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I remember last time a looked into this is that there are really no tax subsidies that the oil and gas industry gets that are unreasonable. Absolutely every ind

• dpkirchner 4y ago
  > Also, oil companies largely don't pay for the environmental damage they do. This is possibly the largest subsidy given to energy companies. Maybe the damage they do to human health is larger.
• nradov 4y ago
  US military involvement in the Middle East is hardly a subsidy to the oil and gas companies that would be impacted by this Act. Most of the oil and gas companies in that region are state owned with Aramco being the largest by far. They aren't subject to US laws or taxes. And they don't even export much to the US. Hypothetically, if an armed conflict shut down Aramco production then US oil and gas companies would actually make more profit. I do agree that allowing oil and gas companies to avoid paying the full costs of environmental damage is effectively a form of hidden subsidy.
  • Spooky23 4y ago
    It’s all connected. The conflict in Ukraine means my heating bill in NY goes up 40% this winter.
    • nradov 4y ago
      Passing this Act wouldn't make your heating bill any lower.
    • Alupis 4y ago
      > The conflict in Ukraine means my heating bill in NY goes up 40% this winter. Why? The US is the largest producer of natural gas in the world, and by quite a large margin[1]. Europe tied themselves to Russian natural gas, heeding no warnings in the process, and now find themselves cut off due to conflict. Oh, if only this could have been predicted and avoided in advance... It makes sense for Europeans to experience ludicrous natural gas bills, but not someone in NY. Further, the US should not make citizens suffer in order to prop up European nations that couldn't have cared any less about their own security until it was too late. [1] https://yearbook.enerdata.net/natural-gas/world-natural-gas-production-statistics.html https://yearbook.enerdata.net/natural-gas/world-natural-gas-...
      • Spooky23 4y ago
        We’re shipping LNG to Europe, and limited pipeline capacity in the northeast is a constraint.
      • randomdata 4y ago
        > It makes sense for Europeans to experience ludicrous natural gas bills, but not someone in NY. It's a globally traded commodity. If someone in NY won't pay 40% more, someone in Europe will. Just like you work for who gives you the most compelling offer, so too does natural gas go to who presents the most compelling offer. > the US should not make citizens suffer in order to prop up European nations Given that the US is where most of the natural gas is produced, per your comment, the US will realize a huge windfall by shipping its product to Europe at a high markup. The citizens of the US will be emboldened by it. They may have to pay more for heat, but stand to gain even more than that. Europe loses either way.
        • Alupis 4y ago
          > The citizens of the US will be emboldened by it. They may have to pay more for heat, but stand to gain even more than that. I have to disagree here. The citizens of the US gain nothing from the US permitting natural gas companies to export to Europe instead of filling local demand first. These are private companies anyway... so not sure how this logic holds up. > It's a globally traded commodity. Sure it is... however a nation can and will prohibit exports when local demand exceeds available reserves. Natural gas is a strategic asset after all, and we're already dangerously dancing with inflation/recession - it wouldn't make sense to accelerate that path just because Europe needs gas after a series of terrible, completely avoidable choices.
    • Aunche 4y ago
      Ensuring stability in the Middle East is a subsidy for fossil fuel consumers. It hurts the oil producers, which are the companies targeted by this bill. The war in Ukraine is a good example of this as it's contributing to their record profits.
      • Spooky23 4y ago
        Middle East stability is a long term policygoal. The United States made Saudi Arabia one of the highest priority allies to avoid a repeat of 1973. On a long term scale, keeping the pumps going is good for the petroleum industry, as sustained high prices justify the capital expense for alternatives. Once you buy an electric car, you don’t really give a hoot about gasoline.
• ElevenLathe 4y ago
  The other big "hidden" subsidy is publicly-funded maintenance of tons of auto infrastructure like 16 lane interstate highways, sewer and water service to far-flung exurbs, etc. The automotive sector (auto manufacturing, petroleum, trucking, etc.) would probably not turn a profit at current levels of production if they were forced to pay for the maintenance of roads to a standard necessary for auto traffic. They might still exist but presumably without this artificial juicing of demand, it wouldn't have made sense to dig up so much oil (and produce and run so many machines to burn it) so fast.
  • riazrizvi 4y ago
    How would the economy function without infrastructure and affordable transportation?
    • pas 4y ago
      denser residential (or godforbid! mixed use) areas would require less capex and opex, so they would require less public funding
      • ElevenLathe 4y ago
        Indeed, basically the entire built environment is one giant fossil fuel subsidy. Almost all construction in the past ~200 years, certainly since WW2, has been malinvestment based on artificially cheap fossil energy. Really, you can say that the industrial revolution is defined by energy getting exponentially and artificially cheaper as we got better at digging up burnable stuff, burning it, and using the resulting energy to do stuff, including digging up more burnable stuff even faster.
    • ElevenLathe 4y ago
      There wouldn't be no infrastructure, it would just have to be scaled back to a level where it could be paid for with real surpluses rather than the fake surplus created by pretending that only digging up oil and coal have a cost, while burning it is free.
