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Oil Slick

I am sympathetic to the argument that the US government and state governments have in place various schemes to subsidize the oil and coal and gas industries. And I agree with the environmental community who wishes to see these subsidies, tax breaks, favorable regulations, etc. removed.

But let me ask a question. The answer to this question will tell you what people truly believe to be the net impacts of government policy on coal, oil and gas to really be. And I argue that to be consistent, you'd have to support the following deal:

Would you favor a complete abolition of ANY AND ALL tax and regulatory preferences for the production and sale of coal, gas and oil … so long as along with it we also end all taxes on the consumption and sale of these products? After all, if you truly think that oil and gas and coal are on net "favored" then you would have to stake out the position that the impact of the subsidies and favorable treatments exceeds that of the suppression of production and consumption due to the corporate taxes, sales taxes, excise taxes, drilling restrictions, etc. and the like on the other end.

Call me crazy – but I do not know a single "E"nvironmentalist who would accept such a deal. Are they out there? And if not, please tell me why you would not accept such a deal, if indeed you want me to take the original claim seriously – that claim being that our policies ON NET are extremely favorable to the fossil fuel industries. Maybe the oil is drowning out the load chirping of the crickets. 

As a final thought experiment, do you think folks would be willing to apply the same logic to the renewables industry?

2 Responses to “Oil Slick”

  1. Harry says:

    This is not meant to be argumentative WC, but what are these federal and state subsidies to the oil, gas, and coal industries? Do you refer to cheap leases given away? Do you mean over generous accounting treatment for tax purposes? What am I missing here?

    No, I am not on the payroll of the American Petroleum Institute, although I wish I were. I do own stock of some companies in the oil business, but should not their 10-K’s reveal the windfalls they receive from government?

    Maybe this is what many people believe, but I just don’t see it.

  2. wintercow20 says:

    Hi Harry,

    I think it is a useful “debate” tactic to grant the others their most savored point and then analyze it. Once we then walk down the road of analyzing whether that point is actually true, the arguments I make are strengthened. In this case, the so-called “subsidies” are largely (as you know) the same allowances for capital depreciation that ANY company gets. It’s sickening to hear the rhetoric of folks who think that some industries should be singled out for special treatment. But that’s of course because folks can’t bother to read the Constitution anymore.

    The irony of course is that one day “their” favored industry will find itself on the wrong end of the special treatment charade and then a great awakening about the injustice of it all will be had.

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