Fossil Fuel Welfare State
To the Editor:
Lately much has been written about the climate crisis in the editorial page of the Caledonian Record. There are those who dispute the fact that the climate crisis is real. Some believe it is not severe enough to take action. Still others believe that action is necessary, just not by the government because they believe in limited government and free market solutions. Renewable energy particularly seems to ignite the ire of these folks. Yet, when it comes to fossil fuels, I noticed that their beliefs in limited government and free market solutions go up in smoke.
To be fair, some of those who oppose government subsidies for green energy may be unaware of the amount of subsidy that the fossil fuel industry receives from the government. The International Monetary Fund estimated that the fossil fuel industry received $5.2 trillion worth of subsidies in 2017. This was approximately 6.5% of the world’s GDP. Obviously some will dispute this figure, but they cannot dispute that governments, including the United States, subsidize fossil fuels. In fact, Forbes reported that fossil fuels account for 85% of all global subsidies.
One argument against subsidizing renewable energy is that it artificially lowers the cost of production. However, the US government does the exact same thing for fossil fuels. The Interior Department allows companies to avoid paying market-based royalty rates for the oil and gas they extract from public lands because of its antiquated pricing program. This results in an annual revenue loss for the US treasury totally tens of millions of dollars.