
Obviously, the $100 option is far preferable to the $10 option. Raw subsidy numbers are meaningless.
So here’s a graph of those same EIA direct and indirect subsidies discussed above, but this time expressed per barrel of oil equivalent energy produced.
As you can see, per the amount of energy produced, we’re spending a hundred times more subsidizing renewables than we spend subsidizing natural gas and oil.
SUMMARY:
• Total US subsidies for fossil fuels, both direct and indirect, are about $3.2 billion dollars with a “b”. Their $649 billion dollar figure is nonsense.
• Total US spending on education, combining Federal, state, and local, is about $1.23 trillion dollars with a “t”, or about five hundred times as much as we spend on fossil fuel subsidies. Their $59 billion figure is only about 5% of the total educations expenditures.
• Per unit of energy produced, subsidies on renewables (solar, wind, biomass) are about a hundred times as large as the subsidy on oil.
CONCLUSION:
• Epocalypse canceled, sorry, no ticket refunds.
My very best New Years wishes to all,
w.
PS: Misunderstandings are the bane of the intarwebs. When you comment, please QUOTE THE EXACT WORDS you are discussing, so we can all be clear just what and who you are referring to.
It would also be good to show what the fossil fuel industry and all its employees pay in taxes. Heck, add in the federal, state, etc tax take added at the pump. Renubles don’t pay anthing.
Compared and contrasted with total taxes paid by education industry employees.
There was a typo in the image at the top of the article.
Correction:
United States spend ten times more on fossil fuel subsidies than on indoctrination.
You are confusing two types of taxes. Almost all education institutions are not-for-profit, so they pay no income tax (unlike Exxon, Chevron, Shell, etc.). The employees pay income and payroll taxes like any employee of any industry.
Federal and state governments derive revenue from sale of oil/gas exploration permits, usually sold at auction. There is no equivalent tax on the education industry.
Additionally, both federal and state governments (and some municipal jurisdictions) levy a retail sales tax on fuel. This is effectively paid by the consumer not the oil company per-se, but again there is not equivalent tax collected per semester-hour of class time.
Finally, the federal government guarantees a good portion of student loans, enabling a somewhat lower than market interest rate. This is effectively a subsidy to the borrower and should be accounted as such (just as should federal loan guarantees for nuclear plant construction).
Taken all together, government derives substantial revenue as a direct result of the exploration, extraction, refining and sale of fossil fuels, and absolutely none from the operation of educational institutions. To the contrary, education represents a very substantial net outlay at all levels.
Roads and bridges and fixing potholes are funded out of fuel taxes and aren’t really a subsidy. The power of eminent domain used to acquire right-of-way for roads could be considered a subsidy, but if so it’s just a fair to call it a subsidy of the automobile makers.
Transportation infrastructure is one of the essential underpinnings of a modern industrial society. If you take away roads and bridges we’ll be back living in the 18th century and we’ll all be too busy just trying to survive to complain about real or imagined subsidies to the fossil fuel industry.
No, if you took away communication infrastructure we would be living in the pre-telegraph 18th century.
If you completely took away transportation infrastructure we would be living in the Stone Age.
Taking away widespread internal combustion would only set us back a century to before the Aluminium Age.
Corporations don’t pay taxes, they collect them from workers and customers. All corporate outlays are included in the prices of their products.
By that logic, no organization ever pays taxes, only individuals.
And individuals required to contribute out of the profits of their employment earnings or commerce with customers or investments in business, or government support, never pay taxes either?
By that logic, no organization ever pays taxes, only individuals.
Yes, Randy, that is basically correct. Think About it. Companies factor into the price of their good and services *ALL* the costs of doing business. All costs includes the costs of paying taxes. Increases in the cost of labor gets factored into the price. Increases in the cost of materials gets factored into the price. And, yes, increases in the cost of taxes gets factored into the price. Same as the cost of any other component of doing business.
If, for whatever reason, they can’t raise their price, then they cut back on costs (hire less workers, substitute lower quality materials, etc.). And if they can neither raise prices nor cut costs, resulting in losses instead of profits, they’ll end up going out of business. This is all Econ 101 level stuff.
Rural municipalities in Alberta are owed $81 million in unpaid property taxes, by oil and gas producers.
