7 ms·

Friendly policies keep US oil and coal afloat far more than we thought (2017)

152 points by aaronbrethorst 7y ago

sbhn 7y ago
Friendly policies arent good for defence stocks. Since trump, the price growth has been so volitile, actially everything is worth less since obama, who oversaw year on year profit in the defense industry. Things are turning now, its now time to reinvest in defense stocks.
perfunctory 7y ago
> indirect subsidies — things like the money the US military spends to protect oil shipping routes Nice one. Never thought about this.
- docdeek 7y ago
  The same protection exists for major shipping routes the world over, not only oil. I'm not sure it is useful to include this in calculations of the subsidies to the fossil fuel sector any more than we would include it in calculating subsidies for tech firms building products in China and shipping them around the world.
  - reallydontask 7y ago
    I suppose this depends on the relative risk that said items have. I would guess that for a pirate in East Africa some items would be more valuable than others. Is oil more valuable than say iPhones to them?
  - Robotbeat 7y ago
    Considering just how much US military presence is in the Middle East primarily for protecting energy assets, I think it is useful. It's disproportionate to the actual value produced compared to other shipping protection deployments.
    - ailideex 7y ago
      How much of the oil used in US comes from middle east?
      - Robotbeat 7y ago
        That's the crazy thing. Nowadays, it's not even very much (on the order of $30 billion in oil per year, much of which is refined and re-exported as gasoline, etc), but we have massive military investments in military bases in Saudi Arabia, Kuwait, Bahrain, Qatar, UAE, Oman, Djibouti, etc. There's no way this passes the cost vs benefit sniff test. Unlike the mid-aughts, the US is very nearly a net exporter of oil and oil products: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=m https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=m...
        FrojoS 7y ago
        What matters is mostly the global price.
      - gameswithgo 7y ago
        It doesn't matter how much physically comes from there to here, it matters how much their production brings down the price of the global commodity.
        Robotbeat 7y ago
        Well, that's the key point about becoming a net exporter of oil, isn't it? If the global price of oil shoots up, the extra cost to consumers is easily offset by the increased revenue for domestic oil production. If that's not good enough for you, there's also the option of protectionist measures to keep the price of oil for consumers nearer what it was originally (which is less economically efficient but is no worse than where you were at first). That's the main argument for being "energy independent."
  - vidarh 7y ago
    I think in general it makes sense to try to account for externalities in everything. If you spend lots of money on things like protecting shipping routes and accounting for that in the product cost tips costs in favour of manufacturing closer, then that's important to understand.
  - ptah 7y ago
    the war in iraq was exclusively about oil
    - Guthur 7y ago
      I think most major wars in the last 100 years could be characterised as for either markets or energy.
- pjc50 7y ago
  Some of these are far more expensive than others. The Afghan war in particular involved shipping in some very expensive oil products due to a very long and dangerous route. Every drop of gasoline had to be shipped across most of Pakistan and over two mountain passes. Convoys were often attacked. https://en.wikipedia.org/wiki/NATO_logistics_in_the_Afghan_War https://en.wikipedia.org/wiki/NATO_logistics_in_the_Afghan_W... The situation was unstable, as much of northeast Pakistan is only loosely under government control and there are quite a lot of anti-US militants there: https://www.rferl.org/a/NATO_Supply_Route_Imperiled_As_Pakistani_Truckers_Refuse_To_Carry_Goods/1360362.html https://www.rferl.org/a/NATO_Supply_Route_Imperiled_As_Pakis... The intermittent engagement between US troops and cross-border Taliban resulted in the US bombing a Pakistani Army post: https://en.wikipedia.org/wiki/2011_NATO_attack_in_Pakistan https://en.wikipedia.org/wiki/2011_NATO_attack_in_Pakistan Not unreasonably, this upset the Pakistani Army: https://www.pri.org/stories/2011-12-02/pakistan-truckers-applaud-shut-down-us-afghanistan-supply-route https://www.pri.org/stories/2011-12-02/pakistan-truckers-app... "The head of Pakistan's army Friday gave the go-ahead for his soldiers to return fire on US troops, if attacked" The US backed down rather rapidly when it realized that going to war with Pakistan would result in the total stranding of their forces in Afghanistan. It has never been entirely clear whether some of the loosely controlled Pakistani intelligence services are supporting the Taliban or not: https://en.wikipedia.org/wiki/Inter-Services_Intelligence_activities_in_Afghanistan https://en.wikipedia.org/wiki/Inter-Services_Intelligence_ac...
  - abdullahkhalids 7y ago
    To those reading this, while most/all of this true, the security situation in this region of Pakistan has improved greatly over the last ten years, due to several internal military campaigns by the Pakistan army. Last year, the northwestern part of Pakistan, which was previously its own territory had become stable enough to be incorporated into the nearest province (KPK). https://en.wikipedia.org/wiki/Khyber_Pakhtunkhwa https://en.wikipedia.org/wiki/Khyber_Pakhtunkhwa
- Fjolsvith 7y ago
  And, its not like any other cargo ships use those protected routes, either.
Robotbeat 7y ago
