reply to post by Kali74
This is not meant as a criticism of other posters, everyone has their own style, and all that, but sometimes I wish I could say "Can't we go some
place a little quieter?"
I looked at your study, and it seemed to be pretty decent in the areas it covered. One thing that struck me about it was the small benefit it would
bring to the government. Sure, every little bit helps, but the study was projecting savings to the government of $31.48 billion over 10 years, or
about 1/10 of 1% of our spending. But still, a savings worth picking up if possible. The study seems to be saying "small cost to the country, small
benefit to the government," and I am a friend of small steps.
That belief is continued through "Our Assesment" on page 14. There are only a couple of troubling notes there.
One concern is that
instability of the tax system may add to uncertainty and slow investment activity.
I think we're seeing some of that uncertainty.
backdrop of weakened natural gas prices, however, the elimination of oil and gas company tax preferences could reduce current employment.not just
prospective gains in employment. Moreover, because capital]intensive industries have larger multiplier effects than labor intensive industries,
spillovers to the rest of the economy could be noticeable in the short run.
But I'm not criticizing the study, I'm glad you brought it up. I
think it makes the case for lifting subsidies a little stronger.
My confusion, which had been clearing up, deepened when I read a Forbes
article with the title:
The Surprising Reason That Oil Subsidies
Persist: Even Liberals Love Them
How could I pass up that headline?
They use an interesting definition for "subsidies" that comes from Oil Change International.
For the article, the definition is key, it is
“any government action that lowers the cost of fossil fuel energy production, raises the price received by energy producers or lowers the price
paid by energy consumers.”
That seems to be good, but be careful, if you accept it, most of the case for ending subsidies goes away.
Oil Change International
comes up with a figure of $4.5 billion a year in subsidies, not terribly far from the $3 billion plus figure used in
that 2009 study you linked.
The reason liberals like the subsidies can be seen in the three largest ones:
The single largest expenditure is just over $1 billion for the
Strategic Petroleum Reserve, which is designed to protect the U.S. from oil shortages. The second largest category is just under $1 billion in tax
exemptions for farm fuel. The justification for that tax exemption is that fuel taxes pay for roads, and the farm equipment that benefits from the tax
exemption is technically not supposed to be using the roads. The third largest category? $570 million for the Low-Income Home Energy Assistance
Program. (This program is classified as a petroleum subsidy because it artificially reduces the price of fuel, which helps oil companies sell more of
it). Those three programs account for $2.5 billion a year in “oil subsidies.”
And finally, the tax issue:
Last year CNN did a story where
they put together their own list of the so-called oil subsidies, and in their list the “largest single tax break” — amounting to $1.7 billion
per year for the oil industry — is a manufacturer’s tax deduction that is defined in Section 199 of the IRS code. This is a tax credit designed to
keep manufacturing in the U.S., but it isn’t specific to oil companies. It is a tax credit enjoyed by highly profitable companies like Microsoft and
Apple, and even foreign companies that operate factories in the U.S. Further, the deduction for oil companies is already limited. Apple is able to
take a 9% manufacturer’s tax deduction, but ExxonMobil is only allowed to take a 6% deduction.
Your point about short-term v. long term thinking is a very good one. Somehow, we should try to do both, oil and gas now, and alternative for the
future. Of course we're not sure about which alternatives are best, or when the "future" will come, but they should be explored. In the meantime,
I think most people want to use energy that's been produced in the US, and that means working for a strong energy industry.
May I say that I not only enjoy my talks with you as well, but I learn from them. I'm very grateful to you.
I truly enjoy our discussions Charles