From NOT A LOT OF PEOPLE KNOW THAT
By Paul Homewood
We’re used to claims that fossil fuels are being subsidised to the tune of trillions of pounds by governments around the world.
For instance, this baloney from the Guardian a couple of years ago:
The implication is that our taxpayer money is being handed out to the fat cats of Big Oil, and that money could be spent on much more worthwhile things.
That in fact is an outright lie.
I was reminded of this issue yesterday, when one naive commenter, (there’s always one!), in a Telegraph article on obscene subsidies for renewables asked “what about all of the subsidies paid out to oil and gas companies”.
Don’t believe me, this is what even the anti-fossil fuel International Energy Agency say.
The IEA have been estimating the cost of fossil fuel consumption subsidies for a few years now. These effectively reflect the sale of fossil fuels at below the market price, or what they call the “reference price”. Note that this does not necessarily mean below cost.
The IEA reckon subsidies added up to $620 billion in 2023, nothing like $7 trillion bandied about by the Guardian, which is based on an IMF report.
https://www.iea.org/data-and-statistics/data-product/fossil-fuel-subsidies-database
$620 billion is still a lot of money, but as Our World in Data point out, nearly all of this takes place in major fossil fuel producing countries, such as Russia and the Middle East.
Not a solitary penny is paid out in the UK, according to the data.
https://ourworldindata.org/how-much-subsidies-fossil-fuels
Indeed just thirteen countries account for $517 billion of the total.
Obviously if you’ve got a lot of oil and gas under your land, it makes sense to exploit it. Iran is a classic example – they could sell it all at full price on the international market, but it prefers to sell it at a lower, affordable price to its own citizens. Without it, they would die off in their thousands during the bitterly cold winters there. What else are they supposed to do? Heat their homes with solar panels?
What the Mullahs, or the Saudis or the Russians choose to do with their own oil and own money is their business and theirs alone. It has nothing to do with the Guardian, IEA or IMF.
Consumption subsidies account for about 80% of total “explicit” subsidies – more on this later. The other 20% are “production subsidies”, effectively where government money is paid to fossil fuel industries.
But most of these are merely the same sort of tax breaks handed out to all companies, so are not directed at fossil fuels at all. This is no doubt why even the IEA don’t bother to count them.
So we see that the $7 trillion scare stories have no basis in reality, and in most of the world there are no subsidies at all, much as the Guardian would like to believe otherwise.
Which brings us back to that $7 trillion!
Our World in Data explains:
This $7 trillion figure comes from a report by the International Monetary Fund (IMF). For context, $7 trillion is equivalent to around 7% of global GDP, a huge amount of money.3
This estimate is much higher than the figures we looked at earlier because it includes not only explicit subsidies (i.e., direct payments) but also implicit subsidies — the societal costs of burning fossil fuels. When we burn fossil fuels, we cause local air pollution that damages human health, and we drive climate change, which also results in environmental and social damage. The IMF also attributes to fossil fuels the social costs of road accidents and congestion. Economists usually refer to these indirect costs, which aren’t reflected in market prices, as “externalities” rather than “subsidies”.
https://ourworldindata.org/how-much-subsidies-fossil-fuels
Whether the implicit costs actually exist in real life is not the point. It is the counterfactual that matters.
Yes, we may have more air pollution. But without fossil fuels, the world would be a much poorer place and a much less healthy one too.
Even more ludicrous is the “cost” of road use – accidents and congestion. A world without roads might not have any road accidents or traffic jams; but it also would not have all the benefits brought by them.
It’s like a doctor telling you to stop eating because you are obese. Yes, your health might suffer through overeating, but you would soon be dead if you stopped eating completely.
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News Flash IMF and Grain I ad
EVs also cause a proportionally equal amount of “Road Accidents and Congestion” and aren’t propelled by FF…except the Fact that they are fueled by FF as the Major source of electron production on most Grid Sourced Electricity
Interesting world map. Says no data for USA, Canada, Most of Africa, Brazil, Australia el al.
What about tax breaks? Somehow claimed to be a subsidy, did I miss that?
What about gasoline & other taxes on retail sales. $0.184/gal Federal tax and various state taxes. and the rest of the world.
Commifornia pays between $1 and $1.20 per gallon in taxes
Actually, more than that depending on where in the state one buys gasoline . . . see my comment below for details.
