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First Principle: End Fossil Fuel Subsidies
Posted by Glenn on November 25, 2006 - 2:35pm in The Oil Drum: Local
A much better and more expansive list of policy recommendations can also be found at "Energize America" platform put together by the good folks at Daily Kos. But rather than debate all these specific proposals I thought I might start defining the key overarching principles that should guide policy makers in drafting legislation aimed at decreasing oil dependence and carbon emissions.
The first principle is "End All Subsidies of Fossil Fuels".
But this may be more pandering to motorists who simply want lower gas prices and see oil companies as "Evil" or "Price Gouging". But actually fossil fuel subsidies are wrapped up in thousands of pieces of legislation, regulations, tax codes, which if they were eliminated should raise the price of gas at the pump. When my State Senator Liz Krueger calculated all of New York State's oil and gas subsidies, she estimated that New York currently subsidizes them to the tune of $1 Billion a year in direct subsidies. And I'm not talking about externalities like the costs of oil wars, the health impact of pollution or the property damage done by global climate change - I'm just talking about financial incentives to consume oil and other fossil fuels.
On the consumption side, the way this normally works is that an industry, say aluminum producers or fishermen complains that gas, diesel, coal, etc prices are underminig their competitiveness and threaten to leave to state X that allows them to buy that fuel tax free or allows them to write off that cost in some other way. The politician can then say that they protected X number of jobs by providing that industry tax incentives to stay where they are. It's a classic special interest ploy that forces political pandering and a regulatory race to the bottom between the states.
There are other direct consumption subsidies that are aimed at helping lower income folks heat their homes or other need based programs that are probably worth keeping in some form. The issue is whether you should subsidize the fuel or just give them enough money to afford the fuel but leaving in place the incentives to conserve. Perhaps subsidizing the installation of insulation, cleaner burning furnaces and other weatherstripping would have more lasting value than simply paying for the immediate fuel needs.
Then there are the producer incentives - incentives that were put into place many years ago as a way to increase domestic production when prices were low. These incentives are clearly not necessary in a $50+ barrel of oil world (nor, I would argue were they ever a sound policy idea).
Even more hidden are other forms of subsidies that favor the purchase of energy-intensive equipment. While many people understand that SUVs are exempt from the "truck tax", there are many times when a company chooses between capital and labor to produce a good or service. Cheap subsidized energy encouraged the process of automation that substituted labor (which is heavily taxed) with capital which are treated as "investment". By ending these subsidies, we may actually see a net increase in jobs in the economy as businesses choose labor over energy intensive capital. This is why many people including most notably Westexas here have called for replacing all the Social Security and Medicare taxes with and energy tax.
But before we increase taxes on anything or further spend any public money on increasing subsidies for other energy sources (like biofuels) we should conduct a top to bottom review of all subsidies in all shapes and sizes. As much as possible, this should come from the Federal government setting a standard across the entire country banning subsidies of any type on fossil fuels lest the race to the bottom on energy subsidies between the states continue.
Sort of like the hippocratic oath (First, Do No Harm) that doctors must take, any politician that supports energy independence or reducing greenhouse gas emissions should have to pledge to end all subsidies of oil, coal, natural gas extraction or consumption. Otherwise, they really are talking out of both sides of their mouth.
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This is a pilot technology, and to get such technologies widely adapted, there is a role for government underwriting the loss of 'first movers'.
We are not going to beat global warming without a clean way of burning coal.
Look around you, and the "enabling" of car-addiction in the US is amazing. I know this is the New York section of TOD, and it may seem strange to you, in a city where a person is a bloody fool to own a car (or merely has more money than brains and a high appetite for punishment) but in most of the US, things are rigged highly in favor of car ownership. There are even charities on the radio asking for people's "extra" cars to donate to the poor, way to go, give them a thing they'll have to work 2 jobs and eat out of Dumpsters to support. I have never once heard a "buy a bicycle for the poor" campaign.
You're thinking of Jane Holtz kay, author of Asphalt Nation.
BP
I also see the Democrats playing at populism and demagoguery with regard to all sorts of reform, from ethics to various energy issues.
