Guest Post by Willis Eschenbach
Fossil fuel companies get $62B a year in implicit subsidies, economist reports
Whenever I hear about “implicit subsidies”, “social costs”, or any accounting of “externalities”, my bad number detector starts ringing like crazy. The problem is that just about anything can qualify as an “implicit subsidy” or one of its equally vague cousins.
The study, paywalled of course, is called “The producer benefits of implicit fossil fuel subsidies in the United States”, by Matthew Kotchen.
So … just what qualifies as an “implicit subsidy” to the eeevil fossil fuel companies?
Like any good liberal, he starts with their favorite scare tactic, “climate change”. So let me digress for a moment about that.
For forty years or so, people have been warning us about what they call a “climate emergency”. The Oxford Dictionary defines “emergency”as “a serious, unexpected, and often dangerous situation requiring immediate action.” Since we’ve been breathlessly warned about this “emergency” for forty years with absolutely no sign of it happening, it’s hardly “unexpected”. And since we’ve seen neither “serious” nor “dangerous” results from this situation, at this point describing it as an emergency is a sick joke. And that’s just the start of why calling our current situation a “climate crisis” or “climate emergency” is just Chicken Little screaming that the sky is falling.
Here’s the current situation. Crop yields continue to rise.
There is no increase in the rate of sea-level rise. The number of extreme weather events like hurricanes, floods, and droughts are unchanged and have been with us forever. Deaths from climate-related disasters are at an all-time low.
The additional CO2 has led to about a 10% increase in “greening”, the amount of new plant life covering the planet. The 300-year-long gradual warming has been generally good for humans, animals, and plants alike. Cold kills. Today, people from rich to poor are generally better fed, better clothed, better housed, and more insulated from the endless historically common vagaries of the weather than at any time in history … where’s the problem?
So I’m calling bullshi@t on the entire climate “emergency” nonsense. Where is the “emergency”? We’ve seen about a degree and a half of warming since 1800. I’ve asked over and over again for someone, anyone, to point out any catastrophic negative effects of that warming … crickets …
But I digress. Kotchen figures that the companies are getting a subsidy for each ton of CO2 emitted. The burning of fossil fuels emits about 37 gigatons of carbon dioxide per year. So right there is a huge, totally invisible, and totally meaningless “implicit subsidy”.
Now, I can’t figure out just how Kotchen calculated the amount of the “climate subsidy”. He says he’s using the Nordhaus estimate of the so-called “social cost of carbon”, which is $31 per ton of CO2 emitted. But that would make the “implicit subsidy” $1.15 trillion dollars, and his total is only a “mere” $62 billion. However, he’s an economist, so he’s covered up his work with thick layers of confusulation and bafflegab, like dividing the “implicit climate subsidy” into separate amounts for “foreign climate” and “domestic climate”, and I had neither the time nor the inclination to unravel the idea that “climate” has domestic and foreign versions. Suffice it to say that the majority of the “implicit subsidy” is imaginary climate costs.
So what else counts as an “implicit subsidy” on Kotchen’s planet? Well … pollution. People only very rarely have “pollution” listed on their death certificates, so economists have complex computer models to spit out numbers of “years of life lost” to pollution. Of course, much `like with climate models, no one knows if the numbers have any relationship to reality, and no two of them give the same answer. So I rather suspect that Kotchen just grabbed the biggest numbers and used them.
From there, however, it gets truly bizarre. The other three items that are treated as an “implicit subsidy” are the imputed costs of traffic congestion, automobile accidents, and road damage.
Seriously. Road damage.
My guess is, you never thought that when your local transportation authority used your tax money to fix potholes, it was an “implicit subsidy” to Exxon Mobil …
The logic seems to run like this. If we didn’t have fossil fuels, we wouldn’t have costs for pothole repair, car crashes, and traffic congestion … so all of the costs of those are an “implicity subsidy” to BP, Exxon, Total, and the other fossil fuel companies. Of course, without fossil fuels we wouldn’t have cars either … but somehow that doesn’t matter.
Now me, I simply can’t follow that logic. For example, if we didn’t have fossil fuels we also wouldn’t have costs for road, bridges and traffic lights … so why isn’t Kotchen counting the costs of those in the “implicit subsidy”?