I sit corrected… Thanks 😉
Anyone who invests in ‘scientific research’ or any research can deduct those expenses from their taxes. If your company is making sewing needles, and hire an R&D department to research for improvements in the design and manufacture of sewing needles or thread, or anything else for that matter, you can deduct the R&D expenses from your income.
Oil companies too have R&D divisions. They research the geology and petrology, hydrocarbon formation, manners of extraction, refinement, handling & transportation, all manner of chemical breakdown, recombination, and materials science of petroleum and related geology, safety, etc. That they deduct these R&D expenses from their income is often considered by their opponents as a subsidy.
Every major company has an R&D department, and they all deduct their R&D budgets. This is not the same as a subsidy.
Well, thank you for that tidbit.
Leftards are so dumb they fail to distinguish a tax break from a subsidy
The left thinks the proper tax rate for anyone who has more than they do, is 100%. If the government allows you to keep anything at all, that’s a subsidy.
In most european states more than half of what you pay at the pump station goes to the state. Less than 10 % can be seen as profit.
If we would all go electric the price of electrictricity would necessarily have to skyrocket even if it was cheaper to produce.
Actually, the gasoline tax is the opposite of a subsidy. It’s supposed to be used to repair roads and highways (which would offset the cost of road damage), but those who administer it frequently spend it on other things.
Many lefties believe that kind of nonsense because they can’t count. It’s as simple as that.
One for me, one for you. Two for me, one for you.
It’s more like 5 for me, minus 5 for you. Leftwingers genuinely believe that the world would be a better place if they have as much money and resources as possible. This is best accomplished by taking money from the people who actually create the wealth.
Bill Clinton, while still president, gave a speech to a bunch of businessmen, in which he declared that while he wanted to give the country a tax break, but he was afraid that the people wouldn’t spend the money wisely, and that would hurt the economy.
That sounds like me shucking oysters!
Subtract that $7 trillion from the taxation applied to fossil fuels at every step of the way from mining through refining through manufacturing or fuel sales. It’s easy to get outrageous claims when you don’t even try to balance the books.
The IMF charter is set out in chapter 1 of the Articles of Agreement. Is is not among them. Rather than spreading disinformation, they should stay in their monetary lane.
‘…they should stay in their monetary lane.’
Historically they (IMF) are the ‘leg breakers’ for the so-called money-center banks (MCB):
Step 1, MCB lends money to a corrupt government (CG). Step 2, CG pours funds down economic rat holes and/or into leadership’s offshore bank accounts. Step 3, IMF steps in to impose ‘austerity measures’ that facilitate MCB loan repayment, but further impoverishes the hapless citizens ruled by CG.
Wash, rinse, repeat.
Should the IMF be abolished, just like the UN?
IMF and the World bank are primarily responsible for maintaining third world countries in their third world status…
.. by denying them the funds to build solid dispatchable electricity supplies.
That’s been the case before renewable energy was even invented. Corruption and tribalism is a big part of it.
The IMF won’t even back their own study.
FTA: “Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.” https://www.imf.org/en/Publications/WP/Issues/2023/08/22/IMF-Fossil-Fuel-Subsidies-Data-2023-Update-537281
have we figured out how much tax revenue they account for?
In the west, the vast majority of the real pollution was taken care of back in the 70’s.
Even in poorer countries, total pollution has been dramatically reduced.
Real pollution now takes place in China, mainly from the filthy manufacturing processes and toxic chemicals used in the wind and solar manufacturing industries.
China is facing an ecological calamity as so much farmland and groundwater are polluted.
Oh yeah. Calculate an imaginary tax to cover equally imaginary costs for the fossil fuel producers, then call it a subsidy for not paying it.
With that sort of accounting, one can also claim wind and solar are cheaper than gas or coal.
Big Clime Syndicate projecting. Again.
where I live in PA, the state government alone generates over 2 billion in tax revenue from FFs.
Fossil fuels have been and still are nothing but a godsend for humanity. Yet these cretins want to do away with them, I guess because they hate humanity.
The IMF don’t seem to know that National Oil Companies (NOCs) produce around 55% of the world’s oil and gas and that at least 25 countries are NOC dependent in that the NOC provides over 20% of government revenue.
They need to get out a bit more.
Just send Doge for couple of weeks
Google AI claims total US fossil fuel revenue governments at all levels of $138 billion in 2019.
Are there really any subsidies for ff, not counting subsidies for consumption in some nations? Isn’t it about depreciation and other appropriate accounting- that some people think is handouts? I don’t know, just asking.