Rhetorical attacks on "Big Oil" are especially popular when gas prices are nigh.
One problem is that the Democrats are just as prostituted to "Big Money" as the Republicans are. I cannot imagine any real change coming from the Democratic Party we see today.
Any changes the Democrats propose will be massaged into corporate subsidies which actually extract more wealth from the poor and middle class.
The reforms we might see will pale in comparison to the new loopholes, corporate welfare, and letgislation on behalf of a wealthy political "base" versus "we the people."
PR corporations will be paid mightily to persuade the target group of "likely voters" that things are otherwise. The poor will be used as photo-ops, while they will be discouraged from actually participating.
The Democrats have no use for peace or for "useless eaters" than the Republicans do.
Democrats want more competent war-planning and execution as well as more competent management of the rabble.
Good politicians and effective cultural reformers die young.
I'm not a bit cynical, am I?
As a first step, I think that it would be good to pull together a list of all fossil fuel subsidies. Useful things to include in the list would be things like what the subsidy is, how much the subsidy costs per person and in aggregate, and who the subsidy benefits. It is very difficult to get subsidies eliminated if they are hidden.
Good post.
- FF's for transportation (mostly oil)
- FF's for manufacturing (natural gas)
- FF's for production of electricity (mostly coal)
This is so because the unaccounted-for externalities (a type of subsidy) and actual subsidies differ for each.Of course for transportaion fuels we have the easy government subsidies to list:
My second would be allowing companies to have royalty free leases in Federal waters. At the most we should be allowing them free royalties only until pay-out, then the royalties need to be increased to at least 25%.
My third candidate is the subsidies for roads. We need tolls high enough to subsidise mass transit, and to stop the feds from building new highways. Its throwing good money after bad.
I do think a "Windfall Profits Tax" is absurd. We import 70% of the US oil consumption and the integrated oil compaies sold their US production years ago, we need an import tax big enough to pay for the military and the resource war in Iraq. But we need to encourage domestic production because 100% of the money received is spent domesticly, while lttle of the foreign profits makes it home.
- gasoline tax, not tolls. You want to discourage the least efficient vehicles. If a nickel or dime is not enough to have the effect, then a dollar a gallon...
But we need to encourage domestic production because 100% of the money received is spent domesticly
- proof?
And I think "free markets" are b.s.. Our capitalist system distorts the true costs and subsidises all kind of political goals-from cheap mortgages with no money down that subsidise the suburbs, to the US Treasury bonds that give our tax money to big insurance companies. An import tax rather than a gas tax seems to be more likely to stimulate US production, because domestic oil prices will rise to the same level as the imports. It will also stimulate alternative energy, and remove a huge subsidy for real estate developers. Same way with Toll Roads. And its doable politicially. The right wing controlled media is already starting their tax-and-spend Democrat mantra. How popular are higher federal gas taxes? But punish the Arabs and Hugo Chavez while being fiscaly responsible?-'nuff said
And don't worry, oilmanbob, your job is secure in any case... :-)
But I am concerned about the US dollar collapsing under the huge mountain of debt and the ruinous imported oil bill. So, we need to get money where the money is to be got-and we import about 14 MMBPD. Ten bucks a barrel is $140,00,000 per day. That's real no shit money that could help eliminate the National Debt.
<rant>
When alternative energy kicks in the oil reserves won't be worth as much-less demand means lower prices if we handle the transition properly. I heard that arguement about saving our reserves when Ronald Reagan and King George the First opened the floodgates of cheap foreign imports in the 1980's. If we'd preserved high prices we wouldn't have the crisis in personel and equipment availability that we have now in the oil patch.
For way too long our energy policy has been handled for the profit of the multinational oil companies at the expense of independents and the citizens of the USA. We have the best government that money can buy. Free markets are a myth and a chimera. Revolution Now! Put the jam pot on the bottom shelf where the little guy can get his spoon in! Republican principles are hypocracy and greed!
