Think Washington subsidizes Big Oil the most? Think again
Not that this will stop the Obama administration from decrying giveaways to Big Oil — facts have never much bothered this bunch before — but a new government report shows there’s big money to be had in energy subsidies, mostly for fuels other than oil and coal.
The Congressional Budget Office compiled federal tax-credit and spending data since the Carter era and found that, lately, the vast majority of the corporate welfare is going not to fossil fuels but to renewable energy:
In case this picture isn’t worth a thousand words to you, CBO summarizes the trend neatly:
Measured in 2011 dollars, the cost of energy-related tax preferences more than doubled between 1977 and 1982 and then fell dramatically between 1982 and 1988, in part because of declines in tax rates and fuel prices… . The cost of energy-related tax preferences grew gradually between 1988 and 2005 and averaged about $4 billion a year from 2000 to 2005. That cost (including outlays for grants in lieu of tax preferences) has risen sharply since then, to an average of $20 billion a year from 2009 through 2011.
In 2011, renewable energy accounted for 68 percent of the tax preferences — almost seven times as much as energy efficiency got and more than four times as much as fossil fuels — and all of the direct subsidies. That’s about $7 of every $8 devoted to federal energy subsidies. Worse, the analysis toward the end of the report suggests these subsidies are being given in a highly economically inefficient way.
Even during most of George W. Bush’s tenure, fossil fuels did well to get half of the handouts. Note that the vast majority of the dough renewables got during his years went to the ethanol boondoggle — through tax subsidies which, finally and mercifully, ended after last year. Yet, in the past few years, ethanol has been matched by giveaways to other types of renewable energy. In fact, this chart more or less reflects the general problem with federal spending over the past decade-plus: Things got bad enough toward the end of the Bush era, but they have exploded out of all semblance of control under Obama. As the CBO authors also noted:
In 2009, DOE received $39 billion for support of energy technologies (after accounting for rescissions [sic] and transfers) — roughly 17 times the average annual appropriation for the preceding decade. That funding included $27.6 billion in budget authority provided under ARRA and $11.4 billion in regular 2009 appropriations.
Note the two bits I put in bold. There was a huge upswing in energy spending in 2009, and not only because of the “stimulus” package. That $11.4 billion in regular spending was the highest of any year since 1980, and it dwarfed the spending in the preceding 10 years.
I favor eliminating any and all corporate welfare, including to fossil fuels. But this report ought to put paid to the notion that we are subsidizing Big Oil to the hilt while ignoring “cleaner” energies.
Ought to — but it probably won’t.
– By Kyle Wingfield
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129 comments Add your comment
Kyle Wingfield
March 8th, 2012
1:17 pm
I would take the “curb the dependency” argument more seriously, btw, if there were a greater focus on energy efficiency than on investing in boondoggles in which one’s big campaign contributors just happen to have large financial stakes.
And no, I’m not accusing 10% personally of being a politician…
HDB
March 8th, 2012
1:19 pm
The reason why we are spending moer NOW for R&D into renewable energy is that this nation didn’t have the foresight to invest in it earlier! During the Carter years, tax credits for R&D and for homeowners who implemented renewable energy (which allowed homeowners to sell their excess energy to utilities) made the US the industry leader….primarily GE!! When Reagan removed the tax credits/tax deductions, the industry declined…and Siemens AG became the industry leader because the German government continueed the investment!! At the end of 2011 renewable energy in Germany provided about 20 % of Germany’s electricity production, with the largest contribution being made by wind power. Spain as a whole has the target of generating 30% of its electricity needs from renewable energy sources by 2010, with half of that amount coming from wind power. In 2006, 20% of the total electricity demand was already produced with renewable energy sources, and in January 2009 the total electricity demand produced with renewable energy sources reached 34.8%.
Some regions of Spain lead Europe in the use of renewable energy technology and plan to reach 100% renewable energy generation in few years. Castilla y León and Galicia, in particular, are near this goal. In 2006 they fulfilled about 70% of their total electricity demand from renewable energy sources.