The depletion allowance is 15% which is tax deductible so savings is dependent on tax bracket. But the government collects a royalty of 12.5% to 16.25% of the value off the top so the so-called depletion allowance subsidy is pretty much canceled out.
A poster who once infested these parts, Simon, once noted that oil companies were allowed to deduct drilling costs. He also noted that since no other companies were able to deduct drilling costs. From this he concluded that deducting drilling costs were there for, a subsidy.
What companies can’t deduct drilling costs? Did he say which ones? If it’s a business, they should be able to deduct all costs. Maybe it’s more about when they can deduct them- either rapidly to encourage that work or more typical depreciation over years. Maybe he doesn’t understand the difference.
From the above article:
“The implication is that our taxpayer money is being handed out to the fat cats of Big Oil, and that money could be spent on much more worthwhile things.
“That in fact is an outright lie.”
Exactly . . . but I’ll go one step further. Not only is it a lie, but the truth is effectively just the opposite! . . . “Big Oil”, including consumers of its products, directly “subsidize” governments via the taxes and other fees paid to produce and consume fossil fuels.
To show the extent that fossil fuel production and consumption “subsidizes” the US Government and in particular the State of California, USA, (among the most egregious examples in the world), consider the following:
At the pump, California drivers pay significantly more for gasoline than the national average due to a combination of state-imposed taxes and other factors. Here’s a breakdown of the added cost due to state-imposed taxes in California, above the national average:
• California has the highest state excise tax on gasoline in the United States, at $0.612 per gallon (as of July 1, 2025). This is compared to the national average of state gasoline excise taxes which is around $0.28 per gallon.
• Beyond the excise tax, California adds other state and local taxes, fees, and climate-related programs that further increase the price at the pump.
• Considering the excise tax alone, Californians pay roughly $0.33 per gallon more than the national average for state excise tax ($0.612 – $0.28 = $0.332). However, when considering all state-imposed taxes and fees, the added cost is significantly higher, with reports indicating it can be around $1.64 per gallon, which is nearly double the national average when factoring in the combined cost of the federal gasoline tax and the average state taxes.
• In terms of state-level sales tax, California ranks #1 in the United States with a base rate of 7.25%. But Alameda County in CA currently imposes the highest county sales tax rate in California, with a total sales tax rate of 10.25%. When considering the average combined state and local sales tax rates, California ranks 8th with an average rate of 8.85%. Message to the other states: your time is coming!
Similarly, there are taxes and fees paid to governments for all other fossil fuel products “Big Oil” makes available other than gasoline, such as:
— other commercial transportation fuels (diesel and jet fuels, Bunker C)
— home heating liquid fuels (kerosene, No.1 and No. 2 fuels, similar to diesel)
— commercial and industrial natural gases (methane, ethane, propane, ethylene, propylene, acetylene, etc.)
— industrial petrochemical liquid feedstocks (benzene, toluene, naptha, etc.)
— a wide range of lubricating oils, and
— even the “low-end” refined products such as tar and asphalt.
So, think about it: effectively, governments around the world collect tax and fee “subsidies” from “Big Oil” and their product consumers to the tune of $trillions.
Especially if Gavin Newsome runs and wins in 2028. We will wind up living in the United States of California
So -the IMF includes the cost of my time stuck in a traffic jam?
Of course . They are stealing your personal time….lol
Fossil fuels ARE the tax base the majority of western nations exist on. Remove all those taxes paid by those companies and all the taxes paid by people on those fuels and economies rapidly collapse.
Why subsidize? Taxes meant for public good are funneled to favored businesses, often just buying votes. Government’s role is a level playing field where competition drives innovation. Instead of subsidies, offer a $100M prize—like XPRIZE—for cost-efficient, reliable, non-CO2* energy. Deregulate sensibly, and modern nuclear could dominate in a decade.
_
*Even believers in the CAGW religion can’t object.
Without using fossil fuels, roads do not need to be paved. Bikes don’t pay road taxes and don’t work in the mud so forget those. Trudge through the mud and manure on horseback and save money!
Corrrection here in bold: “Trudge through the mud and manure on horseback or in an EV and save money!”
Recognizing, of course, that some fraction of electrical energy from the US grid used to charge/recharge EVs is not generated from fossil fuel sources and, moreover, that some EV users actually are able to recharge their EVs using only home-installed solar panels and storage batteries.
For their once a month, if it is a sunny month, trip in the car. 🙄😁😉
Except manufacturing and delivery of those solar panels and storage batteries depend on fossil fuels. Soon as they break down they can’t be replaced so EV’s will become bricks shortly there after.