If a corporation doesn’t really pay taxes, i guess that’s why they can make potholes by running service rigs and tankers over the county roads but then don’t have to pay to grade them.
So, what you are saying is the people who own property are not paying taxes. Oil and Gas companies lease the right to operate on land, the owners of said land have to pay taxes on it. Try again.
The Person who owns the land is Her Majesty, Queen Elizabeth II. Her tenants who have the right to work the surface have a duty to pay taxes, as well as the tenants who were granted mineral rights before 1905, and the Hudsons Bay company, and the Canadian Pacific Railway.
Most oil companies pay for a Crown lease for mineral rights, and every tenant who owns property must pay property taxes for the maintenance of common goods.
In other words, these good ol’ boys ran off without paying their share of the maintenance of a Common Good, and left a toxic mess / public nuisance that the other tenants have to pay, to clean up. We are Not Amused.
Really?!? You are claiming Her Majesty is not paying Her taxes? Wow, government always gets “its” money no matter what name is at the top of the sheet. Again, try again.
No, the oil and gas companies’ property is in and on the land. And the land owner is Her Majesty Queen Elizabeth II. She doesn’t pay tax to herself.
The farmers and smallholders are freehold tenants, but pay taxes on their ownership of the right to work the surface.
The cost of constructing and maintaining roads is largely paid through property (not fuel) tax. Most fuel tax is excise/royalty tax paid to the Crown.
The petrolrum industry receives little or no subsidy, except unintentionally by bankruptcy.
Land owners pay property taxes. Companies doing business on that land pay the land owners, then the land owners pay the property taxes with a portion of that payment to them. If your government is participating in a scheme to avoid paying their lawfully required taxes you need to take that up with them, not me or oil/gas/mining/timbering companies.
@Sam Grove:
In the sense of who ultimately foots the bill you are correct; corporations simply pass through the taxes they pay as part of the cost they build into the sale of their products and services.
But in an accounting sense corporations do pay taxes, and it appears as a line item on their balance sheets, and the amount paid directly reduces the earnings distributed to shareholders. And the distinction here is that for-profit corporations like energy companies are assessed and must pay income taxes on their net earnings, while non-profit corporations like universities do not. So back to the focus of this post, education corporations are not taxed on their income, and the amount of taxes avoided should be counted as a “subsidy” if we’re being consistent.
Oh, another direct hit! You don’t tend to walk rds around the area, go right for the point of maximum damage. Good on you, sir.
Alan, eminent domain usually involves compensation for those lands that are private.
@Irfan All:
Under the US Consititution, eminent domain always involves compensation. But just because you receive “fair market” value for your property doesn’t mean you would willingly sell it at that price. Exxon cannot force you to sell you land to advance their plans; government can. The exercise of that power is in effect a subsidy, as it enables a sale that might not otherwise take place.
Energy production equipment installations are taxed whether a petroleum pipeline or a hydrogen pipeline, a gas turbine or wind turbine, a power line frim a coal plant or a solar farm.
Solar and wind ‘farms’ themselves are also taxed. The total value is tiny by comparison, as are the taxes, and there are some subsidies.
Buying anything attracts sales and import taxes, whether a rooftop solar or rope start backup generator or a new furnace. But also not everything at your house adds to property tax, even if it’s screwed down and wired into the panel.
I think it’s better to counter the stream of riduculous propaganda from the left, with facts rather than with more propaganda.
If only politicians would counter propaganda like:
“You. Bought. A. Pipeline!”
with:
“You. Bought. A. Diesel. Campaign. Bus!!”,
Which would be countered with “What’s that Trudeau jet run on?”
It might lead to some honest discussions.
Renewables also pay property and sales taxes, in large scale installations like wind and solar farms. They don’t pay severance or royalties, obviously, but if they were ever significantly large, there surely would be new taxes invented.
Rooftop PV installations here have sales and payroll taxes, but not property tax.
Let’s not add to the propaganda, wild exaggeration, and misinformation around petroleum and energy. The article neatly and thoroughly skewers the notion that the petroleum industry is getting a free ride.
Agree,
Don’t forget to include fees paid by coal companies to pay for the reclamation/environmental clean up of pre-SMCRA coal mining through the Abandoned Mine Land program.
