13 ms·

Can we stop subsidizing oil and corn too?

by spodek 7y ago

nicoburns 7y ago
It sounds facetious, but this comment is completely on point. It's pretty egregious that governments (e.g. the UK where I live) have stopped subsidising renewables, but continue to subsidise fossil fuels. People saying fossil fuels are cheaper often seem to forget this.
- whatshisface 7y ago
  How exactly do these governments subsidize fossil fuels?
  - jdub 7y ago
    Tax claims, usually. Spent X dollars on fuel for farming or mining? Here's Y dollars off your tax bill.
    - whatshisface 7y ago
      Isn't every business allowed to depreciate their purchases?
      - jdub 7y ago
        Spending money on a commodity isn't like buying a mainframe. And these are specific deductions and claims for fossil fuel products.
      - guan 7y ago
        For land producing minerals, there is a special tax rule called “percentage depletion” available to some taxpayers. With percentage depletion, the owner can deduct a fixed percentage (15%) of gross income every year. This can add up to more than the original amount invested in an oil field. Normally, the depreciation allowance for capital investment over a period of years can only add up to the amount originally invested.
    - tim333 7y ago
      If the business has to pay tax to the government it isn't really a subsidy, which I think it usually the case with oil and gas. The UK govt seems to have received £1.2 bn from the oil and gas businesses in 2018/19. (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/818296/Statistics_of_government_revenues_from_UK_oil_and_gas_production_July_2019.pdf https://assets.publishing.service.gov.uk/government/uploads/...)
      - jdub 7y ago
        While there are some direct incentives for fossil fuel producers, most of the subsidies go to commercial use of fossil fuel products.
      - KirinDave 7y ago
        Why? The net effect is exactly the same.
        tim333 7y ago
        Government takes money from business = tax Government gives money to business = subsidy The oil industry is the first one even if depreciation allowances are involved in the tax calculation.
        greglindahl 7y ago
        You might want to check out the concept of a Tax Expenditure https://en.wikipedia.org/wiki/Tax_expenditure https://en.wikipedia.org/wiki/Tax_expenditure, which is when a government lowers tax on something.
        tim333 7y ago
        It's still an odd use of the word subsidy. I wish I could subsidise the oil industry by having them send me large amounts of money. Maybe we can kill the oil industry by tripling the subsidies so they have to send the government three times as much? It makes it hard to have sensible discussion. Is there a word for whether the government pays to the industry or visa versa if tax and subsidy have been redefined to no longer mean that?
  - addicted 7y ago
    Many governments set the price at the gas pump and subsidize the difference.
  - opencl 7y ago
    The UK in particular charges 5% VAT instead of the normal 20% for natural gas, heating oil, solid fuel and electricity for residential use. They claim that this isn't a subsidy but tax breaks for specific product categories sure sounds like a subsidy to me.
    - pfortuny 7y ago
      Well, most food has 0% VAT, as well as other necessities... I gather at least home energy should have a similar treatment. At least up to some level.
      - bryanlarsen 7y ago
        How do you split food into "luxury" and "basic" foods? A 1 pound loaf of bread is "basic", a 5 pound loaf is "luxury"? What an impossible task. Far easier to put the VAT on all food and then send a rebate check to everybody on the assumption that the average food spend is "basic" and anything above average food spend is "luxury". Same thing for home energy. Heating a 1000 square foot flat is "necessity", heating a 5000 square foot flat is "luxury"....
        StreamBright 7y ago
        It is not that hard. See what is sold in a luxury store deduct what is sold in average Joe grocery stores and what you got is luxury food items.
        greglindahl 7y ago
        Is it that easy? I suspect you'll get an objection or two about junk food from doing that. Imagine how much fun marketers will have with that kind of measure, if it's a 20% difference.
        frobozz 7y ago
        It isn't about size, it's about the nature of the foodstuff. A biscuit is basic. A chocolate biscuit is luxury. Cake is basic Meals you cook at home are basic Meals someone cooks for you (e.g. restaurant or takeaway) is luxury. (among other examples)
- jdub 7y ago
  Australia subsidises vehicle fuel for use in coal mining[1]. It is totally bananas. [1] among other things but this is the most ridiculous
  - gonzo41 7y ago
    Regulatory capture. We exempt mining companies from fuel tax because they don't drive on public roads. sigh.
    - ancarda 7y ago
      Isn't the point of a fuel tax to pay for road repairs? Why should they pay a fuel tax if they aren't using public roads? I don't drive, so I may be completely off here - I'm genuinely asking because I don't know
      - jdub 7y ago
        They may not drive their enormous mining trucks on public roads, but they benefit from the society (including other public roads) that our taxes support. Plus it's absurd that we're incentivising the use of fossil fuels at all, let alone to dig up fossil fuels.
        pdpi 7y ago