I refuted a similar claim from another fan of “green” energy, who said that depletion allowances for oil and gas are a “subsidy”. I corrected him by saying that all extractive industries are subject to depletion allowances under US tax law, and that those are merely equivalent to depreciation on other business assets. Extractive industries (which includes mining, upon which the EV and “green energy” industry are heavily dependent) are granted depletion allowances, as well as companies engaged in forestry and another “green energy”, geothermal production.
In any case tax depreciation deductions for all business entities is standard practice throughout history in the United States and around the world, and only serve to spread out the tax burden throughout the life cycle of the extractive resource. They are not a “subsidy”, in anywhere remotely near the same sense as “green energy” subsidies wherein the government makes cash payments to producers, distributors, related product producers (like EVs) and users of said “green energy” sufficient so that they can appear superficially to be paying their way, when clearly they are not and could not possibly complete with fossil fuel or nuclear power producers and products that directly consume “green” energy.
I’m sure that most companies would prefer to be able to deduct all expenses, in the year those expenses were paid, rather than spread the deduction out over 5 to 30 years. That’s because money now is more valuable than money in the future.
Very nice Paul. This is really important information and should be plastered all over the media. It is simple, easy to understand, short and clearly shows how we have been lied to for decades.
One of the most egregious deceits about “subsidies” is in Australia, where anti-diesel activists claim that the at-the-pump purchase price rebates to farmers, miners, fishers, ships, etc are “subsidies”.
The reality is that the price these diesel consumers have to pay at their fill-up stations includes a component that the government applies to all motor fuels as a special levy to fund public road maintenance.
And then logically and fairly, because these industries don’t use public roads to any extent, the government allows them to claim a rebate of the roads maintenance cost component in the diesel fuel they’ve consumed over the year.
So these groups of diesel consumers are actually performing an unpaid collection function for the government (ie the Australian population).
But the deceitful anti-fossil fuels activists then treats this compulsory convenience arrangement for the government as “subsidising fossil fuel”.
This isn’t ignorance, it’s just outright lying.
Coal gets very little direct subsidies in the US.
Here is an example of the lifetime cost of a coal plant.
The key is running steadily at 90% output for 50 years, on average
Coal electricity less costly, available NOW, not pie in the sky, like expensive Fusion and Small Modular Nuclear
.
Assume mine-mouth coal plant in Wyoming; 1800 MW (three x 600 MW); turnkey-cost $10 b; life 50 y; CF 0.9; no direct subsidies.
Payments to bank, $5 b at 6% for 50 y; $316 m/y x 50 = $15.8 b
Payments to Owner, $5 b at 10% for 50 y; $504 m/y x 50 = $21.2 b
Lifetime production, base-loaded, 1800 x 8766 x 0.9 x 50 = 710,046,000 MWh
Ignored cost; O&M escalates at 4%; insurance escalates at 4%; taxes, periodic overhauls.
.
For lower electricity cost/kWh, borrow more money, say 70%
Traditional Nuclear has similar economics
.
Wyoming coal, at mine-mouth $15/US ton, 8600 Btu/lb, plant efficiency 40%, Btu/ton = 2000 x 8600 = 17.2 million
Lifetime coal use = 710,046,000,000 kWh/y x (3412 Btu/kWh/0.4)/17,200,000 Btu/US ton = 353 million US ton
Lifetime coal cost = $5.3 billion
Electricity cost = (15.8 + 21.2 + 5.3) x 1,000,000,000/710,046,000,000 = 6 c/kWh; this cost will be higher, because some costs were ignored.
But the Owner can deduct interest on borrowed money, and can depreciate the plant of over 50 y, or less.
.
For perspective, China used 2204.62/2000 x 4300 = 4740 million US ton in 2024
Do mining companies pay “royalties” to the state in the USA?
There are many ways companies gain access to mineral rights
It is best to look that up on the internet
Some mines are 100% privately owned
Owners enter into multi-decade contracts with power plant owning utilities.
A normal accounting standard is EBITDA, earnings before interest payments, taxes, depreciation and amortization
Wasn’t 2023 the year they pulled from the strategic reserve at some “price”? You don’t get to call this a subsidy if the purpose was to lower gasoline prices because your polls were getting hammered.
Or the time pulls from other strategic reserves of gasoline were done only for Maine and New Hampshire when poll numbers were not in you favor in two purple states.