Jefferson
March 8th, 2012
1:20 pm
If someone wastes gasoline by not using it effeciently, it not only cost them but it increases the cost to others also.
Lil' Barry Bailout (Revised Downward)
March 8th, 2012
1:22 pm
Investors don’t invest in things that people don’t want, that’s why Carter failed. Why invest in expensive energy sources when cheap, plentiful oil is on the market?
Tiberius - Your lightning rod of hate!
March 8th, 2012
1:22 pm
“At the end of 2011 renewable energy in Germany provided about 20 % of Germany’s electricity production, with the largest contribution being made by wind power. Spain as a whole has the target of generating 30% of its electricity needs from renewable energy sources by 2010, with half of that amount coming from wind power.”
And yet the two most vocal opponents of Cape Wind, one of the largest wind farms ever proposed in Massachusetts, were Teddy Kennedy and John Kerry, both uber-liberal Democrat Senators from that state.
NIMBY trumps policy beliefs every time, doesn’t it HDB?
Kyle Wingfield
March 8th, 2012
1:23 pm
HDB: If you’re going to cite Spain regarding renewables, you better talk about something more recent than 2009 and especially 2006. Since then, the solar bubble in that country — fueled entirely by subsidies — has burst spectacularly.
And if you think wind power has potential for eliminating fossil fuels, ask yourself this: What fuels the turbines when the wind isn’t blowing? And if you still don’t know the answer, ask yourself this: Why is a guy like T. Boone Pickens so darn interested in wind power?
jm
March 8th, 2012
1:24 pm
Kyle, this is old news, but only to the uninformed. Like the whole Democratic Party.
Now with Ten Percent More Flavor
March 8th, 2012
1:26 pm
10%: Let me answer your question with a question: Do you honestly think we can curb our dependency on fossil fuels anytime in the next 2-3 decades?
Not without trying, Kyle. What motivation does a profit here, profit now, private industry have to even entertain the notion of alternative energy? Unless there’s a bigger profit in it.
Increasingly expensive oil through deeper water exploration, more hostile locations such as the arctic as well as the middle east and Africa, environmental costs such as the Gulf of Mexico, etc. What would you have us do, Kyle. Wait until the cost of oil dictates change and forces it through a less than optimal approach. Do you yearn for a Mad Max/Thunderdome world for your child in 10 to 30 years?
jm
March 8th, 2012
1:27 pm
Kyle, the liberal answer to your 1:23 about when the wind isn’t blowing is: batteries!
Of course, if you do the math, the country would have to buy about $800 Billion worth of batteries in order to rely on alternatives.
Liberals are insane and nothing can restore their sanity other than the eventual implosion of our economy.
Tiberius - Your lightning rod of hate!
March 8th, 2012
1:27 pm
Oh, yeah. And HDB? Castilla y León has a population of less than 3 million people. And their primary economic enterprise is agriculture. In other words – pretty damned backwater.
Let me know when they can supply the industrial energy needs of 300 million with their solutions.
Jefferson
March 8th, 2012
1:28 pm
If water in Atlanta get expensive will you blame the Atlanta mayor or the Gov of GA ?
jm
March 8th, 2012
1:28 pm
“Wait until the cost of oil dictates change and forces it through a less than optimal approach.”
When oil prices dictate (incentivize) change, which will then happen, THAT IS THE OPTIMAL APPROACH. Silly
Jefferson
March 8th, 2012
1:29 pm
Or maybe a judge or FL or AL ?
jm
March 8th, 2012
1:30 pm
“will you blame the Atlanta mayor”
I blame shirley, not the current guy
Jefferson
March 8th, 2012
1:30 pm
Like energy, where’s the plan ? Or just let money and profits sort it out…
jm
March 8th, 2012
1:31 pm
Germany is cutting their incentives too.
jm
March 8th, 2012
1:32 pm
“let money and profits sort it out…”
OPTIMAL solution.