From the Department of Interior
Revenue and disbursements
Fees paid by coal mine operators fund the AML Reclamation Program.
Companies pay a per-ton fee to OSMRE:
$0.28/ton on surface mined coal
$0.12/ton on deep-mined coal (subsurface)
$0.08/ton on lignite
Congress set the current rates when the fee was extended in the Tax Relief and Health Care Act of 2006, lowering the rates 20% from the original amounts set in 1977.
Interest from AML fees pays for a portion of the costs for health care plans for the United Mine Workers of America (UMWA).
Just ask Wyoming how much taxes are paid by the fossil fuel folks and the benefits to their communities.
In 2018, ExxonMobil generated $290.2 billion in gross revenue. XOM spent $259.2 billion to generated that revenue. $32.7 billion was spent on “other taxes and duties” – Payments to government entities. This left them $31 billion of income before income taxes. They paid $9.5 billion worth of income taxes on the $31 billion, leaving $21.4 billion in net income.
For every $1 of net earnings, governments confiscated $2 worth of taxes and duties.
https://corporate.exxonmobil.com/-/media/Global/Files/investor-relations/annual-meeting-materials/annual-report-summaries/2018-Summary-Annual-Report.pdf
Thank you Willis for this article.
The warmist fraudsters frequently toss out this blatant falsehood about government subsidies to the oil industry. The fact is that the oil industry is often the primary funder of governments around the world.
In Canada, the oil industry in the province of Alberta is one of the primary funders of the entire country, through tax transfers via the federal government to the other provinces. Tax transfers exist when the feds collect tax money in Alberta and spend it in other provinces.
Here is a summary of tax transfers from province to province. Since 1961, only Ontario, Alberta and BC are net positive, contributing more money to the rest-of-Canada than they took out. Now, only Alberta is positive. Ontario’s manufacturing economy has been severely harmed by costly, intermittent green energy policies. BC has also recently become a subsidized province.
The contributions since 1961 from each Alberta family-of-four to the rest of Canada is about one million dollars – and the average Alberta family is not worth even close to one million dollars.
Regards, Allan
Post Script:
Why do the warmists frequently spread their false propaganda? Because that is what they do; that is their policy – Lie, lie, lie!
A few quotes by Lenin will shed further light on this process:
https://www.azquotes.com/author/8716-Vladimir_Lenin
Truth is the most precious thing. That’s why we should ration it.
[aka “Lie, lie, lie!”]
We can and must write in a language which sows among the masses hate, revulsion, and scorn toward those who disagree with us.
[There are many such examples in the global warming/climate change scam – for example, climate scammers call climate skeptics “deniers” and refuse to debate the bogus CAGW “settled science”.]
There are no morals in politics; there is only expedience. A scoundrel may be of use to us just because he is a scoundrel.
Free speech is a bourgeois prejudice.
The press should be not only a collective propagandist and a collective agitator, but also a collective organizer of the masses.
People always have been and they always will be stupid victims of deceit and self-deception in politics.
It is, of course, much easier to shout, abuse, and howl than to attempt to relate, to explain.
Democracy is indispensable to socialism.
The goal of socialism is communism.
The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.
Trust is good, but control is better.
As an ultimate objective, “peace” simply means communist world control.
One of the basic conditions for the victory of socialism is the arming of the workers Communist and the disarming of the bourgeoisie the middle class.
[aka “We must get rid of the Second Amendment and disarm the populace.”]
One man with a gun can control 100 without one.
Give me four years to teach the children and the seed I have sown will never be uprooted.
[Is that four years of public school or four years of university, or both? Why are so many teachers doctrinaire leftists?]
Give me just one generation of youth, and I’ll transform the whole world.
**************************
CANADA – FEDERAL TAX TRANSFERS
Tax transfers exist when the feds collect tax money in Alberta and spend it in other provinces.
Province 1961-2017 Per Family
Cdn$ Billions of Four (Cdn$)
NL -$172.3 -$1,254,228
PEI -$49.1 -$1,506,396
NS -$305.8 -$1,375,752
NB -$202.7 -$1,121,532
QC -$476.3 -$267,216
ON +$722.9 +$279,300
MB -$175.2 -$618,336
SK -$98.8 -$398,316
AB +$611.0 +$837,672
+2%int.+$906.5 +$1,242,827
BC +$120.8 +$125,628
TERR -$113.2 -$5,035,608
Source: Statistics Canada data and computations by R. Mansell and M. Khanal
I recall looking through the list of FF subsidies and saw things like funding the strategic petroleum reserve and home heating oil subsidies for low income families.