- Provide for a stable tax base for the state of Alaska
- Reduct our negitive ballance of payments by as much as $60,000,000.00 per DAY
- Provide an employment base for Alaska oil field workers for at least 50 years
- Provide the resource to keep the west coast refineries working
- Insure that the Alaska pipeline is not shut down when north slope (Prudo Bay et al) declines to the 400,000 BOPD rate necessary to operate the pipeline
- Provide the incentive to build the North Slope gas pipeline to maximize the gas potential of the North Slope
I am sure sure that there are additional reasons for more North Slope oil and gas development but these are the first that come to mind.A late comment, to your specific list, which I appreciate. My sincere questions: 1) How long do these positive outcomes last? 2) What happens when ANWAR begins to decline? 3) What to do with this gain - (?)... that is, how to insure the presumed energy gain (total) will be used for off-setting the effects of global peak?
In the Great Depression, entire schools of economics were based on differing levels of caution with regards to taking on national debt. There was a reason for that, even if the current political spectrum is used to the idea. Debt is dangerous, and it takes some very strong elements (being the world's only superpower, capable of unlimited imperialism under the heading of Saving the World from Communism, de facto anchor currency for the world, being the world's best source of cheap oil, having unmatched engineering prowess, the world's best functioning middle class, and in general, being The Shit) to handle it safely. If those elements fall apart, debt spirals out of control and inevitably, the country spirals out of control.
Greenspan spent his career trying to hold the reins, riding the bipolar horse of the market as the country sped up in its path down that spiral. I'm just not sure that we can level out again, without drastically reshaping the political system and the economy.
Conservation is our first step, and quite possibly the most valuable one. Higher prices and stopping subsidies for wasteful behaviour are an important first step. People are empowered when they save money, and saving energy will save money. If we use fewer fossil fuels we will help global warming.And to quote Ben Franklin, "Waste Not, Want Not"
All I'm saying is that an oil import tax meets more of our countries economic needs than a "windfall profits tax". And, I think a cute label for it like an Anti-terrorism initive would quite probably sell the deal, while a gasoline tax is political suicide and won't pass, and probably would get vetoed if the tax did pass. Maybe call an import tarrif an Independence Initative. Stop funding terrorists with your SUV.
This will be an uphill battle. The Automobile industry and the oil companies control the media-look at the advertisements on CNN and Fox news channels. And, New York writers I hope to inspire you, have the actresses om the soaps say that guys drive gas guzzlers to make up for their small penis and stupidity.
Do you have any specifics for "reshaping"?
This is a genuine call for discussion to you and everyone else here. How can such a program actually be enacted in the current political climate? Please enlighten me because I think you are just doing the proverbial "whistling past the graveyard at night" thing here.
Having said that, there may be method to the madness:
Issue useless dollar IOU's to other nations.
Turn the IOU's into massive amounts of superior military kit, superior fire-power, the best standing army since Ceasar.
Then play 'stand and deliver!' :-)
Of course, there is always a risk it can go pear-shaped.
I actually think this is a pretty winning political idea. This is not about artificially raising the price of gas $7. That's a strawman. It would take a gas or carbon tax to achieve that.
I'm just saying that businesses and individuals should not get any special tax breaks or incentives. It's getting rid of exemptions and simply leveling the playing field.
Removing subsidies should be a slam dunk - it's not calling for new spending, higher taxes or added debt. In fact all this is getting rid of are subsidies that aid business practices that are wasteful of two things we value - energy and carbon emissions.
I think it's time to get past our inhibitions on calling out politicians that talk about massive new projects or investments that are unproven or "green washing" their record while keeping the very system of subsidizing fossil fuels intact. So everytime some proposes something new, I say tell them to simply repeal special tax breaks for those that waste energy and carbon.
Peakguy
And I didn't say use this or a tax to raise the price of gas to $7 a gallon. What I said was that this would not be a winning proposal even then for the reasons I just outlined.
Peakguy, if you think the bulk of America (or even most of the rest of the world) would accept those arguments, I fear that you are sadly overestimating the rational aspect of humanity.
***
"If I had a rocket launcher."
As an aside, this sounds like the title and a line from an old Bruce Cockburn song about, I believe, Nicaragua....for years he's written good music about the places he's visited --including Iraq.
***
Back to the topic at hand: it seems like the idea of ending fossil fuel subsidies is agreed upon, but people are also agreed that it cannot or will not be done. Is that fair to say?