Tiberius - Your lightning rod of hate!
March 8th, 2012
1:39 pm
Still waiting to read from one of the liberals on this blog where they think the government gets their authority to provide taxpayer money to promote private industries.
Now with Ten Percent More Flavor
March 8th, 2012
1:43 pm
Seems as though there is a great deal of complaint of late regarding gasoline prices. What talk has been initiated as a result of this complaint? Talk of more domestic production for one. Is the claim that more domestic production will decrease gasoline cost to the consumer. If so, what evidence is there to support such a claim. What I see is increased extraction of higher cost oil now that oil prices have increased enough to support a profitable extraction. Hence, going forward, gasoline costs will only trend higher, barring discovery of some huge reserve of low cost oil or equivalent, unless demand falls dramatically as it did during the most recent recession.
Jefferson
March 8th, 2012
1:47 pm
T- the authority comes from the contributors to the lawmakers elections.
Tiberius - Your lightning rod of hate!
March 8th, 2012
1:47 pm
“Is the claim that more domestic production will decrease gasoline cost to the consumer. If so, what evidence is there to support such a claim.”
You may have heard something called “supply and demand” in between reading up on the collective works of Marx and Lenin.
Tiberius - Your lightning rod of hate!
March 8th, 2012
1:48 pm
Oh, so we ignore the Constitution because our politicians say so?
No wonder you’re an Obama supporter, Jefferson.
HDB
March 8th, 2012
1:54 pm
Lil’ Barry Bailout (Revised Downward)
March 8th, 2012
1:22 pm
“Investors don’t invest in things that people don’t want, that’s why Carter failed. Why invest in expensive energy sources when cheap, plentiful oil is on the market?”
Because oil is a FINITE resource…and it will eventually run out! Plus, because we have become a net IMPORTER of oil from the Middle East, the US could be held energy hostage again as it was during the NIxon years.
Tiberius – Your lightning rod of hate!
March 8th, 2012
1:22 pm
“NIMBY trumps policy beliefs every time, doesn’t it HDB?”
No disagreement there!! If I had the finances, I’d put a windmill in MY back yard!! BTW, MidAmerican Energy in Iowa has wind farms….and produces almost 30% of its energy capability from wind…to cover a state of over 6M people. PG&E has a windfarm that can cover 50,000 homes….we can become more energy independent if we had the national WILL to do so!!
jm
March 8th, 2012
1:31 pm
“Germany is cutting their incentives too.” Why? Siemens is number 1 in wind turbine technology; it’s a profitable venture….so it doesn’t need the incentives now that it needed before!!!
Lil' Barry Bailout (Revised Downward)
March 8th, 2012
1:55 pm
If Obozo were not obstructing, the market would be producing domestic oil when the price was high enough to make it economical. His obstruction distorts the oil market and increases prices.
Obozo is responsible for rising gasoline prices.
Now with Ten Percent More Flavor
March 8th, 2012
1:59 pm
“Is the claim that more domestic production will decrease gasoline cost to the consumer. If so, what evidence is there to support such a claim.”
You may have heard something called “supply and demand” in between reading up on the collective works of Marx and Lenin.
Now that you have managed to work in your quaint little poke and got that off of your chest, do you care to offer up any actual data from the real world.
Inside Out
March 8th, 2012
1:59 pm
“You may have heard something called “supply and demand”
I guess you did not get to the part where the oil companies own that oil that is produced and sells it on the open market….. Or the part where OPEC has stated that the are willing prepared to reduce their production to ensure that the world supply does not increase to a point that will reduce oil prices per barrel to a level below their expectations? See that the funny thing about the oil debate….There are other players involved that have more to say about the game than we do. you can get with the drill baby drill game if you choose, and thats fine, but until you are willing to accept that the only way we can win is to change the field, our energy policy will continue to fall flat. In other words, we can not win with fossil fuels..We have to change what we use in order to become independant….