This is what happens when FF “subsidies” are removed:
https://www.reuters.com/article/us-ecuador-protests-idUSKBN1WI25Q
https://www.independent.co.uk/news/world/middle-east/iran-protests-tehran-rouhani-subsidies-a9208021.html
I suspect the only protesting to be heard if renewable subsidies were removed would be from “Green” investors.
In the US, the GreenSlime investors have bought and paid for the Democrat politicians and Enviro-NGOs mouthpieces to do their whining and protesting for them.
A few years ago, and it was easy to track down the individual components of the alleged subsidies.
Then it became known that DOE’s research facilities, a sizeable number, were booked as subsidies supporting fossil fuels.
Plus all of those tax subsidies towards people buying renewables, those are charged against fossil fuels as well.
During 2016, it became very frustrating trying to delve into the individual subsidies; where footnotes and references lead deeper into convoluted documents that list might gross amounts, but fail to divulge individual details as to exactly the source and where applied.
From the report Willis supplied a link to above; “Direct Federal Financial Interventions and Subsidies in
Energy in Fiscal Year 2016”: the description under their “Table 1” chart:
All words that strongly suggest loans, R&D, tests, salaries, buildings, heating and cooling costs are still charged against fossil fuels.
Willis’s excellent analysis above shows how even with IMF, Forbes, EIA and IEA’s financial thumbs on the scale, fossil fuels are extremely beneficial for the alleged subsidies lodged against them and how uneconomical the alleged renewables.
Now, I am left wondering if all of the land costs necessary to support renewable energy sources are somehow charged against fossil fuels as a ‘subsidy to fossil fuels’?
When I lived in Indonesia, I observed riots when the Government pushed up fuel costs. I saw riots because locals wanted jobs in the resource industry and they’d already employed too many people.
What I never saw was renewables. Too expensive.
Their “estimated” subsidies (lies) will be banded about everywhere by warmists and extinction alarmists.
You know what they say about lies circling the world.
They’ve been doing this for years. Every time I investigated some absurd ‘subsidy’ claim it turned out they’d just made up some number for ‘environmental cost’ or some such nonsense and called that a subsidy. Literally created trillions of dollars of ‘subsidies’ out of thin air.
The state is subsidising your and my breathing. Because they do not tax it. And if they were taxing it they still would be subsidising it because they wouldn’d tax it enough.
People who promote such logic out to be sectioned. Or worse.
sectioned as in draw and quartered ?
WSJ is run by dyslexics, they meant is to be called SJW. As for the IMF, I’m not sure that I is for but I can read the MF loud and clear.
Christine Lagarde was the managing director of the IMF for seven years until November 2019. Now she is President of the European Central Bank.
Heaven help the Europeans.
Haven’t you heard of a “Carbon Tax”?
Are you still subsidizing the local grocery store? Surely anything you spend there is a subsidy of that business by the definitions used by the IMF.
“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” – Ronald Reagan
If constructing and maintaining roads is a subsidy for fossil fuels, then it is also a subsidy for electric and other non-fossil fuel vehicles. So add that into the “alternative energy” subsidies.
Bill, my point exactly … once you start down that road, there’s no end to it.
w.
pun intended?
Ah, but Willis there is an end and its called Communism and state control of everything, eliminates all issues with corporations.
The tendency is toward fascism where corporations will still be officially “private”, but just controlled by paid puppets. Already going on now to some extent (media, google, academia, etc).
Indeed.
The kiddies have to travel to school. Therefore any government activity that fosters that travel has to be counted as a subsidy.
All the fossil fuel subsidies, like filling potholes, should also be counted toward education spending.
There is an almost infinite gulf between those who seek after the truth and those who are just trying to prove a case. Dr. Mann would be exhibit ‘A’ in that regard.
Its entirely unclear why road costs are a subsidy for fossil fuel companies but not for car companies?
