‘Subsidy Day’ is What Tax Day is For Oil Companies
|May 13, 2014||Posted by Staff under Subsidies & Waste & Public Debt|
This 2014 excerpt of The Nation, Apr 15, is by Zoë Carpenter.
ExxonMobil, the world’s largest oil company, hauled in a $32.6 billion profit last year. Tax day, the company got its annual boost from the Federal Government: an estimated $600 million in tax breaks. Chief executive Rex Tillerson got a 3 percent bump in his pay package, sending it above $28 million.
The US gifts as much as $4.8 billion to the oil industry each year, more than any other country. Much of that comes not as direct handouts but instead via loopholes in the tax code; deductions for depleting oil reserves, for example, and write-offs for the expense of drilling a new well.
Globally, subsidies for fossil fuel production —- amounting to $1.9 trillion in 2011, or 8 percent of government revenues —- increase emissions and put heavy burdens on public budgets.
The IMF estimates that eliminating fossil fuel subsidies could lower emissions by 13 percent.
In the last fifteen years oil and gas companies spent more than $1.4 billion on lobbying, employing nearly 800 lobbyists, many of them culled from congressional offices. That expense is actually a shrewd investment: every dollar the five largest oil companies spend on lobbying reflects $53 in tax breaks.
Another de facto subsidy comes from the Interior Department’s failure to collect royalties on domestic oil and coal. The government has lost as much as $14.7 million because royalties are not collected on offshore leases in the Gulf of Mexico. In Wyoming’s Powder River Basin, below-market sale prices and an uncompetitive bidding for coal reserves has cost taxpayers as much as $30 billion over the past two decades.
Finally, there is a more deeply hidden giveaway to the fossil fuel industry, the most critical of oversights: the fact that companies don’t pay for the damages caused by their products.
Ed. Notes: It’d be interesting to know how much lobbying the CEO does directly; I bet he’s on a first-name basis with many key players in Washington. I also bet the amount of subsidy above is too low; it leaves out paying the companies to pump some oil back into the ground (Strategic Reserve and did not mention the subsidies for “research”.
Some number crunchers figure that resource industries could not turn even a penny of profit if they had to pay for all the damages they cause to worker (even death to refinery workers), consumer (cancer), and nature (destruction of habitat by even routine pollution from oil tankers).
For a political analysis, the author left out a key fact. If oil companies had to pay the full-rental value of oil in the ground (as Norway charges them) instead of keep this socially-generated common wealth for themselves, then they would not have those funds and would not have so much political power. If those oil rents funded a dividend to citizens, a la Alaska’s oil share, then the general public would enjoy that extra income and the political clout that comes with it. People then might understand the wisdom of the entire geonomic package and move on to recovering the rents for all sites and natural resources, completely changing the economy and political scene.