There are a bunch of strange state-level credits, too. Coal mining credits are regularly reinstated here in Virginia, for instance, and there are also huge subsidies for infrastructure like ports and railroads primarily used for transporting coal. Also, there are indirect subsidies like depressed property values around coal-oriented rail lines, dust blowing from open rail cars and coal piles into the lungs of nearby residents causing increased asthma rates: https://www.motherjones.com/environment/2017/10/this-huge-rail-company-is-spewing-coal-dust-all-over-a-low-income-community/ https://www.motherjones.com/environment/2017/10/this-huge-ra... Very few people actually work in these highly-mechanized and automated facilities. Eliminating coal terminals in city limits would easily pay for itself in increased tax revenue from businesses and housing in currently uninhabitable areas surrounding these dusty coal terminals. EDIT: based on the fact that asthma rates are about double in the areas surrounding the terminal and that (based on state-level statistics) there are about 10,000 asthmatics in Newport News with about a tenth of the population of the city living near the coal terminals, that means there are probably on the order of 500 more asthmatics in the area than there would be without the coal terminals. From what I can tell, there are fewer than 500 people actually employed in the two Newport News coal terminals, so we're talking at least one additional case of asthma for every job in the coal terminals. EDIT AGAIN: Ex-Im loan guarantees also go to coal export facilities: https://chesapeakeclimate.org/blog/lawsuit-seeks-to-stop-federal-loan-guarantee-for-coal-planned-for-export-from-hampton-roads/ https://chesapeakeclimate.org/blog/lawsuit-seeks-to-stop-fed...
- bamboozled 7y ago
  Sometimes I wonder if the attachment to certain industries and jobs is hidden in the psychology of men who were once boys. You were talking about "rails lines". I remember living in a coal town like you're describing and it was fascinating how much the coal terminal seemed like a massive Tonka Truck set. Big trains, cars and ships coming in out and constantly and the men who were fascinated by all of it. Those who owned and operated it, like a huge toy train set. I mean it was interesting. Most people who worked there just loved the coal industry and what it was about, comradery, big shiny trucks etc. I'd actually love to know if anyone has actually found any research on the euphoria and attachment people have to fossil fuel industries and if that has anything to do with part of their ongoing popularity and support for mining jobs (obviously asside from just the money part). It honestly seems like some people would feel like a part of them were dead if it's all shut down. I did once see a documentary on post coal mining depression in some places in the UK and it's real. Renewable energy doesn't really have the same kind of boyish appeal I guess.
backtobecks 7y ago
stable genius
TomMckenny 7y ago
Surely no one believed that criticism of clean fuel subsidies was anymore intellectually honest than calls for a balanced budget.
ptah 7y ago
has anyone done similar analysis for UK/EU?
- perfunctory 7y ago
  Had to smile as apparently now one has to mention UK separately.
- tialaramex 7y ago
  In the UK, when I was a kid some (for the time) hard economic right politicians had power and the coal mines were Union bastions since almost the beginning of unions, so the politicians destroyed the coal industry. Some people are understandably still very angry about this today - after all it destroyed their communities. But an unintended consequence is that it was far easier to disentangle the country from coal power. If you're importing it anyway having closed your own mines, there are fewer angry hard working people to protest when you stop. So the UK now often (as in most of the day, and sometimes for days at a time) has no coal electricity generation. The other thing they did was take a very big coal power plant and convert it to burn trees. Notionally it burns "waste" wood but in practice the volumes involved mean people are growing trees to sell as "waste" for that plant. This is not great for the environment, but hey at least it isn't coal.
  - hef19898 7y ago
    Depending on how the trees are grown it might even be okish fir the environment. At least the fuel itself is CO2 neutral. Loosing the land on the other hand is a different story.
    - pjc50 7y ago
      It's mostly imported. Last time I ran the numbers I calculated that Drax would burn every tree in the UK within a year if limited to local wood. Supposedly it's sawmill waste: https://www.drax.com/sustainability/environment/#sourcing-sustainable-biomass https://www.drax.com/sustainability/environment/#sourcing-su... that would otherwise be burned as waste: https://www.drax.com/sustainability/one-company-helped-transform-biomass-business/ https://www.drax.com/sustainability/one-company-helped-trans... Not everyone agrees: https://www.redpepper.org.uk/activists-are-taking-on-the-uks-largest-carbon-culprit/ https://www.redpepper.org.uk/activists-are-taking-on-the-uks...
deleted 7y ago
[deleted]
nmeofthestate 7y ago
If you look at the graph of subsidies, and adjust to percentage of generation, then you can see that renewables receive a higher level of subsidy. A big chunk of the "subsidy to non-renewables" is support for heating for the poor. This allocation is by virtue of most generation being non-renewable. When we move to more-expensive renewables, this support will be bigger and will have moved to the renewable column. So, it's not really a subsidy to non-renewables. This is just a couple of things I noticed - you need to be alert to creative accounting when it comes to renewables, because many people tend to be motivated by ideology rather than numbers.
- thinkcontext 7y ago
  > A big chunk of the "subsidy to non-renewables" is support for heating for the poor. They address this directly, guess you missed it. "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."
  - nmeofthestate 7y ago
    That's what I'm referring to.