But of course they are not a subsidy at all, as roads are paid for by the users of the roads. If I pay the cost of something then there cannot be a subsidy.
Ultimately it’s the consumer who pays. And as the tax is currently based on fuel/gas tax in most states, it’s not the road users (some of whom drive electric, ride bikes or horses, or otherwise don’t consume gasoline when using the roads) but rather the gasoline users (some of whom aren’t necessarily driving on the roads when using the gas, for example those operating lawmowers, gas-powered generators, etc) who are doing the paying.
If we did accounting like Nouveau Monde Phillistines, we would be arrested for defrauding government. I think as a nice contrast between renewables’ and fossil fuels’ effect on the government treasury, you should show what the fossil fuel industry (and its employees) pays in taxes
[Mods please remove last comment a partial repeat]
“Epocalypse” may be a great term for the ‘Climate Emergency’ that seems to be strangling our epoch.
Is it your invention?
As far as I know it is my invention, along with Thermageddon … but throughout history there have been lots of simultaneous inventions. Here’s one example:
https://www.youtube.com/watch?v=UQHaGhC7C2E
w.
I first heard Tom Lehrer when I was a wee one. My favorite was “The Hunting Song” with the refrain: “There are 10 stuffed heads in my trophy room right now: Two Game Wardens, Seven Hunters and a pure-bred Jersey Cow.” The guy was genius.
This is precisely why IMF should be eliminated and Forbes boycotted out of business.
The Forbes article is dishonest.
It is only looking at Federal spending on education which is roughly 10 pct of total primary and secondary education money spent. The vast majority of funds for education comes from state and local government.
Another excellent piece, Willis!
As you say, calculating the real cost of something gets into some pretty gray areas when you start adding the costs of so-called indirect subsidies. I suppose there is a bit of legitimacy to the argument that filling potholes is an indirect subsidy, but to do that you need to apportion those costs to EVERYTHING that is indirectly subsidized by that activity.
So, what other activities might also be indirectly subsidized by that? I guess, just about everything that somehow involves movement on the highways, since leaving potholes unfilled would undoubtedly increase the cost of those activities. Unfortunately, the article would seem to allocate the entire cost as a subsidy to fossil fuels. If it was allocated properly, I doubt that anything but a trivial subsidy could be allocated to any individual activity. Further, the cost of pothole filling is SUPPOSED to be paid through taxes already paid for the consumption of those fossil fuels, so our government already figured an arguably equitable way for the users of the highway system to pay for its maintenance. [An aside… I say arguably equitable because the damage to roads and highways is largely caused by heavy and overweight trucks, but most of the tax revenues come from taxes on passenger car fuel.]
Ah, well, number manipulators will always do so to support their arguments, and the least we can do is try to be aware of their flummery.
Each year I file a tax return on my miniscule ownership in some in oil and gas wells, and search for my subsidy. I never find one. There is a thing called “domestic production credits” which helps small producers of goods produced in the USA. It would work if I were producing something like sand or gravel, but the last line of the form states “subtract % of total derived from the production of oil and gas”.
Why is road work due to fossil fuel use? Don’t electric cars also use the road. If all transportation were using electric, the pot holes would still occur.
The Good Roads Movement occurred in the United States between the late 1870s and the 1920s. Advocates for improved roads led by bicyclists turned local agitation into a national political movement.
[Wikipedia]
Blame bicyclists!
“Why is road work due to fossil fuel use? Don’t electric cars also use the road. If all transportation were using electric, the pot holes would still occur.”
But they don’t pay the gas tax. That’s one reason why Washington State is moving towards taxing per mile, with a transponder in the vehicle.
Leonard
“The cost of fixing the potholes on the road to my humble abode.”
The answer should be obvious! If the zealots get their way, and there is a complete transition to non-fossil fuel vehicles, they will no longer repair potholes. That eliminates the hated subsidy.
It’s not, it’s a subsidy for Ford..or is it the buses…maybe logistics companies…or the businesses we get to by driving…
Its absurd, the users pay the full price. Thus there is no subsidy.
That transponder thing would be fairer all around. Right now we pay property tax that is used to pay for road and alley maintenance.
There’s no rebate for any homeowner or landowner without a road vehicle. But there is an off road fuel tax rebate.
