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My father in laws ranch is surrounded by wind farms. I asked him why they were suddenly cropping up all around his land, and he told me 2 reasons: 1) TAX BREAK
by S_A_P 12y ago
My father in laws ranch is surrounded by wind farms. I asked him why they were suddenly cropping up all around his land, and he told me 2 reasons:
1) TAX BREAKS AND/OR
2) Huge government subsidies
The folks that lease these things get huge tax breaks for allowing them on their land, and there is massive government incentives out to build these things. That would signal to me that they are not yet economically viable. When people start building them on prospect(similar to wildcatting an oil well) then I will believe the economics work out. Until then, its a bad business to be in.
- jshen 12y agoThere are huge subsidies for fossil fuels. Does that mean they are not viable?
- hodder 12y agoI'd be interested in an outline of these subsidies (in the US) if you have a source.
- jshen 12y agohttp://en.m.wikipedia.org/wiki/Energy_subsidies#United_States http://en.m.wikipedia.org/wiki/Energy_subsidies#United_State...
- SilasX 12y agoOf the top three purported oil subsidies in the link: 1) Foreign tax credit: everyone gets that to avoid double taxation. 3) Deduction of exploration costs: deduction of expenses is typical and again something everyone does when you're being taxed on profits. This is better understood as "the tax code explicitly recognizes this as an expense, just as it does for hiring workers or warehousing unsold inventory". Would you mind articulating what you think the oil subsidies are? The alternative fuels subsidy (2) seems like a legit case but only gets you 14 of the 370 billion claimed. (I get that there are environmental costs but that's not what people have in mind with the vague "oil subsidies" I keep hearing about.)
- jshen 12y agoHere's one In the United States, the federal government has paid US$74 billion for energy subsidies to support R&D for nuclear power ($50 billion) and fossil fuels ($24 billion) from 1973 to 2003. During this same timeframe, renewable energy technologies and energy efficiency received a total of US$26 billion.
- SilasX 12y agoThat's not very convincing, considering that, on closer inspection, the previous ones turned out not to be subsidies...
- jshen 12y agoconvincing of what? Someone said that renewables aren't viable because they are subsidized. I said that fossil fuels are also subsidized so that is an odd argument to make. I've shown that fossil fuels do get subsidies. I'm not sure what you are going on about.
- SilasX 12y agoYou asserted that they get subsidies. The subsidies turned out to be largely a) (1) not double taxing them, and b) (3) a tax code clarification that exploration costs are valid expenses. If you want to establish that oil gets subsidies, please be specific about what they are so that I can learn more about them and confirm it is not simply a case of "something everyone gets".
- mikeash 12y agoIn addition to the explicit subsidies mentioned in the sibling comment, also keep in mind the implicit subsidies of allowing people to pollute without paying the costs. Environmental regulations have diminished this substantially, but it's still pretty big. Pollution amounts to a subsidy of billions of dollars a year for fossil fuels, only we pay with our lungs instead of our wallets.
- steveax 12y agoAnd in addition to the externalities that are not borne by the producers, how bout factoring in the portion of the US military budget that is devoted to ensuring access to oil around the world?
- mikeash 12y agoI'm not sure about counting that. My guess is that even if we were fully energy independent somehow, we'd still have an equally large military budget and probably find some other excuse for having various "adventures" in remote parts of the world.
- netcan 12y agoTrue, bot on the other hand there are also the OPEC caps keeping prices up and excise taxes in most places on oil derived fuels. If you're looking for where the market would be in a free state, you will have a hard tome finding it.
- jshen 12y agoBecause there is no such thing as the platonic ideal of a free state.
- ArkyBeagle 12y agoPerhaps those who make the counters are shills, but I've seen quite effective counters to this belief. 1) Energy is an industrial activity. So it gets industrial tax treatment. 2) Depletion allowances exist. These are at least mostly the same for any mining activity. Oil may be a bit different because the case law and policies surrounding it grew up differently than, say coal. There's no "third column" for subsidies. Those are it. This being said, the article makes a good case for negative environmental externalities not being part of the price of tar sands production. That would be a subsidy.
- jroche 12y agohttp://cleantechnica.com/2013/10/01/us-solar-company-build-unsubsidized-70-mw-solar-farm-chile/ http://cleantechnica.com/2013/10/01/us-solar-company-build-u...
- dllthomas 12y agoThere are three relevant regions in cost/benefit space here; call them A, B, and C. Region A, producing energy by way of wind/solar costs sufficiently less than the price of that energy to make the capital expenditures a good use of money for individual market participants. Region C, producing energy by way of wind/solar costs more energy to make than we get out of it. This is allegedly the case for ethanol. Region B, the dollar cost of building and maintaining wind and solar might too high, while the energy cost might not be. In region A, subsidies are unnecessary - people will build anyway. In region C, subsidies actually raise energy prices. In region B, subsidies could make energy cheaper. If you believe the government doesn't do anything unnecessary, then the existence of subsidies shows we're not in region A. If you believe the government doesn't do anything harmful, then the existence of subsidies shows we're not in region C. Honestly, I'm not sure the existence of subsidies shows us much of anything. There is a world where they might be helpful, though.
- DaniFong 12y agoThat was once true, but not any more; solar and wind are way cheaper than oil based power today, and have been since about 2004. The tax breaks help of course, but there's still more than 50 GW of electrical capacity worldwide that would be better served economically by renewables than oil