Corporate Welfare Details Released
U.S. Government Lavishes Welfare on Oil Companies to Deplete Natural Resources
by Kirsty Hamilton
During the latest round of negotiations under the UN
climate treaty in Bonn, Greenpeace released a comprehensive and
detailed analysis of US federal government subsidies to the oil
sector. This follows a year after releasing a report comparing
energy subsidies (fossil fuels, nuclear, renewables) in 17 Western
European countries and the EU completed by economists at Vrije
Universiteit, Amsterdam.
The new detailed report, "Fueling Global Warming: Federal Subsidies
to Oil in the United States," produced for Greenpeace by Doug Koplow
and Aaron Martin at Industrial Economics, Inc found that the US
government provided up to $11.9 billion in subsidies to the US oil
industry in 1995 excluding the cost of defending Persian Gulf oil
supplies (with their inclusion the figure rises to as high as $35.2
billion).
Among the major subsidies to the oil industry analyzed in the report are:
the full cost to maintain the Strategic Petroleum Reserve at $5.4
billion; tax breaks to domestic oil exploration and production at $2.3 billion;
and support for oil-related exports and foreign production at $1.6 billion.
Other key findings of the report:
-
Oil companies continue to pay substantially less than the standard rate
of corporate taxation, with payments in 1995 more than 23 percentage
points
below the statutory rate. The average tax rate paid by oil companies
fell
from 21.9% in 1981 to only 11.9% in 1995;
- Through creative accounting by oil producers and lapses in auditing
practices by some government agencies, American taxpayers forfeit $200
million per year in royalties;
- Inadequate bond payments and user fees for the current stock of onshore
and offshore oil operators shift up to $550 million in liability
insurance
premiums from oil companies to taxpayers;
- Subsidized export promotion through the Export-Import Bank and
Overseas Private Investment Corporation continues to heavily favor oil over
cleaner
energy alternatives;
-
The BTU tax proposed by Congress in 1992-1993, if enacted, would still not have been as large as federal subsidies to fuel.
The Executive Summary of the report "Fueling Global Warming: Federal
Subsidies to Oil in the United States" is available at the address:
http://www.greenpeace.org/~climate/oil/fdsub.html
What's your opinion on corporate welfare for the oil industry? Does your Congressperson support a free market instead of government handouts? Tell The Progress Report:
Back to The Progress
Report