As I’ve said this is the era of peak stupid. It can only last for years, not decades. Forbes.com publishing this kind of communist ineconomy is a sign of the top being reached. I’m relieved, since it can’t get any worse.
Did I just invoke Murphy?
Hugs, so peak stupid is not sustainable. Lets hope they don’t discover a way to sustain it.
“Two things are infinite: the universe and human stupidity; and I’m not sure about the universe.” Einstein
It’s already gone on for decades, and shows no signs of slowing.
Unfortunately, peak stupid is just like peak everything else. every time someone claims we’ve reached or are about to reach the peak, a higher peak is usually found. We’ve been hitting peak stupid for decades, and as this forbes article shows, the stupid always seem to find a higher peak to hit.
You think we’ve reached peak stupid?
Here, hold my beer.
But as non-fossil fuels take over so there is a mass transfer of infrastructure (I mean subsidies to the Green Industries) such as, roads, electric power infrastructure etc. Now that’s a massive subsidy over just a few years.
I’ve been struggling for years to comprehend what Subsidies are given to which form of energy: fossil fuels, electricity from each of Coal, Nuclear, Hydro, Wind, Solar – each has blessing & bane. Thanks for your explanation & analysis!
-/-
“Consider: which one is better … spending $100 to subsidize the production of lots of energy, or spending $10 to subsidize a business like Solyndra that crashed and burned?”
However, Solyndra had an ingenious technology (cylindrical panels receiving light from many directions via underlying mirrors) that was valid when Solar Panel prices were above a certain amount.
When the Crash of 2008 destroyed many American banks, warehouses quickly filled with Solar Panels. Solar Farms are built by Banks: no banks = no Solar Farms.
Solar suppliers quickly cut prices to maintain cash flow. China chose to distribute its Quantitative Easing funds by building Solar Farms in China to keep their producers in business. That meant their producers could also continue worldwide sales, which today approach domination status.
The price of Solar Panels dropped 80% in <2 years. 10 long term, excellent American Solar Panel makers were driven out of business, including newcomer Solyndra.
A further tragedy happened when Solyndra’s bankruptcy receiver destroyed the cylindres instead of donating them to researchers for improvement.
-/-
The other hidden question in your Solyndra question is whether it’s better for a society to have Centralised or Distributed generation of electricity. Please analyse for us & explain your opinion.
So what about ‘subsidies’ to education, on top of the huge direct expense? Schools need books. That requires paper, which means cutting down trees, and all the environmental impacts of that. They also need school buses, which require those potholes to be filled, and buses spew out harmful emissions (and non-harmful ones, like CO2).
And schools require land, destroying natural habitats. There are environmental costs to fabricate, er, estimate.
I’m sure there are billions and billions of dollars spent on these and other ‘subsidies’.
The whole thing thing is a scam, but one thing is certain: if these idiots win any concessions wrt the use of fossil fuel, the most profitable companies in the world will be those which make yellow vests.
Legions of misinformed voters have elected an unending stream of monetary idiots Landing us $22 trillion in debt with $100+ trillion in unfunded liabilities. Using the IMF approach this should arguably be added to the cost of education.
From my observations of the nearby school I would make a SWAG that 10 percent of the average family expenditure is spent on driving to/from school, and while for keeping the family car warm in the winter and cool in the summer when dropping off/picking up their kids at school. Cars are backed up for more than half a mile for about 30 to 45 minutes twice a day.
The other non subsidy that they call a subsidy is the deletion allowance on the oil/NG removed from the ground. Meanwhile, the State, County and/or city collect “Property” taxes on that new found wealth buried in the ground. In reality, they are taxing the fossil fuel balance their budget which raises the price for all users. I would also make a SWAG that the total of all of these “Property”taxes, nationwide, is more than that $649 Billion.
So they’re admitting that without fossil fuels there would be no transportation? Nothing fast enough to care (much) about a pothole in the road, anyway. Which leaves out anything faster than a horse-drawn conveyance.
I generally have a huge problem with this, as well. See, what they’re saying here is, all income belongs to the government, and if we allow you to keep any of it, that’s a subsidy!!! Wrong! All income belongs first (and only!) to the one who earned it. Any that winds up in government hands, except by donation, is taken coercively, whether it’s called a tax or fee or whatever! Now most of us obey tax laws and so the actual presence of a gun is not required, but the threat of one is still always there. Why am I the only one that has brought this up?
