The truth about government energy subsidies
The truth, unlike the common wisdom or at least the Democrat narrative, is that far and away the bulk of the $37 billion in government energy subsidies goes to “renewable” energy sources, not evil oil and gas corporations. The $37 billion is $19 billion more than was spent in 2007 in government subsidies, a 50% increase in spending.
It was a feature of the Obama administration’s recent narrative that government was subsidizing rich oil and gas companies and that should stop. Never mentioned, of course, were where other subsidies were going. For example:
Of that $19 billion increase, additional subsidies for renewables amounted to more than $9 billion, a 186 percent increase. Subsidies for renewables now total $14.7 billion.
Wind power was the biggest recipient of federal energy dollars. Last year, this sector took in almost $5 billion in subsidies – a more-than-tenfold increase from 2007. Meanwhile, solar energy subsidies increased six times over the same period, from $179 million to $1.13 billion. And biofuels (think ethanol) saw a jump from $4 billion to $6.6 billion.
Any idea what we’ve bought for that money?
Take wind power. Today, it represents a paltry 1.2 percent of total domestic energy production. Yes, that’s up from 0.5 percent in 2007. But only after spending billions in taxpayer resources.
What’s more, wind power is expected to fall well short of some key growth goals set by the Obama administration. The Department of Energy has officially declared it wants 20 percent of the energy market comprised of wind by 2030.
Currently, there are about 40,000 wind megawatts online in America. Meeting the Department’s target on time would require creating 13,000 new megawatts of wind energy every year — twice the growth notched by the industry last year, which was an all-time high. And warnings of a major contraction ahead have already been sounded by the American Wind Energy Association.
A classic example of government trying to pick winners and losers, or, in more succinct terms distorting the market. Instead of letting the market decide what is viable, government hopes to force it. And, predictably, the results are not good.
As for the evil oil and gas companies. Well the Democrats try to sell them as the ones sucking down all the subsidy dollars and not paying their “fair share”. The truth, of course, is almost the opposite:
Plenty of politicians, mostly Democrats, have advertised that eradicating federal dollars for oil and natural gas as a budget panacea.
The EIA [Energy Information Administration – part of DOE] study shows that these critics have fingered the wrong energies. Researchers report that last year, oil, natural gas, and coal received a total of 11 percent of all federal energy subsidies. And most of those oil and natural gas “subsidies” are typical deductions, deferrals, and credits that all businesses take.
In fact, as a share of net income, the oil and gas industry paid 41.1 percent in federal income taxes last year, compared to 26.5 percent for all non-oil and gas S&P 500 manufacturing companies. Meanwhile, oil and gas account for 78 percent of domestic energy production and are responsible for more than 9.2 million American jobs.
The myths, however, continue to persist. On sector promises jobs and a new source of energy and is essentially a subsidy sink hole. The other accounts for over 9 million jobs and actually provides the vast bulk of energy the country uses. Guess which one is constantly under fire from the left?