        If the stated goal of a rule is X, it's entirely reasonable to request an exemption based on how you act relative to X. As a matter of principle, I object to denying said exemption because the request comes from the requester's position on Y. In this particular case, if the tax is indeed levied on the basis of how it impacts road use and repairs, it's perfectly fair to exempt fuel meant to be used only in private property, irrespectively of how I feel about its polluting nature. I do agree it's absurd that we don't disincentivize the use of fossil fuels, and the mining of said fuels in general, but two wrongs don't make a right.
        kortilla 7y ago
        By that measure everyone benefits from public roads and should pay fuel tax even if they aren’t driving on them. That makes no sense. You know farmers are exempt from diesel tax for farm equipment too, right?
- tialaramex 7y ago
  UK Renewable energy production is still subsidised by Contracts For Difference. What happens is the government says OK, for this power we're willing to pay extra. Bid for how much you want. Some offshore wind farm builder might say OK, pay us £65 per MWh in 2020. No better offers in that category (low risk zero carbon power)? OK. Every MWh you generate in 2020 the electricity grid pays whatever they'd pay for gas or coal or anything else, then, the difference between that and £65 per MWh is from the government. Maybe the grid pays £20 right now, subsidy is £45. But, maybe the wants every amp they're paying £95 right now, the government gets £30 back from the wind farm. CFDs make investors comfortable. Wind farms are expensive, what if we take out a loan to build this expensive wind farm and only get £15 per MWh we'd go bankrupt. If the government promises £65 we're profitable so long as we build that wind farm. CFD bidding also drives down costs, if your rival will take £35 the government may not accept your bid.
  - edh649 7y ago
    It’s worth noting that ‘established technologies’ have not been eligible since CfD round 2 in 2017. This includes onshore wind, solar PV, energy from waste with CHP, hydro (>5MW and <50MW), landfill gas and sewage gas technologies. [1] From phase 1, roughly 670MW of onshore wind and about 75MW of solar were supported. [2] [1] - https://www.ashurst.com/en/news-and-insights/legal-updates/uk-power-the-second-contracts-for-difference-allocation-round/ https://www.ashurst.com/en/news-and-insights/legal-updates/u... [2] - https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-one-outcome https://www.gov.uk/government/publications/contracts-for-dif...
    - tialaramex 7y ago
      Fair. On the other hand, what is there to subsidise? For onshore wind in particular, the remaining role of a CfD at competitive prices would be solely consistency/ predictability. I think the Private Sector would like to believe they can compete effectively in offering that. If I were a UK government that wasn't trying to eat its own tail over Brexit (so this is pretty hypothetical) I'd be focused on storage. People are going to build on-shore wind farms because they make sense. I need to subsidise figuring out how to smooth out the system load, or else all the wind farms in the world won't help me.
e2le 7y ago
Why is subsidizing corn a bad thing? Honest question.
- jdub 7y ago
  It distorts the market by incentivising corn farming. Want to know why so many US farmers grow corn, lobby for bio ethanol fuel laws, and why an ungodly amount of US food is based on corn and corn byproducts (e.g. high fructose corn syrup)? Corn subsidies.
  - Vadoff 7y ago
    It sucks because high fructose corn syrup tastes worse than sugar for a lot of people too.
- organsnyder 7y ago
  The corn monoculture in the United States is so pervasive, we hardly notice it—especially for someone like me that's lived under the regime my entire life (I'm in my mid-30s). It's caused us to use corn in places where other materials may be more optimal—for the environment, our health, and even economically—if it weren't for subsidies. I know someone who has a severe corn allergy (or reaction of some sort). He has to be careful even purchasing "fresh" non-corn vegetables at the supermarket, as they are often coated with a corn-based preservative.
  - deleted 7y ago
    [deleted]
  - Forbo 7y ago
    Reminds me of this thread: Corn is not a food, it's a platform. https://twitter.com/SwiftOnSecurity/status/1074810043495796736 https://twitter.com/SwiftOnSecurity/status/10748100434957967...
  - drak0n1c 7y ago
    If most of the world's practical alternative to US corn is palm oil and other cheap slash and burn crops - abandoning corn won't be good for the environment.
MuffinFlavored 7y ago
Why do governments subsidize oil + corn?
- seph-reed 7y ago
  Because some very rich people control a whole bunch of it, and they're very, very good at getting their way.
- kleer001 7y ago
  Because foreign corn is too competitive, too cheap, and pull the rug out from local farmers. It's a short term solution to a long term problem.
  - ssijak 7y ago
    Well, if you want a free market then let them pull the rug if they cant compete and spend the money more wisely.
drdrey 7y ago
In what concrete ways do we subsidize oil?
- smileysteve 7y ago
  Intangible Drilling Costs to start. https://www.investopedia.com/articles/07/oil-tax-break.asp https://www.investopedia.com/articles/07/oil-tax-break.asp https://www.americanprogress.org/issues/green/reports/2016/05/26/138049/it-is-time-to-phase-out-9-unnecessary-oil-and-gas-tax-breaks/ https://www.americanprogress.org/issues/green/reports/2016/0...