My own opinion is that the corporatist (Fascist, OK) political system is too resistant to change to be able to sustain any effort to reform our energy policy.
Money will be thrown at alternatives as a palliative to the liberal geeks, but this same money will mostly line the pockets of huge corporations and drive up food prices along the way.
Meanwhile, the main solutions sought to all problems will be military. why? Because war will help keep the rabble in line and will especially justify the continued erosion of Habeus Corpus rights, the US Constitution, and so forth. Just as importantly, war does not challenge the corporatists to change, but actually adds to the profit-taking of huge corporatists involved directly or indirectly in the Military-industrial complex.
The Democrats already are setting the stage to be the "Smarter Never-Ending War Party" rather than an "Anti-War Party." The Democratic leadership continues to demand more competently planned and executed war. They do not suggest at all that there are workable alternatives to war.
Again, our Energy and Security and Foreign Policies will all depend on growing the military and upon increasingly blurring the line between military action outside of "The Homeland" and police activity inside the US borders.
Politicians who push for real change will find their careers to be short-lived.
Every letter we write, every protest we attend counts. I'm proud of NYC for your protests during the GOP Coronation. I think the Neocons were just too scared to fix the last election.
We need to demand that our Government acts responsily. We need to demand our traditional freedoms-a free press, free speech, freedom of assembly, fair and open elections and the freedom to bear arms so that they are scared of us, the people of the US. And freedom from choking on pollution and freedom from the international energy slavers.
I admire Carter's bravery in presenting that Sweater Speech, but maybe not so much his psychological strategizing.
The politician who proposes the end of 'all oily subsidies' will be the one to catch the blame when the prices go up to where they 'should be', and so of course, he/she will never stick their head in that noose. I don't think you can just devise a policy to push us away from the Fossil Fuels.. the plan has to involve making the alternatives draw us TO them. (Including that pinnacle of alternatives, reduced-consumption/conservation .. call it what you will)
The part about how cheap energy and pricey labor made companies create energy-heavy solutions is really worth looking at, since we need to rediscover a full range of labor thru management jobs that will be able to stay here and really be the underpinning of our economic base. I think it means that we have to reinvent both the basis of the Labor Unions (or they do, anyway) and the Tax Code, so that work is rewarded, but also fits into the system. I don't know if the Detroit LaborUnion model was really sustainable, subsidised as it and all of the Auto industry has been, on both cheap oil AND gov't subsidies for Auto MFRs, Highways, etc. I think labor should be organised, but it has to be functional, where some of the unions I have had the closest contact with have some difficult disfunctions to fix. (IATSE-Nabet film tv unions in NY)
I guess my main thought is that even if it involves killing unhelpful subsidies.. the program must be focused on and sold on what we are moving towards, not just what we are trimming out of our path so we can get there.
'Accentuate the Positive' , or in otherwords, have an energised, forward moving message.. not one of reductions and restrictions. Those will be disciplines necessary to 'put us on the moon'.. but the goal is The Moon!
I think the idea of generating a massive growth in the Alt Energy sector itself would be targeting several birds with the same stone. (Now I have to look at the article linked in today's earlier post about solar industry jobs)
However the intent is not to dramatically or artificially raise gas prices, but reduce the incentives to overconsumption.
If businesses are making decisions about whether to invest in a technology that uses more energy, but reduces the payroll, a tax system that makes energy inputs relatively cheaper than labor inputs encourages businesses to use more energy and cut jobs. Has anyone else noticed how delivery trucks, even the ones delivering small quantities of stuff, have gotten larger and larger? or the growth of these massive "logistics centers" near the interstates, which increase transport and energy costs to avoid labor costs?
A revenue-neutral tax shift which reduces "job killing" payroll taxes at the same time it increases environmentally-friendly carbon taxes may be more politically palatable, and the principle of revenue-neutrality could become a populist campaign - support congress cleaning up these tax loopholes, and every dollar the treasury gains will mean a dollar less that employers or workers pay in federal payroll or income taxes.
Health care reform would also be helpful in this regard; employers are currently incentivized to reduce payrolls to avoid employee and retiree health care costs, and may be shifting to energy-intensive technologies to do so.