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:02 pm
“Now that you have managed to work in your quaint little poke and got that off of your chest, do you care to offer up any actual data from the real world.”
Yeah, it’s called the free market economic system. Probably not covered in your studies of “American Idol winners and their impact on society” class.
HDB
March 8th, 2012
2:03 pm
Lil’ Barry Bailout (Revised Downward)
March 8th, 2012
1:55 pm
Much of domestic oil capability was CAPPED in the 70s when oil companies decided that it was CHEAPER to import oil from the Middle East. That capability hasn’t been released YET!! Also, the moritorium on deepwater drilling in the Gulf has been lifted!!! The DEMAND for oil in CHINA and INDIA plus the US is now EXPORTING gasoline is the cause of higher fuel prices. We are also in the summer crossover, in that refineries are transitioning to create the summer blends…….
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:03 pm
“Or the part where OPEC has stated that the are willing prepared to reduce their production to ensure that the world supply does not increase to a point that will reduce oil prices per barrel to a level below their expectations?”
See, if we have our own sources not part of OPEC, what they do won’t particularly matter, will they?
Kyle Wingfield
March 8th, 2012
2:04 pm
HDB @ 1:54: The subsidies in Germany and Spain aren’t only or even mostly for producing turbines, etc. They’re for making the energy produced by those turbines cost-competitive. Those subsidies increasingly are going by the wayside.
The Euros are also increasingly giving up on crippling their economy to fight global warming/climate change/climate chaos/whateversoundsscariestthisweek. Of course, leave it to the American left to keep fighting for an idea that Europe has already proven not to work…
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:05 pm
“Also, the moritorium on deepwater drilling in the Gulf has been lifted!!!”
Except that it hasn’t really.
The Disaster-in-Chief still controls the leases / permitting process.
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:07 pm
“We are also in the summer crossover, in that refineries are transitioning to create the summer blends…….”
And why do we have “summer blends”, HDB?
The word your looking for begins with “G”.
Jefferson
March 8th, 2012
2:07 pm
T- when you assume…what does that tell us about T ?
Now with Ten Percent More Flavor
March 8th, 2012
2:07 pm
Please explain to the class, rod, what happens to the free market laws of supply and demand in the case of a monetary loss associated with continued production at market price. You might wish to look into some of the more recent events including the closure of oil refineries that were capable of handling only sweet crude and natural gas production decline due to drops in natural gas prices. In short, supply will not increase unless demand at a profitable price increases.
Finn McCool (Class Warfare = Stopping Rich People from TAKING MORE of OUR MONEY)
March 8th, 2012
2:07 pm
President Obama just gave Israeli Prime Minister Benjamin Netanyahu a serious whupping. In the process, he greatly reduced the risk of a catastrophic war, made his saber-rattling Republican opponents look like idiots, and seriously weakened the powerful Israel lobby.
http://www.salon.com/2012/03/08/obamas_aipac_trifecta/
mwuahahahahahaha
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:07 pm
I fail to see any assumption on my part, Jefferson.
Jefferson
March 8th, 2012
2:08 pm
T- you should respect the President of the US, the lack of is a reflection on you, not him. President Bush too.
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:10 pm
Only a liberal columnist at Salon could declare a “whupping” from a series of mixed messages from the Disaster-in-Chief.
Finn McCool (Class Warfare = Stopping Rich People from TAKING MORE of OUR MONEY)
March 8th, 2012
2:11 pm
Obozo is responsible for rising gasoline prices.
And the congress-imposed restraints on Iran have absolutely nothing to do with it?
Psst…bend over, here comes Israel.. Ooops, I mean bow down….
Lil' Barry Bailout (Revised Downward)
March 8th, 2012
2:11 pm
Finn, if you’re such an Obozo receptacle that you believe he is the boss of Netanyahu, you may have a surprise coming.