sbhn 7y ago

Friendly policies arent good for defence stocks. Since trump, the price growth has been so volitile, actially everything is worth less since obama, who oversaw year on year profit in the defense industry. Things are turning now, its now time to reinvest in defense stocks.

perfunctory 7y ago

> indirect subsidies — things like the money the US military spends to protect oil shipping routes Nice one. Never thought about this.

docdeek 7y ago
The same protection exists for major shipping routes the world over, not only oil. I'm not sure it is useful to include this in calculations of the subsidies to the fossil fuel sector any more than we would include it in calculating subsidies for tech firms building products in China and shipping them around the world.
- reallydontask 7y ago
  I suppose this depends on the relative risk that said items have. I would guess that for a pirate in East Africa some items would be more valuable than others. Is oil more valuable than say iPhones to them?
- Robotbeat 7y ago
  Considering just how much US military presence is in the Middle East primarily for protecting energy assets, I think it is useful. It's disproportionate to the actual value produced compared to other shipping protection deployments.
  - ailideex 7y ago
    How much of the oil used in US comes from middle east?
    - Robotbeat 7y ago
      That's the crazy thing. Nowadays, it's not even very much (on the order of $30 billion in oil per year, much of which is refined and re-exported as gasoline, etc), but we have massive military investments in military bases in Saudi Arabia, Kuwait, Bahrain, Qatar, UAE, Oman, Djibouti, etc. There's no way this passes the cost vs benefit sniff test. Unlike the mid-aughts, the US is very nearly a net exporter of oil and oil products: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=m https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=m...
      - FrojoS 7y ago
        What matters is mostly the global price.
    - gameswithgo 7y ago
      It doesn't matter how much physically comes from there to here, it matters how much their production brings down the price of the global commodity.
      - Robotbeat 7y ago
        Well, that's the key point about becoming a net exporter of oil, isn't it? If the global price of oil shoots up, the extra cost to consumers is easily offset by the increased revenue for domestic oil production. If that's not good enough for you, there's also the option of protectionist measures to keep the price of oil for consumers nearer what it was originally (which is less economically efficient but is no worse than where you were at first). That's the main argument for being "energy independent."
- vidarh 7y ago
  I think in general it makes sense to try to account for externalities in everything. If you spend lots of money on things like protecting shipping routes and accounting for that in the product cost tips costs in favour of manufacturing closer, then that's important to understand.
- ptah 7y ago
  the war in iraq was exclusively about oil
  - Guthur 7y ago
    I think most major wars in the last 100 years could be characterised as for either markets or energy.
pjc50 7y ago