I looked into it before for the USA and didn't find a definitive answer, but it might be something like 50% of highway and road infrastructure is covered by user taxes and fees, and the rest comes from general revenues and so amounts to a subsidy.
I didn't read Asphalt Nation by Jane Holtz Kay, but if that's the book referred to by fleam, I guess she argues the subsidies are greater than 50%. No doubt it depends on what costs you count. (Highway patrol?)
Still, I would think it would be well worth figuring out more clearly what the subisidies are. Seems like one of the best arguments for raising the gas tax. (End the subsidies.)
My first preference is that no new roads be built. New roads will just encourage the perpetuation of easy motoring which must go the way of the dinosaur before we go the way of the dinosaur. If we have to have roads, make them toll roads with a mechanism to charge tolls based upon the gas mileage or size and power of the vehicle.
Take those billions of dollars it takes to build new roads and divert it to low carbon, renewable energy. Divert truck freight to rail freight and save further billions as this will cut down the maintenance costs for our interstate highway system. Our interstates are a joke as they are always in a state of reconstruction or maintenance. Use tolls to fund whatever maintenance is required.
Raise gas taxes on fuel and make part of that tax a war tax to pay for our little adventures like Iraq. Then let people decide how much they like to pay directly for these adventures.
With deficit spending, there are no repercussions for the taxpayer. If people had to actually pay for our wars and othe wasteful spending, perhaps they would being to wake up and demand a new government.
Driving isn't the problem. Burning fossil fuels is the problem. Tax the actual problem directly. A toll road doesn't get people to drive efficient vehicles or drive the vehicles they have in an efficient manner.
Wait a second! I have a great idea! We should have the tollbooth at the entrance to the gas station. The toll is $10 and you are only allowed to buy 5 gallons of gasoline at a time. Perfect.
Driving is the fundamental problem.
It supports high energy use suburban & exurban forms and can only be made so efficient.
Your solution/approach is fine for the early days of post-Peak Oil, but will stumble when the US is allocating liquid fuels to agriculture and other essential uses.
Alan
In this scenereo, micro-managing the rich's commuting won't be anywhere near sufficient. The rich must be prevented from all forms of "frivolous" energy use: heating and cooling the house, driving around on their own private property in the truck (no toll booths on their own yard), running electrical appliances, motorboats, etc.
That brings me right back to: Driving isn't the problem, fossil-fuel use is the problem. OK, I'll ammend that to: fossil-fuel allocation is the problem. Where do tolls fit in? You suggest that tolls are a way to allocate fuel appropriately. I suggest that tolls are a micro-management strategy that won't work in a "free" society. Either you put tolls on everything (so that there is no longer any freedom) or you allow holes that will leak energy like crazy and cause even worse mis-management of the fuel. Micromanaging everything would consume as much energy as it saves, take a long time to roll out, and it would be even less pollitically possible than serious fossil-fuel taxes.
Why not just tax fossil fule use, cut paroll taxes, and give poor people money. All three of those activities are already in place in the country's laws. The programs just need to be adjusted/expanded. Instead of stiffling people with tolls and other roadblocks, give people the freedom and financiall incentive to innovate and solve their own problems.
High tolls on every limited access highway (say 50 to 75 cents/mile) WILL discourage suburban and exurban living (as will traffic camera enforced 50 mph speed limits).
Combine 75 cents/mile toll for every mile of commuting except the first couple of miles and the last one with said commuting no faster than 50 mph (no new cars required to save energy !) and suburban living will become less attractive. Living close to work and/or Urban Rail in a walkable neighborhood is a better goal than Suburbanites all driving Priuses !
Moving to more fuel efficient cars is NOT the long term solution to Peak Oil. Changing out Urban Form is part of the answer to Peal Oil. Better a Hummer driving 3 miles to work than a Prius driving 18 miles even though they use the same gallons of gas.
I have relatively little concern over average fleet mielage. Peak Oil will take care of that. I am more concerned about the fundamental Urban Form that we live in. The structural oil use inherent in suburbia to live there and service suburbia.
One can live years without once driving on a limited access highway. And that urban lifestyle is better than commuting 18 miles to owrk, regardless of the car driven.
