Coal / Energy

Friendly policies keep US oil and coal afloat far more than we thought

US fossil fuel production is subsidized to the tune of $20 billion annually

Researchers at Oil Change International (OCI) set out to quantify the level of US fossil fuel subsidies.

WASHINGTON, DC — “Oil Change International (OCI)  is only counting direct production subsidies. As they acknowledge, that leaves out a great deal.

For one thing, it leaves out the annual $14.5 billion in consumption subsidies — things like the Low Income Home Energy Assistance Program (LIHEAP), which helps lower-income residents pay their (fuel oil) heating bills. (There are better ways to help poor people, but let’s leave that aside for now.)

It also leaves out subsidies for overseas fossil fuel projects ($2.1 billion a year).

Most significantly, OCI’s analysis leaves out indirect subsidies — things like the money the US military spends to protect oil shipping routes, or the unpaid costs of health and climate impacts from burning fossil fuels. These indirect subsidies reach to the hundreds of billions, dwarfing direct subsidies — the IMF says that, globally speaking, they amount to $5.3 trillion a yearBut they are controversial and very difficult to measure precisely.

Finally, OCI acknowledges that its estimates of state-level subsidies are probably low, since many states don’t report the costs of tax expenditures (i.e., tax breaks and credits to industry), so data is difficult to come by.

All of which is to say: OCI has produced about the most conservative possible estimate of the subsidies received by fossil fuels in the US. These are solely production subsidies — taxpayer money that goes directly to producing more fossil fuels.

So what’s the verdict?

Adding everything up: $14.7 billion in federal subsidies and $5.8 billion in state-level incentives, for a total of $20.5 billion annually in corporate welfare.

Of that total, 80 percent goes to oil and gas, 20 percent to coal. On the right, subsidies are broken down by stage of production. Extraction gets the most.”

— David Roberts,

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