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https://en.wikipedia.org/wiki/Energy_subsidies#United_States https://en.wikipedia.org/wiki/Energy_subsidies#United_States $3.2bn / year for fossil fuels, about

https://en.wikipedia.org/wiki/Energy_subsidies#United_States https://en.wikipedia.org/wiki/Energy_subsidies#United_States $3.2bn / year for fossil fuels, about half of what went to renewables

CountSessine 10y ago
Those figures seem to come from here: https://www.cbo.gov/publication/43993#section0 https://www.cbo.gov/publication/43993#section0 In particular, the $3.2bn/year is a tax write-off sort of 'subsidy', not a grant sort of subsidy, which I believe solar has received recently (section 1603). Without doing more digging, I can't tell whether what those oil and gas write-offs are for. Exploration? Research?
- smallnamespace 10y ago
  Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. The Wikipedia article cites another article that has the breakdown (over a period of years): 1. Foreign tax credit ($15.3 billion) 2. Credit for production of non-conventional fuels ($14.1 billion) 3. Oil and Gas exploration and development expensing ($7.1 billion) https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf
  - CountSessine 10y ago
    Have you read that pdf you linked to? Similarly, the study counts funds used to support carbon capture and storage programs1 as a fossil fuel subsidy, despite their potential to reduce the emissions associated with burning coal. If that's counted against oil and gas 'subsidies', that doesn't seem right. Foreign Tax Credit ($15,300) - IRC Section 901. This is a generally applicable credit that is intended to enable taxpayers earning income or profits abroad to avoid double taxation. Wait - so a good 40% of the total is actually a non-subsidy that is the consequence of the US having a tax treaty with a foreign country? Not being able to double-tax oil and gas companies is considered a 'subsidy'? The US has a tax treaty with just about every civilized country in the world that has provisions to avoid double-taxation because to do otherwise would be pathological. Counting that is 40% of the 'subsidy'?
    - mikeyouse 10y ago
      The foreign tax credit is an oil subsidy since the 'creative' oil companies started structuring their royalties to foreign governments as taxes, so they can deduct them against profits. If Exxon has to pay a royalty of $1/barrel to Nigeria for access to their oil fields, rather than account for the royalty 'properly', they structure the deal to pay a $1/barrel tax to Nigeria. Then they can claim that they paid taxes instead of royalties and get the offset from the foreign tax credit.
      - linkregister 10y ago
        I don't doubt you but can you explain this in greater detail? I have filed for the foreign tax credit and it disqualifies most non-income taxes. I would presume royalties would be covered by this.
        mikeyouse 10y ago
        Royalties are excluded, and the IRS has clamped down more in defining what exactly counts as income tax, but it's still common for oil and gas companies to structure their payments as taxes to get the credits. For instance, in Saudi Arabia, there is an 85% corporate tax rate on oil/gas companies and a 20% corporate tax rate on the average business. It sure looks to me like that's a 20% tax rate plus a 65% royalty rather than an 85% rate, no? http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
      - CountSessine 10y ago
        <citation required>
        mikeyouse 10y ago
        http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
  - efaref 10y ago
    > Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. It has a different effect on the entity being taxed. A tax write-off increases the rewards for an already profitable proposition, but tax write-off don't normally incentivise someone to do something that is a loss (unless the write-off is transferrable to other profits, but that's a separate question). Subsidies, however, can make a loss into a profit, incentivising people to do it. That's exactly the point of the original solar subsidies. Now that the solar industry appears to be relatively well bootstrapped, it's not unreasonable to remove the straight subsidies. I think solar still enjoys many if not all of the same tax write-offs as other energy sources.
ajss 10y ago
Looking at the gross subsidy is misleading. Federal gas tax revenues alone are about $35bn/yr.
- smallnamespace 10y ago
  The excise tax is intended to pay for transportation infrastructure though, not to disincentivize gasoline consumption.
  - ajss 10y ago
    Whatever the intentions of the people imposing the tax, the effect is to disincentivize gas consumption. My point is, if the government taxes certain activities by $x and subsidises the same activity by $y, quoting only $y doesn't give the full story.
    - Dylan16807 10y ago
      As far as I know gas tax isn't paid by the producers, but sure we can combine gas producers and users for this discussion. Money taken or given to either one has the same effect on the demand for gas production. When that $x in taxes is paying for the infrastructure used, then the gas producers/users are actually getting $y+x from the government. The $x, being a service charge, cancels out, and the only thing left is $y. $y is the difference between the world we live in vs. a world where the government paid no special attention to the industry. It's the most important number.
      - ajss 10y ago
        Even granting your argument, if the government takes $x as a service charge for infrastructure, and subsidises by $y, that would be a net subsidy of $y, not $y+$x. But $x is not a service charge. It bares no relation to the amount of anything used. They can't opt out of the road part of the service charge and build their own roads. The tax is not hypothecated. Whatever the rhetoric of politicians, it doesn't bare any resemblance to a service charge.
coldtea 10y ago
Add the military spending to ensure control of oil producing countries and cheap oil, and it's more like $1 trillion.
crdoconnor 10y ago
That's only federal subsidies.