I think you see the looming crisis and take the simple & easy path, ;ets all just drive more fuel efficient cars ! That will save us !
I see a deeper and more fundamental problem. We need to START NOW on a multi-decade change of our Urban Form to a low energy living situations. Tolls on highways are a good first step in that direction. 50 mph speed limits would be a good second step on the "stick" side. Building more Urban Rail on the carrot side.
Best Hopes,
Alan
You have proposed specific roadblocks to coerce a single style of living. I think these roadblocks will stifle innovation while simultaneously being more of a problem than a fix (due to the unintended consequences of people circumventing the roadblocks). What if people living 50 miles from work start flying to work instead of driving just to circumvent your roadblocks?
Are you aware that the afore-mentioned Hummers are among the most dangerous vehicles to pedestrians and bikers? It is exactly because of these types of vehicles that people are reluctant to walk or bicycle around town. Aggressive frames, high bumper heights, huge grills, "brush guards," and extremely poor visibility are the worst nightmare of everyone not in a similar urban assault vehicle.
I think that burning fossil fuels is the problem. I propose, instead, a systemic solution. With the multi-decade timeframe you mention, an ever-increasing "carbon liberation" tax can be effective without causing such a sudden change as to cause national disaster. A carbon tax hits directly at what I perceive to be the problem and pushes individuals to adjust their lifestyle, companies to adjust their products and services, and scientists to redirect their efforts to be most effective.
In never said more efficient cars were THE solution. That's a strawman. Of course it is not THE solution. However, it is part of the solution in several ways. (1) During the phase-out of fossil fuels, more-efficient vehicles will allow people to stretch their miles longer, thus prolonging the existing oil and/or limiting the damage done during the power-down. (2) The world will need to be more energy-efficient after peak oil, because the replacement energy will be in relatively short supply compared to the waste we enjoy today; more efficient vehicles (of whatever type) will let people get more utility out of the limited renewable energy available in the future. (3) A fuel tax (that promotes efficiency) will promote research, development, and deployment of efficient technologies; this will get the country out ahead of the curve when we reach the power-down and beyond, making the technology available when it is most needed.
I bet if you put that to a vote verses "50 year old age limits" (punishable by death, of course) the age limits would be more popular (and more effective at saving fuel).
Peak Oil will not be a smooth curve downward, especially from the POV of the US suburbanite. When the Islamic Republic of Arabia replaces the House of Saud, you will see 50 mph speed limits, gas rationing and much more. It will be far easier for the Hummer owner 3 miles from work to get to work "via other means" (walking ?) than the Suburbanite 18 miles away.
Other realistic supply disruptions are US-Iran, US $ free fall, civil war in Mexico, civil war in Venezula, and Russian reductions in exports (by intention or by incompetence). And just "faster than anticipated" depletion curves. All = 50 mph speed limits IMO.
We are going to experience a disaster, and much of it will be concentrated in Suburbia & Exurbia. I am reminded of Kunstler's quote that "American suburbia is the greatest misallocation of resources in the history of humanity".
Best Hopes for better Urban Forms,
Alan
Here is my tale on such a program. The gent thought he would get 80% off his bill. The temp outside is -15 F and he had windows open to 'air out' the house. Meanwhile had the temp at 86 degrees.
Ran up over $3000 in charges in 3 months.
A property manager I know who has 'some racial issues' has observed that the tenents who are on energy assistance usually have the temprature higher than the people who were not.
Maine's official energy policy is
And because the winter has been warm so far, Gov Baldacci felt free to diss Chavez; a lawyer friend told me some of his firm was writing Chavez for Governor because Chavez did more for poor in Maine than Baldacci. :-) Anyway, we can get all the cheap energy we need because we're licensing the big boilers to burn trash. Numb as a hake. It may be "Democrats" running this state, but for the most part the leadership is fairly reactionary and authoritarian, free-market neoliberals. It's a plantation economy, with the "political class" dividing up the spoils. On the bright side, I have been invited to do a presentation on energy/peak oil and ramifications to Legislative Committee once session gets underway.
cfm in Gray, ME
A few rhetorical throw-away lines about the environment and two real strategies:
1) PR to look "Green" but also all about "No Change In The American Lifestyle At ALL!!!" and,
2) subsidies for big companies and special interest groups who contribute to the party (namely ethanol backers).