Some of these are far more expensive than others. The Afghan war in particular involved shipping in some very expensive oil products due to a very long and dangerous route. Every drop of gasoline had to be shipped across most of Pakistan and over two mountain passes. Convoys were often attacked. https://en.wikipedia.org/wiki/NATO_logistics_in_the_Afghan_War https://en.wikipedia.org/wiki/NATO_logistics_in_the_Afghan_W... The situation was unstable, as much of northeast Pakistan is only loosely under government control and there are quite a lot of anti-US militants there: https://www.rferl.org/a/NATO_Supply_Route_Imperiled_As_Pakistani_Truckers_Refuse_To_Carry_Goods/1360362.html https://www.rferl.org/a/NATO_Supply_Route_Imperiled_As_Pakis... The intermittent engagement between US troops and cross-border Taliban resulted in the US bombing a Pakistani Army post: https://en.wikipedia.org/wiki/2011_NATO_attack_in_Pakistan https://en.wikipedia.org/wiki/2011_NATO_attack_in_Pakistan Not unreasonably, this upset the Pakistani Army: https://www.pri.org/stories/2011-12-02/pakistan-truckers-applaud-shut-down-us-afghanistan-supply-route https://www.pri.org/stories/2011-12-02/pakistan-truckers-app... "The head of Pakistan's army Friday gave the go-ahead for his soldiers to return fire on US troops, if attacked" The US backed down rather rapidly when it realized that going to war with Pakistan would result in the total stranding of their forces in Afghanistan. It has never been entirely clear whether some of the loosely controlled Pakistani intelligence services are supporting the Taliban or not: https://en.wikipedia.org/wiki/Inter-Services_Intelligence_activities_in_Afghanistan https://en.wikipedia.org/wiki/Inter-Services_Intelligence_ac...
- abdullahkhalids 7y ago
  To those reading this, while most/all of this true, the security situation in this region of Pakistan has improved greatly over the last ten years, due to several internal military campaigns by the Pakistan army. Last year, the northwestern part of Pakistan, which was previously its own territory had become stable enough to be incorporated into the nearest province (KPK). https://en.wikipedia.org/wiki/Khyber_Pakhtunkhwa https://en.wikipedia.org/wiki/Khyber_Pakhtunkhwa
Fjolsvith 7y ago
And, its not like any other cargo ships use those protected routes, either.

Robotbeat 7y ago

There are a bunch of strange state-level credits, too. Coal mining credits are regularly reinstated here in Virginia, for instance, and there are also huge subsidies for infrastructure like ports and railroads primarily used for transporting coal. Also, there are indirect subsidies like depressed property values around coal-oriented rail lines, dust blowing from open rail cars and coal piles into the lungs of nearby residents causing increased asthma rates: https://www.motherjones.com/environment/2017/10/this-huge-rail-company-is-spewing-coal-dust-all-over-a-low-income-community/ https://www.motherjones.com/environment/2017/10/this-huge-ra... Very few people actually work in these highly-mechanized and automated facilities. Eliminating coal terminals in city limits would easily pay for itself in increased tax revenue from businesses and housing in currently uninhabitable areas surrounding these dusty coal terminals. EDIT: based on the fact that asthma rates are about double in the areas surrounding the terminal and that (based on state-level statistics) there are about 10,000 asthmatics in Newport News with about a tenth of the population of the city living near the coal terminals, that means there are probably on the order of 500 more asthmatics in the area than there would be without the coal terminals. From what I can tell, there are fewer than 500 people actually employed in the two Newport News coal terminals, so we're talking at least one additional case of asthma for every job in the coal terminals. EDIT AGAIN: Ex-Im loan guarantees also go to coal export facilities: https://chesapeakeclimate.org/blog/lawsuit-seeks-to-stop-federal-loan-guarantee-for-coal-planned-for-export-from-hampton-roads/ https://chesapeakeclimate.org/blog/lawsuit-seeks-to-stop-fed...