    • 4y ago
• legitster 4y ago
  > The US' military interest in the Middle East seems to be entirely based on the oil reserves in the region. This is such a common trope that's clearly not true. Afghanistan doesn't have any real oil production, and Iraq had a tiny OPEC quota. To the extent that oil production had any real strategic purpose in the US conflicts, it was the income they provided local regimes.
  • megaman821 4y ago
    My answer to that would be that the US was/is very concerned about spillover conflict. A few aggressive countries could easily draw the whole region in. Why is the US so less concerned about South East Asia or Africa than the Middle East?
    • ethbr0 4y ago
      Because it's no longer the 1960s and the Trotskyist concept of permanent revolution is kaput?
  • jcranmer 4y ago
    If you're looking at it narrowly in terms of US's actual invasions, perhaps. But the US foreign policy in the Middle East has generally been directed towards "keep the oil flowing" to such a degree that there's not really any other coherent vision or grand strategy at play in that region.
  • dpkirchner 4y ago
    If you want to get pedantic about hyperbole, let's get even more pedantic! Afghanistan isn't in the Middle East, although some consider it to be in the "Greater Middle East" (a recently coined term).
  • hindsightbias 4y ago
    We built all that infrastructure decades back after Kuwait. Our entire force structure pivoted and remained that way because it was obvious the only thing that stopped Saddam from rolling into the northern Saudi fields was himself. If he'd been smart, he would have kept going and would still be there. Afghanistan and Iraq II and III are just knock-on effects of all that and we're not doing because like MBS for his personality.
• theptip 4y ago
  From the OP, the list of “subsidies” is below. I’m not an expert but this sounds like lots more than amortization. Do these all sound like things that are reasonable after digging more to you? (Tone check - not accusatory, I’m curious if this matches up with your previous research or doesn’t overlap). Tax credits and deductions on the face sound unreasonable to me, but it’s unclear from the summary how substantial they actually are. I’d agree that policing the Middle East is by far the biggest subsidy though, and that externalities are the thing we should be focusing on. But absent a coherent CO2 tax proposal I’m ok with chipping away at smaller subsidies where they exist (Though now seems to be a politically suicidal time to propose doing so. Wait until inflation is under control before increasing the cost of gas again.) >>> This bill limits or repeals certain fossil fuel oil and gas subsidies for oil companies. Specifically, it increases to seven years the amortization period for geological and geophysical expenditures; repeals the tax credits for producing oil and gas from marginal wells and for enhanced oil recovery; repeals the tax deduction for the intangible drilling and development costs of oil and gas wells; repeals percentage depletion; repeals the tax deduction for tertiary injectant expenses; repeals the passive loss exception for working interests in oil and gas property; denies the tax deduction for income attributable to domestic production activities for oil and gas activities; prohibits the use of the last-in, first-out (LIFO) accounting method by major integrated oil companies; limits the foreign tax credit for dual capacity taxpayers (i.e., taxpayers who are subject to a levy of a foreign country or U.S. possession and receive specific economic benefits from such country or possession); and expands the definition of crude oil for purposes of the excise tax on petroleum and petroleum products to include any oil derived from a bitumen or bituminous mixture (tar sands), and any oil derived from kerogen-bearing sources (oil shale).
  • megaman821 4y ago
    I am no expert, but the only one the sticks out to me is the depletion allowance. If you sell a million barrels of oil you then get to say you land is worth a million barrels of oil less. What exactly is that supposed to be incentivizing? You have already taken the oil out of the ground and sold it. It is a pure gift to be able to write-off some of your land value after that.
• Aunche 4y ago
  > How much less oil would be pumped with warring countries and unstable regimes? Less oil being pumped globally would be beneficial to American oil companies. > Also, oil companies largely don't pay for the environmental damage they do. If burning oil left a stinky purple gas instead of an invisible gas, they would be paying far, far more to stop it or get rid of it. Then tax the people burning the oil, not the ones the ones that are producing it. It's not like Middle Eastern oil burns any cleaner than domestic oil. The sad truth is that nobody in America actually gives a damn about the environment. They'll virtue signal about wanting change, but back off at any proposal that requires personal sacrifice.
  • megaman821 4y ago
    > Less oil being pumped globally would be beneficial to American oil companies. In the short term, yes. There is a point when you ruin the whole industry. Right now $4/gallon gas has no good alternatives, but at $15/gallon things like e-fuels and biofuels start competing quite nicely.
    • Godel_unicode 4y ago
      This is misunderstanding how the market works. If gas prices got that high, yes other fuels would come into the picture but they wouldn’t replace cheaper-to-produce American crude because of margins. The thing about those prices that would be a concern would be pushing people towards not using fuel altogether, not the existence of more expensive biofuels.
  • pas 4y ago
    it's easier to tax at the source (and then subsidize specific uses, eg. medicine)