You could argue that he’s only looking at the cost of damages (potholes, crashes) and inconveniences (congested roads) caused by cars … but if that’s the case, what about the damages due to airplanes, trains, and ships? The good ship Ever Given has already caused tens of billions of dollars in costs due to the “congestion” at the Suez Canal … why is that kind of cost not counted? Plus there’s the fact that maritime transport already contributes to between 2% to 3% of global greenhouse gas emissions. Ships that have to go around Africa instead of going through the Suez Canal, and which are traveling faster to make up for lost time, means additional fuel consumption and emissions. But it isn’t the first time this kind of thing happened, and such previous ship, train, and airport costs and additional emissions are not counted. Runways and railroad lines have to be fixed just like roads, but those costs are not counted. Why?
(I suppose I shouldn’t be giving Kotchen any ideas or he’ll soon be up to $124 billion in “implicit subsides” instead of his current $62 billion dollar claim …)
This points out my biggest problem with such “external costs”, “social costs”, “externalities”, and “implicit subsidies”—the people like Kotchen who are pulling these numbers out of their fundamental orifices can pick and choose anything that they want to include or exclude.
And here’s the second-biggest problem for me—the underlying logic makes no sense. Look, they count car congestion and car accidents as an “implicit subsidy” to Exxon because it’s damage caused by the use of fossil fuel …
But if that’s the case, shouldn’t we count the cost of the damage done by computers through computer online crime as an “implicit subsidy” to the computer manufacturers?
Or how about the electrocutions and the house fires caused by people having substandard electric house wiring? Are they an “implicit subsidy” to Pacific Gas and Electric, my local power utility? If the fossil fuel folks get charged with “implicit subsidies” for providing energy for cars, shouldn’t PG&E get charged with “implicit subsidies” for providing energy for houses?
Now, you could argue that the fixing of potholes is an “implicit subsidy” because it’s paid by taxes … but at the end of the day, the government has no money, so the cost always lands on some subset of the population, just like the costs of house fires, traffic congestion, and computer crime.
And finally, he goes on in great detail as to just which energy companies are getting what amount of subsidies … whereas in fact, they aren’t the ones burning the fossil fuels. If a man sells me a knife, isn’t what I do with that knife on me and not on the Gerber Knife Company? Whether I use it to carve up a Thanksgiving turkey or to carve up my neighbor is on me, not on the knife supplier. Similarly, if I buy some oil, whether I use it to make nylon for ski jackets or burn it to make electricity is on me, not on Exxon or BP … so why should the “implicit subsidies” be claimed to go to the oil companies? I want my implicit oil subsidy, and I want it now!
My conclusion? I see no logical reason that fixing potholes is an “implicit subsidy” to those terrible people whose only crime is supplying the energy that has lifted the world out of misery, sickness and poverty.
I am compelled to add, however, that the amount of bumwad that passes peer-review and is published in “scientific” journals these days is a crime against science …
Here, it was lovely and warm, so the good lady and I went to Occidental, our local “Census Designated Place”. It’s not a town, no town council, no mayor, so that’s what it’s called. As always I was bemused by the statue made by an amazing local sculptor named Patrick Amiot. It stands in the middle of Occidental as a tribute to the closest person we ever had to a mayor, a man everyone called “Ranger Rick”. Here he is, in his perennial San Francisco Giants hat.
Occidental is a wonderful place, a village from another time. Nearly a decade ago now, I wrote about Ranger Rick here.
Businesses in Occidental are starting to return to life, and if Governor Newsom ever gets up off his dead asterisk and ends the lockdown and mask lunacy, we’ll be good again. When the Governor of Texas did that 26 days ago, Joe Biden called it “Neanderthal thinking” and said it risked “thousands of more deaths” … but here’s how it has actually worked out.
You say that 26 days is not enough time for new deaths to show up? OK, here’s new cases …
As you can see, the lifting of the mask and lockdown mandates haven’t made the slightest bit of difference in Texas.
This is the first pandemic in history where we’ve quarantined the healthy instead of the sick, and it has been a total unqualified disaster. As I posted up a year and a week ago, End The American Lockdown Now. Our response to this pandemic has been totally insane.
And while that wonderful woman and I are waiting for sanity to return, we had tacos outdoors at the Mexican restaurant and enjoyed people-watching on a beautiful spring day.
Best of the sunshine to all, keep laughing or you’ll cry,
The Usual: When you comment, please quote the exact words you are discussing, so we can all be clear on what and who you are talking about.