Saturday, March 7, 2015

Protecting Oil Companies’ Rights is Not a Government Subsidy

In commenting on an article "Oil divestment is investing in climate change solutions" (which I addressed in The “Divest-Invest Philanthropy” Movement and its Statist Roots), the correspondent “gyre” had this to say:

I don't believe there has ever been nor will be an energy source as heavily subsidized by public money as oil was and is still subsidized.

The charge that the oil industry is subsidized is nothing new. What’s different about gyre’s charge is the nature of the “subsidy” he asserts:

Think of energy and national security for one moment. How many trillions of dollars have been spent on oil acquisition (cheap federal land grants and transportation routes) and protection. Is there any doubt that the deployment of our troops throughout the world and all those "boots on the ground" in the Middle East are not related to the acquisition of oil and the control of oil refineries? Even the Navy has been involved with the protection of shipping lanes for oil tankers and the deployment of ships to the Arctic region in order to protect our interest in the oil locked in the seabeds under the Arctic ocean. Both Russia and China are very interested in the oil above the Arctic Circle. This may lead to future conflicts with them. It's a no win situation for all parties and it's becoming more costly to maintain our oil dependence.

I left these comments:

Where does the “public money” come from? Taxes; a large amount of which is paid out of profits, wages, dividends, and salaries earned by the fossil fuel industry. If the oil industry is “heavily subsidized,” then so is every other self-supporting, tax-paying industry. In fact, given that most of our prosperity— and thus “public money”—comes from prosperity powered by fossil fuels (which you yourself readily acknowledge), the notion that oil is the most subsidized energy source is patently absurd.

A subsidy is a direct payout from taxpayers to recipients, not an indirect benefit producers’ own taxes fund, such as a military that protects the rights of American energy producers and America’s national security interests. Some companies do get actual subsidies; e.g., solar, wind, and ethanol companies. I say let’s end all corporate welfare, lower and flatten corporate income taxes in exchange for elimination of all special tax provisions, and create a level market [tax] playing field for all energy technologies and producers. Then we’ll see who really needs subsidies to survive.

It’s not just the oil industry that’s protected by our military. It takes consumers to sustain an industry. By protecting oil company’s rights, the government protects every consumer of their products; the products that power your car, heat and cool your home, provide illumination at night, produce and cook your food, etc., etc., etc.

Notice also the selectivity. Those shipping lanes carry all manner of commerce. Why single out only oil companies and their consumers as recipients of this alleged “subsidy”. Trillions of dollars of merchandise produced by myriad industries and passing through those shipping lanes are also protected by our Navy.

Gyre’s premise is circular: The government doing its job is a subsidy. To whom? To the very people whose taxes fund the subsidy, without which there is no subsidy. Gyre’s selectivity is nothing more than irrational bias against oil companies that falls apart on examination.

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