Can we stop subsidizing oil and corn too?

by spodek 7y ago

Can we stop subsidizing oil and corn too?

It sounds facetious, but this comment is completely on point. It's pretty egregious that governments (e.g. the UK where I live) have stopped subsidising renewables, but continue to subsidise fossil fuels. People saying fossil fuels are cheaper often seem to forget this.

whatshisface 7y ago
How exactly do these governments subsidize fossil fuels?
- jdub 7y ago
  Tax claims, usually. Spent X dollars on fuel for farming or mining? Here's Y dollars off your tax bill.
  - whatshisface 7y ago
    Isn't every business allowed to depreciate their purchases?
    - jdub 7y ago
      Spending money on a commodity isn't like buying a mainframe. And these are specific deductions and claims for fossil fuel products.
    - guan 7y ago
      For land producing minerals, there is a special tax rule called “percentage depletion” available to some taxpayers. With percentage depletion, the owner can deduct a fixed percentage (15%) of gross income every year. This can add up to more than the original amount invested in an oil field. Normally, the depreciation allowance for capital investment over a period of years can only add up to the amount originally invested.
  - tim333 7y ago
    If the business has to pay tax to the government it isn't really a subsidy, which I think it usually the case with oil and gas. The UK govt seems to have received £1.2 bn from the oil and gas businesses in 2018/19. (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/818296/Statistics_of_government_revenues_from_UK_oil_and_gas_production_July_2019.pdf https://assets.publishing.service.gov.uk/government/uploads/...)
    - jdub 7y ago
      While there are some direct incentives for fossil fuel producers, most of the subsidies go to commercial use of fossil fuel products.
    - KirinDave 7y ago
      Why? The net effect is exactly the same.
      - tim333 7y ago
        Government takes money from business = tax Government gives money to business = subsidy The oil industry is the first one even if depreciation allowances are involved in the tax calculation.
        greglindahl 7y ago
        You might want to check out the concept of a Tax Expenditure https://en.wikipedia.org/wiki/Tax_expenditure https://en.wikipedia.org/wiki/Tax_expenditure, which is when a government lowers tax on something.
        tim333 7y ago
        It's still an odd use of the word subsidy. I wish I could subsidise the oil industry by having them send me large amounts of money. Maybe we can kill the oil industry by tripling the subsidies so they have to send the government three times as much? It makes it hard to have sensible discussion. Is there a word for whether the government pays to the industry or visa versa if tax and subsidy have been redefined to no longer mean that?
- addicted 7y ago
  Many governments set the price at the gas pump and subsidize the difference.
- opencl 7y ago
  The UK in particular charges 5% VAT instead of the normal 20% for natural gas, heating oil, solid fuel and electricity for residential use. They claim that this isn't a subsidy but tax breaks for specific product categories sure sounds like a subsidy to me.
  - pfortuny 7y ago
    Well, most food has 0% VAT, as well as other necessities... I gather at least home energy should have a similar treatment. At least up to some level.
    - bryanlarsen 7y ago
      How do you split food into "luxury" and "basic" foods? A 1 pound loaf of bread is "basic", a 5 pound loaf is "luxury"? What an impossible task. Far easier to put the VAT on all food and then send a rebate check to everybody on the assumption that the average food spend is "basic" and anything above average food spend is "luxury". Same thing for home energy. Heating a 1000 square foot flat is "necessity", heating a 5000 square foot flat is "luxury"....
      - StreamBright 7y ago
        It is not that hard. See what is sold in a luxury store deduct what is sold in average Joe grocery stores and what you got is luxury food items.
        greglindahl 7y ago
        Is it that easy? I suspect you'll get an objection or two about junk food from doing that. Imagine how much fun marketers will have with that kind of measure, if it's a 20% difference.
      - frobozz 7y ago