BTW: I amy be "numb as a hake" but does that mean "dumb as a rake"?
You might point out that most people on pulic assistance in this country have health issues or are old and require more heat.
Naw. just when he talks about 'the poor' he thinks of them being a different color than him. As a real estate agent, he's based his business selling in a 'mixed' neighborhood. The cases he mention are like the one I mentioned. Ones that smack of abuse, not help.
Published on Wednesday, October 29, 2003 by the Los Angeles Times
Then it would be possible to set up a hit list of subsidies that have to go in the order that they have to go.
My question is "Does anyone have the information handy necessary to set up this list?"
It would provide a useful tool to participate in the American and worldwide political dialogue.
The book is not about Iraq or resource war, but rather about looks comprehensively at environmental, human health, and also "national security" costs of our oil consumption.
According to the Amazon.com blurb, he proposes a strategy for dealing with big oil using "successful lawsuits by state governments against big tobacco as a model."
Hasn't big tobacco succeeded in rolling back some of the decisions in those cases?
Tamminen appears to address the issue of taking on Big Oil with regards to accountability for environmental, human health, and "national security" issues. He is a Special Advisor to Governor Arnold Schwarzenegger of CA.
Any thought on this?
I consider it a truism that all energy sources and methods of transportation in the industrialized world live and die by subsidy and favorable regulation. Nuclear, by itself, gets something over $4 billion a year in the U.S., not including the insurance backstop of the Price-Anderson Act. All renewables together get about $400 million. Wind and solar power are already the fastest growing energy sources out there, but if we yanked all energy subsidies, renewables would explode.
I constantly read and hear people go on about how "we could do X, Y, and Z, if only the government weren't corrupted by big oil money." Or big auto, or big whatever. Ok, so first get the money out of politics. Until that happens, all the citizen lobbying is a waste of time. You want to get rid of oil subsidies? Start a new civil rights movement, only based on money, not race. Level the playing field so that Bill Gates and the guy who mows Bill's lawn have the same political clout. It's about mandatory public financing and spending limits on personal wealth. Right now, top spenders win primaries, and 80% of their cash comes in $500-1000 chunks from millionaires. First things first.
However, the influence of corporatists is so diffuse that even with "clean elections" the corporatists would find ways -- legal and illegal -- to retain control of poltics.
Now that some people are toying with "clean elections" the corporatist polticians -- which includes most folks in Congress and Senate, as well as those in the Legislative branch, and most folks holding state and local offices as well -- will work like maniacs to make sure the movement is nipped in the bud.
Watch speaker Pelosi destroy reform efforts of all kinds as though she was GWB's own Legislative lapdog.
Don't worry. The Democrats will have millions of dollars to spend on PR to persuade the rabble that they are doing all they can for reform even while backpedaling as fast and far as they can from any real reform.
The game is totally rigged by now: nobody who rocks the political boat will survive in American politics.
The Fat Lady has been pretty successful and starting looking at and investing in oil wells in Texas and Louisiana the past 2 years. The tax incentives are impressive. About 70% of the total invested amount can be written off for tax purposes in the first year. The remaining 30% is written off over the next 7 years. Of the oil/gas produced 15% of the revenue is tax free (depleteion). This is a pretty attractive incentive with oil at $60 and gas at $8. But let me tell you the real numbers. A new well in the fields west of Fort Worth, (non Barnett Shale) that were first drilled in the 1950's with no modern completeion techniques can now produce 30 barrels of oil and 150 MCF a day and return all invested capital in 36 months or less. It's a damn good investment but completely trivial in terms of solving any energy problem. If you cut these oil tax benefits, all this little guy stuff will stop until oil is north of $100. A windfall tax on me is stupid because I'll just stop investing.
Plus GWB will veto it while the right wing media rants on about "tax and spend Democrats." Only a fool pisses in the wind.
And do not worry, those small pools of oil & gas will still be there when oil is $175/barrel. High enough to justify extraction even with higher taxes.
