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