        It isn't about size, it's about the nature of the foodstuff. A biscuit is basic. A chocolate biscuit is luxury. Cake is basic Meals you cook at home are basic Meals someone cooks for you (e.g. restaurant or takeaway) is luxury. (among other examples)
jdub 7y ago
Australia subsidises vehicle fuel for use in coal mining[1]. It is totally bananas. [1] among other things but this is the most ridiculous
- gonzo41 7y ago
  Regulatory capture. We exempt mining companies from fuel tax because they don't drive on public roads. sigh.
  - ancarda 7y ago
    Isn't the point of a fuel tax to pay for road repairs? Why should they pay a fuel tax if they aren't using public roads? I don't drive, so I may be completely off here - I'm genuinely asking because I don't know
    - jdub 7y ago
      They may not drive their enormous mining trucks on public roads, but they benefit from the society (including other public roads) that our taxes support. Plus it's absurd that we're incentivising the use of fossil fuels at all, let alone to dig up fossil fuels.
      - pdpi 7y ago
        If the stated goal of a rule is X, it's entirely reasonable to request an exemption based on how you act relative to X. As a matter of principle, I object to denying said exemption because the request comes from the requester's position on Y. In this particular case, if the tax is indeed levied on the basis of how it impacts road use and repairs, it's perfectly fair to exempt fuel meant to be used only in private property, irrespectively of how I feel about its polluting nature. I do agree it's absurd that we don't disincentivize the use of fossil fuels, and the mining of said fuels in general, but two wrongs don't make a right.
      - kortilla 7y ago
        By that measure everyone benefits from public roads and should pay fuel tax even if they aren’t driving on them. That makes no sense. You know farmers are exempt from diesel tax for farm equipment too, right?
tialaramex 7y ago
UK Renewable energy production is still subsidised by Contracts For Difference. What happens is the government says OK, for this power we're willing to pay extra. Bid for how much you want. Some offshore wind farm builder might say OK, pay us £65 per MWh in 2020. No better offers in that category (low risk zero carbon power)? OK. Every MWh you generate in 2020 the electricity grid pays whatever they'd pay for gas or coal or anything else, then, the difference between that and £65 per MWh is from the government. Maybe the grid pays £20 right now, subsidy is £45. But, maybe the wants every amp they're paying £95 right now, the government gets £30 back from the wind farm. CFDs make investors comfortable. Wind farms are expensive, what if we take out a loan to build this expensive wind farm and only get £15 per MWh we'd go bankrupt. If the government promises £65 we're profitable so long as we build that wind farm. CFD bidding also drives down costs, if your rival will take £35 the government may not accept your bid.
- edh649 7y ago
  It’s worth noting that ‘established technologies’ have not been eligible since CfD round 2 in 2017. This includes onshore wind, solar PV, energy from waste with CHP, hydro (>5MW and <50MW), landfill gas and sewage gas technologies. [1] From phase 1, roughly 670MW of onshore wind and about 75MW of solar were supported. [2] [1] - https://www.ashurst.com/en/news-and-insights/legal-updates/uk-power-the-second-contracts-for-difference-allocation-round/ https://www.ashurst.com/en/news-and-insights/legal-updates/u... [2] - https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-one-outcome https://www.gov.uk/government/publications/contracts-for-dif...
  - tialaramex 7y ago
    Fair. On the other hand, what is there to subsidise? For onshore wind in particular, the remaining role of a CfD at competitive prices would be solely consistency/ predictability. I think the Private Sector would like to believe they can compete effectively in offering that. If I were a UK government that wasn't trying to eat its own tail over Brexit (so this is pretty hypothetical) I'd be focused on storage. People are going to build on-shore wind farms because they make sense. I need to subsidise figuring out how to smooth out the system load, or else all the wind farms in the world won't help me.