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:12 pm
“Please explain to the class, rod, what happens to the free market laws of supply and demand in the case of a monetary loss associated with continued production at market price.”
I’ll get to it right around the time a free market exists in the oil business, Ten Percent.
Inside Out
March 8th, 2012
2:12 pm
“See, if we have our own sources not part of OPEC, what they do won’t particularly matter, will they?”
Again…Thats where you are missing the point…..The Oil companies have no intrest in you paying lower fuel cost…They are selling to the highest bidder. Regardless of how much you say it when oil is produced here, it does not stay here. If China is willing to pay 1 penny more, then that where it goes…We are not like the Saudis or the Venezuelans…..we do not have a Nationalized oil company. That free market you keep speaking of is stacked against us in this case…We are behind the eight ball and the only chance we have to be energy independant is to Change our source of energy…Why is that so hard for you to understand?????
Kyle Wingfield
March 8th, 2012
2:14 pm
Also: Sens. Jim DeMint and Mike Lee have introduced legislation to end all energy-specific tax subsidies, including those for oil and gas companies. If Senate Dems defeat it, does that mean they’re in the pockets of Big Oil?
HDB
March 8th, 2012
2:16 pm
Kyle Wingfield
March 8th, 2012
2:04 pm
Question: if it’s thought that wnid power doesn’t work, then why is MidAmerican Energy in Iowa producing 30% of capability via wind….and the costs make energy more affordable in Des Moines, Ames, Iowa City…….(I used to live there!)…….
Why is PG&E in California investing in wind farms if it doesn”t work??
Answer: it complements the other sources of power (particularly nuclear)…and drives DOWN energy costs!! The more sources you have, the cheaper the overall cost!!
Tiberius – Your lightning rod of hate!
March 8th, 2012
2:07 pm
Nope…the word I’d use begins with “S” – smog!!!
Now with Ten Percent More Flavor
March 8th, 2012
2:17 pm
I’ll get to it right around the time a free market exists in the oil business, Ten Percent.
I too anxiously await the end to government subsidies for the fossil fuel industry along with the elimination of the deployment of our military to areas considered strategically important based on the fossil fuel resources, etc.
And I was looking forward to your timely explanation of the laws of supply and demand and their limitations.
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:19 pm
Oh, and here is what the President should have told Netanyahu:
Israel is a sovereign nation, in charge of it’s own destiny. If you wish to preemptively strike ANY of the countries currently threatening you, have at it. If you wish to use nuclear weapons, we won’t stop you. Turn Iran into glass if you so desire.
We’ll sell you whatever arms and materiel you want or need, including access to overhead imagery of any targets you want to hit.
But don’t come crying to us if you fail to take out your enemies, because actions have consequences on both sides, including those who would initiate war.
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:22 pm
“Why is that so hard for you to understand?”
Understand it completely, Inside Out.
When will you ever understand that we don’t have a free market here in either the supply or demand side of the equation?
Tiberius - Your lightning rod of hate!
March 8th, 2012
2:24 pm
“Answer: it complements the other sources of power (particularly nuclear)…and drives DOWN energy costs!! The more sources you have, the cheaper the overall cost!!”
Or there might be state and Federal incentives to do so, making them more affordable. I don’t know that, but do you know if it isn’t true, HDB?
Think Washington subsidizes Big Oil the most? Think again – Atlanta Journal Constitution (blog) | iyfr.com - fast news hub for all
March 8th, 2012
2:28 pm
[...] Atlanta Journal Constitution (blog) [...]
Kyle Wingfield
March 8th, 2012
2:33 pm
HDB @ 2:16: If they’re doing so grandly, why do they need subsidies?
Or maybe they’re doing grandly because of the subsidies that make the electricity they generate from wind competitive with that generated from fossil fuels such as coal. I don’t know about those companies in Iowa and California specifically, but that’s the case in Germany and Spain — which is the point I was making at 2:04.