Just so, Red!
In the UK some of potholes are a danger to cyclists, some might consider that a good thing until it damages their wheel and or suspension.
So roads and bridges are not used by EVs? And they don’t cause potholes?
Being heavier and delivering more torque, I would have expected them to tear up the roads and bridges more…
The term “renewables” is terribly misleading. The vast amount of said “renewable” energy generation is from burning wood and dung, according to the IEA. That said, it would be better to know how much of the subsidy allocation above actually went to wind and solar, which provides a miniscual amount towards our global energy demand.
It has become quite difficult to filter the “less than complimentary” renewable data out of the recent IEA documents.
https://www.iea.org/data-and-statistics
From this same paper “Efficient fossil fuel pricing in 2015 would have lowered global carbon emissions by 28 percent and fossil fuel air pollution deaths by 46 percent, and increased government revenue by 3.8 percent of GDP. ”
Amazing.
First of all why did they pick the year 2015?
So all they have to do to fix carbon emissions, air pollution and the economy is to have “efficient” fossil fuel pricing. “Efficient” as in fixing the price through legislation rather than through the market. Right. Just like in Venezuela.
Who pays for this Sh#t/Paper?
Who pays? I do. You do. Let’s drain the swamp.
“lowered global carbon emissions by 28 percent”
“and increased government revenue by 3.8 percent of GDP”
First they assume that increased taxes will lower the use of fossil fuels, then they calculate the amount of taxes with the assumption that there will be no drop in the use of fossil fuels.
“fossil fuel air pollution deaths by 46 percent”
Can anyone actually find any such deaths?
The UK government states that in the UK there are no subsidies for fossil fuels – just lots of taxes on them. Renewables are very heavily subsidised (as in the rest of the world).
Great exposé, Willis — one that should be publicized far and wide.
I found pretty much the same thing during a conversation with one of my brothers, back in 2015. He said that coal is far more subsidized than “renewables,” and cited a Science mag paper by Ottmar Edenhofer, titled, “King Coal and the queen of subsidies.”
Edenhofer claimed that fossil fuels are subsidized world wide to the tune of $550 billion.
Like you, I checked the numbers at the US Energy Information Agency. And like you, I found that per unit of power generated, the US subsidized renewables at 35 times the rate of fossil fuels.
Edenhofer cited “IEA, World Energy Outlook 2014 (IEA, Paris, 2014),” which gives the $550B number as an unreferenced statement.
Edenhofer based his subsidy on the so-called social costs of carbon — calculated on the assumption that all the disaster-loving IPCC projections are true. Which they are not. It’s entirely a phantasmagorical crock.
And, of course, it passed peer review and editorial appraisal in that bastion of climate integrity, Science magazine.
Ottmar Edenhoffer is an economist who famously said that UN climate policy is not about the environment, but about redistributing wealth. In short, he’s a moralizing tyrant.
Here is the US Energy Information Agency data for that analysis.
Table ES2. Quantified energy-specific subsidies and support by type, FY 2010 and FY 2013 (million 2013 dollars)
For FY 2013:
Coal, 2013: $1.085 billion
Natural Gas and Petroleum Liquids, 2013: $2.346 billion
Solar, 2013: $5.328 billion
Wind, 2013: $5.936 billion
Renewables, 2013 total: $15.043 billion
Table ES4. Fiscal year 2013 electricity production subsidies and support (million 2013 dollars, unless otherwise specified)
Coal: 6% of subsidies
Natural gas and petroleum Liquids: 4% of subsidies
Renewables: 72% of subsidies.
In 2013 in the US, renewables got 7x the subsidies of fossil fuels (Table ES4) and produce about 5x less power (Table ES5). That’s 35x the subsidies of fossil fuels per unit power produced.
Redefining words is a modern pastime. “Marriage” is not what it used to be. “Free speech” is not what it used to be. “Gender” is not what i used to be. “University” is not what it used to be. “Subsidy” is not what it used to be. IMF is not what it used to be.
More than a few rather important words in the U.S Constitution, and the legislation enacted under it, no longer mean what they used to mean for the the first 100+ years.