bamboozled 7y ago
Sometimes I wonder if the attachment to certain industries and jobs is hidden in the psychology of men who were once boys. You were talking about "rails lines". I remember living in a coal town like you're describing and it was fascinating how much the coal terminal seemed like a massive Tonka Truck set. Big trains, cars and ships coming in out and constantly and the men who were fascinated by all of it. Those who owned and operated it, like a huge toy train set. I mean it was interesting. Most people who worked there just loved the coal industry and what it was about, comradery, big shiny trucks etc. I'd actually love to know if anyone has actually found any research on the euphoria and attachment people have to fossil fuel industries and if that has anything to do with part of their ongoing popularity and support for mining jobs (obviously asside from just the money part). It honestly seems like some people would feel like a part of them were dead if it's all shut down. I did once see a documentary on post coal mining depression in some places in the UK and it's real. Renewable energy doesn't really have the same kind of boyish appeal I guess.

backtobecks 7y ago

stable genius

TomMckenny 7y ago

Surely no one believed that criticism of clean fuel subsidies was anymore intellectually honest than calls for a balanced budget.

ptah 7y ago

has anyone done similar analysis for UK/EU?

perfunctory 7y ago
Had to smile as apparently now one has to mention UK separately.
tialaramex 7y ago
In the UK, when I was a kid some (for the time) hard economic right politicians had power and the coal mines were Union bastions since almost the beginning of unions, so the politicians destroyed the coal industry. Some people are understandably still very angry about this today - after all it destroyed their communities. But an unintended consequence is that it was far easier to disentangle the country from coal power. If you're importing it anyway having closed your own mines, there are fewer angry hard working people to protest when you stop. So the UK now often (as in most of the day, and sometimes for days at a time) has no coal electricity generation. The other thing they did was take a very big coal power plant and convert it to burn trees. Notionally it burns "waste" wood but in practice the volumes involved mean people are growing trees to sell as "waste" for that plant. This is not great for the environment, but hey at least it isn't coal.
- hef19898 7y ago
  Depending on how the trees are grown it might even be okish fir the environment. At least the fuel itself is CO2 neutral. Loosing the land on the other hand is a different story.
  - pjc50 7y ago
    It's mostly imported. Last time I ran the numbers I calculated that Drax would burn every tree in the UK within a year if limited to local wood. Supposedly it's sawmill waste: https://www.drax.com/sustainability/environment/#sourcing-sustainable-biomass https://www.drax.com/sustainability/environment/#sourcing-su... that would otherwise be burned as waste: https://www.drax.com/sustainability/one-company-helped-transform-biomass-business/ https://www.drax.com/sustainability/one-company-helped-trans... Not everyone agrees: https://www.redpepper.org.uk/activists-are-taking-on-the-uks-largest-carbon-culprit/ https://www.redpepper.org.uk/activists-are-taking-on-the-uks...

deleted 7y ago

[deleted]

nmeofthestate 7y ago

If you look at the graph of subsidies, and adjust to percentage of generation, then you can see that renewables receive a higher level of subsidy. A big chunk of the "subsidy to non-renewables" is support for heating for the poor. This allocation is by virtue of most generation being non-renewable. When we move to more-expensive renewables, this support will be bigger and will have moved to the renewable column. So, it's not really a subsidy to non-renewables. This is just a couple of things I noticed - you need to be alert to creative accounting when it comes to renewables, because many people tend to be motivated by ideology rather than numbers.

thinkcontext 7y ago
> A big chunk of the "subsidy to non-renewables" is support for heating for the poor. They address this directly, guess you missed it. "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."
- nmeofthestate 7y ago
  That's what I'm referring to.