e2le 7y ago

Why is subsidizing corn a bad thing? Honest question.

jdub 7y ago
It distorts the market by incentivising corn farming. Want to know why so many US farmers grow corn, lobby for bio ethanol fuel laws, and why an ungodly amount of US food is based on corn and corn byproducts (e.g. high fructose corn syrup)? Corn subsidies.
- Vadoff 7y ago
  It sucks because high fructose corn syrup tastes worse than sugar for a lot of people too.
organsnyder 7y ago
The corn monoculture in the United States is so pervasive, we hardly notice it—especially for someone like me that's lived under the regime my entire life (I'm in my mid-30s). It's caused us to use corn in places where other materials may be more optimal—for the environment, our health, and even economically—if it weren't for subsidies. I know someone who has a severe corn allergy (or reaction of some sort). He has to be careful even purchasing "fresh" non-corn vegetables at the supermarket, as they are often coated with a corn-based preservative.
- deleted 7y ago
  [deleted]
- Forbo 7y ago
  Reminds me of this thread: Corn is not a food, it's a platform. https://twitter.com/SwiftOnSecurity/status/1074810043495796736 https://twitter.com/SwiftOnSecurity/status/10748100434957967...
- drak0n1c 7y ago
  If most of the world's practical alternative to US corn is palm oil and other cheap slash and burn crops - abandoning corn won't be good for the environment.

MuffinFlavored 7y ago

Why do governments subsidize oil + corn?

seph-reed 7y ago
Because some very rich people control a whole bunch of it, and they're very, very good at getting their way.
kleer001 7y ago
Because foreign corn is too competitive, too cheap, and pull the rug out from local farmers. It's a short term solution to a long term problem.
- ssijak 7y ago
  Well, if you want a free market then let them pull the rug if they cant compete and spend the money more wisely.

drdrey 7y ago

In what concrete ways do we subsidize oil?

smileysteve 7y ago
Intangible Drilling Costs to start. https://www.investopedia.com/articles/07/oil-tax-break.asp https://www.investopedia.com/articles/07/oil-tax-break.asp https://www.americanprogress.org/issues/green/reports/2016/05/26/138049/it-is-time-to-phase-out-9-unnecessary-oil-and-gas-tax-breaks/ https://www.americanprogress.org/issues/green/reports/2016/0...