Best Hopes,
Alan
I said that. But taxes at $60 shuts me down....
A waste of tax dollars to subsidize oil production.
What we produce today will be gone later, post-PO.
And we can much better use the tax $ to prepare for Peak Oil.
Sorry, no sympathy from me.
As I said, a waste of money.
Best Hopes,
Alan
I'd like to see taxes raised to 70% on high incomes that don't invest in US jobs. This tax cutting for the benefit of stupid rich coupon clippers has really hurt the middle class in this country. I'd like to see depreciation on real capital equipment and investments in real manufacturing and mining again. A New Deal!
They will do even better later, when we are well past Peak-Oil and the US $ has tanked. Perhaps we can only afford to buy 5.5 million b/day. THEN we will need those 30 barrel/day
The chain of people who benefit is not worth the massive tax dollar subsidy. Think of all those helped by building, say, the Los Angeles "Red Line" subway down Wilshire Blvd to UCLA and then past Westwood to Santa Monica.
And unlike the oil well, the Red Line subway will still be producing a 100 years from now.
Alan
The last attempt to punish oil kicked the bucket out from under the feet of independents, not big oil. The majors did just fine by increasing the imports from overseas.
I know you agree that some things in our society need a little subsidy. That's the nature of mass transit, it requires some help. So does drilling wells in a post-peak oil province. And if investors are scared they won't invest-they'll go take their money to a less risky area.
What's Sorely Lacking:
* Nuclear Power
* Syn Fuels - For fertilizer and other petrochemicals
* Raising Oil and Gas Taxes
* Apollo/Manhattan/Whatever Program to Expand Electrified Passenger and Freight Rail
* LNG Terminals
What's In there but shouldn't be:
* Ethanol bio-fuels.
I believe an additional $2 tax on a gallon of gas is one solution. Our current consumption of 140 billion gallons of gas would generate 280 billion dollars of Taxes. The 7.65% payroll tax paid by employees would be removed on the first $ 50,000 of earned income. The 7.65% paid by employers would remain and the self-employed would only pay 7.65% on the first $50,000.
After $50K of earned income there would be an incremental increase in pay-roll taxes up to the current 7.65%. The 7.65% would extend out to the current max cap on earned income and could be extended as is currently being done to insure sufficient funds to meet our currently projected requirements. Each working person would then receive an additional $765 for each $10K of earned income to compensate for the tax on 382 gallons of gas or about 8000 miles of average mileage or 40k miles for $50K or more. There certainly would be an incentive by the conscientious to save on gas. Of course old farts like me with no earned income and who do most of the voting would object, as would the very rich, and all the self serving congress-folks beholding to their lobbyists. It would also get some of the non essential traffic, as in motor-homes, off the road.
Then we should also incrementally increase the tax on over the road and through the air commercial diesel consumption, to provide additional incentives for rail traffic.
How much do you suppose both would reduce our current 21 mbd consumption?
-TfT.
Some folks disagree over some specifics of which subsidies for which producers -- especially "big" versus "the little guys."
Also, there is enthusiasm for taxes oriented to reducing fossil fuel waste -- especially petroleum used for transportation. But quite a bit of disagreement as to how to do that.
Finally,a very important issue seems to be the ability of our political system to respond to PO and its twin GW in any helpful way.
It looks to some of us like the political system will allow "Big Oil" to set policy rather than "we the people." Not too many people have expressed confience that our political system can respond with sensible policy, as far as I can tell. Maybe we at TOD need to address this issue further.
Where do we go from here with this discussion? It is a good one, in my view, and well worth a second post from peakguy, if he is willing.
For instance, Public Citizen has complied a list of tax subsidies included in last year's Energy Bill:
These are just some of the them. There are some things on their list that I don't think are bad "subsidies" like the government funding incentives to clean up coal power plants. But rather than goverment funding something the industry itself should do, the government could regulate and pass on through the system.
It would make sense for the Democrats to push for rolling much of this back to balance the budget and reduce incentives to extract and burn fossil fuels versus other renewable power sources.
I would love if people could post their own ideas here about subsidies to roll back. Be specific.