https://en.wikipedia.org/wiki/Energy_subsidies#United_States https://en.wikipedia.org/wiki/Energy_subsidies#United_States $3.2bn / year for fossil fuels, about half of what went to renewables

CountSessine 10y ago

Those figures seem to come from here: https://www.cbo.gov/publication/43993#section0 https://www.cbo.gov/publication/43993#section0 In particular, the $3.2bn/year is a tax write-off sort of 'subsidy', not a grant sort of subsidy, which I believe solar has received recently (section 1603). Without doing more digging, I can't tell whether what those oil and gas write-offs are for. Exploration? Research?

smallnamespace 10y ago
Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. The Wikipedia article cites another article that has the breakdown (over a period of years): 1. Foreign tax credit ($15.3 billion) 2. Credit for production of non-conventional fuels ($14.1 billion) 3. Oil and Gas exploration and development expensing ($7.1 billion) https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf https://www.eli.org/sites/default/files/eli-pubs/d19_07.pdf
- CountSessine 10y ago
  Have you read that pdf you linked to? Similarly, the study counts funds used to support carbon capture and storage programs1 as a fossil fuel subsidy, despite their potential to reduce the emissions associated with burning coal. If that's counted against oil and gas 'subsidies', that doesn't seem right. Foreign Tax Credit ($15,300) - IRC Section 901. This is a generally applicable credit that is intended to enable taxpayers earning income or profits abroad to avoid double taxation. Wait - so a good 40% of the total is actually a non-subsidy that is the consequence of the US having a tax treaty with a foreign country? Not being able to double-tax oil and gas companies is considered a 'subsidy'? The US has a tax treaty with just about every civilized country in the world that has provisions to avoid double-taxation because to do otherwise would be pathological. Counting that is 40% of the 'subsidy'?
  - mikeyouse 10y ago
    The foreign tax credit is an oil subsidy since the 'creative' oil companies started structuring their royalties to foreign governments as taxes, so they can deduct them against profits. If Exxon has to pay a royalty of $1/barrel to Nigeria for access to their oil fields, rather than account for the royalty 'properly', they structure the deal to pay a $1/barrel tax to Nigeria. Then they can claim that they paid taxes instead of royalties and get the offset from the foreign tax credit.
    - linkregister 10y ago
      I don't doubt you but can you explain this in greater detail? I have filed for the foreign tax credit and it disqualifies most non-income taxes. I would presume royalties would be covered by this.
      - mikeyouse 10y ago
        Royalties are excluded, and the IRS has clamped down more in defining what exactly counts as income tax, but it's still common for oil and gas companies to structure their payments as taxes to get the credits. For instance, in Saudi Arabia, there is an 85% corporate tax rate on oil/gas companies and a 20% corporate tax rate on the average business. It sure looks to me like that's a 20% tax rate plus a 65% royalty rather than an 85% rate, no? http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
    - CountSessine 10y ago
      <citation required>
      - mikeyouse 10y ago
        http://taxfoundation.org/blog/treating-royalties-governments-taxes-they-are http://taxfoundation.org/blog/treating-royalties-governments...
- efaref 10y ago
  > Why is that an important distinction here? Both direct subsidies and tax credits/rebates/write-offs have the same net effect on the government's coffers. It has a different effect on the entity being taxed. A tax write-off increases the rewards for an already profitable proposition, but tax write-off don't normally incentivise someone to do something that is a loss (unless the write-off is transferrable to other profits, but that's a separate question). Subsidies, however, can make a loss into a profit, incentivising people to do it. That's exactly the point of the original solar subsidies. Now that the solar industry appears to be relatively well bootstrapped, it's not unreasonable to remove the straight subsidies. I think solar still enjoys many if not all of the same tax write-offs as other energy sources.

ajss 10y ago

Looking at the gross subsidy is misleading. Federal gas tax revenues alone are about $35bn/yr.

smallnamespace 10y ago
The excise tax is intended to pay for transportation infrastructure though, not to disincentivize gasoline consumption.
- ajss 10y ago
  Whatever the intentions of the people imposing the tax, the effect is to disincentivize gas consumption. My point is, if the government taxes certain activities by $x and subsidises the same activity by $y, quoting only $y doesn't give the full story.
  - Dylan16807 10y ago
    As far as I know gas tax isn't paid by the producers, but sure we can combine gas producers and users for this discussion. Money taken or given to either one has the same effect on the demand for gas production. When that $x in taxes is paying for the infrastructure used, then the gas producers/users are actually getting $y+x from the government. The $x, being a service charge, cancels out, and the only thing left is $y. $y is the difference between the world we live in vs. a world where the government paid no special attention to the industry. It's the most important number.
    - ajss 10y ago
      Even granting your argument, if the government takes $x as a service charge for infrastructure, and subsidises by $y, that would be a net subsidy of $y, not $y+$x. But $x is not a service charge. It bares no relation to the amount of anything used. They can't opt out of the road part of the service charge and build their own roads. The tax is not hypothecated. Whatever the rhetoric of politicians, it doesn't bare any resemblance to a service charge.

coldtea 10y ago

Add the military spending to ensure control of oil producing countries and cheap oil, and it's more like $1 trillion.

crdoconnor 10y ago

That's only federal subsidies.