Subsidizing the Most Profitable Industry on Earth

I stole the title for this piece from Bill McKibben on Bill Moyers web site.

Now Rick Santorum has provided us with wonderful environmental insights:

“There is no such thing as global warming,” he told Glenn Beck on Fox News in June 2011.

“It’s just an excuse for more government control of your life and I’ve never been for any scheme or even accepted the junk science behind the whole narrative,” he told Rush Limbaugh

[Climate change is] an absolute travesty of scientific research that was motivated by those who, in my opinion, saw this as an opportunity to create a panic and a crisis for government to be able to step in and even more greatly control your life. … I for one never bought the hoax. I for one understand just from science that there are one hundred factors that influence the climate. To suggest that one minor factor of which man’s contribution is a minor factor in the minor factor is the determining ingredient in the sauce that affects the entire global warming and cooling is just absurd on its face. And yet we have politicians running to the ramparts — unfortunately politicians who happen to be running for the Republican nomination for president — who bought into man-made global warming and bought into cap-and-trade.

[T]he left is always looking for a way to control you. They’re always trying to make you feel guilty, so you’ll give them power so they can lord it over you. They do it on the environment all the time. …

Environmentalism is also, apparently, a religion — and not the good kind. Opposition to the Keystone XL pipeline is just “pandering to radical environmentalists who don’t want energy production, who don’t want us to burn more carbon,” he told Iowans in December. “It has to do with an ideology, a religion of its own that’s being pushed on the American public.”

“All subsidies to energy should be eliminated,” Santorum said on Feb. 6, which might sound good to libertarians as well as some clean-energy advocates who’d like to see a level playing field without huge advantages for fossil fuels.

Now the last one is interesting. Last week Senator Robert Menendex proposed the “Repeal Big Oil tax Subsidies Act,” which would include billions of dollars enjoyed by the top oil companies. It failed. President Obama is also calling for an end to oil subsidies in his early campaign, but he is also drilling everywhere. Bernie Sanders will introduce a more comprehensive bill that tackles all fossil fuels; it has not chance either.

So what is at stake here? The energy industry is getting between $10 and $40 billion annually while they are making historic profits. You’d think the Occupy movement and the Tea Party would get on this.

The problem is we don’t like taking about subsidies, we tend to nod off during these discussions. Subsidies are used to encourage something, that is the idea of them, yet why do we want to continue fossil fuel subsidies rather than renewable sources? One reason is that it gives the 1% money from the 99%, or business as usual.

Bill McKibben gives 5 reasons on subsidies I find interesting:

1. Don’t subsidize those who already have plenty of cash on hand. No one would propose a government program of low-interest loans to send the richest kids in the country to college. (It’s true that schools may let them in more easily on the theory that their dads will build gymnasiums, but that’s a different story.) We assume that the wealthy will pay full freight.  Similarly, we should assume that the fossil-fuel business, the most profitable industry on Earth, should pay its way, too. What possible reason is there for giving Exxon the odd billion in extra breaks? Year after year the company sets record for money-making — last year it managed to rake in a mere $41 billion in profit, just failing to break its own 2008 all-time mark of $45 billion.

2. Don’t subsidize people forever. If students need government loans to help them get bachelor’s degrees, that’s sound policy. But if they want loans to get their 11th BA, they should pay themselves. We learned how to burn coal 300 years ago.  A subsidized fossil-fuel industry is the equivalent of a 19-year-old repeating third grade yet again.

3. Sometimes you’ll subsidize something for a sensible reason and it won’t work out. The government gave some of our money to a solar power company called Solyndra.  Though it was small potatoes compared to what we hand over to the fossil-fuel industry, it still stung when they lost it. But since we’re in the process of figuring out how to perfect solar power and drive down its cost, it makes sense to subsidize it.  Think of it as the equivalent of giving a high-school senior a scholarship to go to college. Most of the time that works out. But since I live in a college town, I can tell you that 20% of kids spend four years drinking: they’re human Solyndras. It’s not exactly a satisfying thing to see happen, but we don’t shut down the college as a result.

4. Don’t subsidize something you want less of. At this point, the greatest human challenge is to get off of fossil fuels. If we don’t do it soon, the climatologists tell us, our prospects as a civilization are grim indeed.  So lending a significant helping hand to companies intent on driving us towards disaster is perverse. It’s like giving a fellowship to a graduate student who wants to pursue a thesis on “Strategies for Stimulating Donut Consumption Among Diabetics.”

5. Don’t give subsidies to people who have given you cash. Most of the men and women who vote in Congress each year to continue subsidies have taken campaign donations from big energy companies. In essence, they’ve been given small gifts by outfits to whom they then return large presents, using our money, not theirs. It’s a good strategy, if you’re an energy company — or maybe even a congressional representative eager to fund a reelection campaign.  Oil Change International estimates that fossil-fuel companies get $59 back for every dollar they spend on donations and lobbying, a return on investment that makes Bernie Madoff look shabby. It’s no different from sending a college financial aid officer a hundred-dollar bill in the expectation that he’ll give your daughter a scholarship worth tens of thousands of dollars. Bribery is what it is.  And there’s no chance it will yield the best energy policy or the best student body.

But here is my take on the issue. We will continue our absurd subsidies for fossil fuel industries until other countries start causing more problems than we do. In other words, before too long China will begin to make us look like pikers when it comes to a huge carbon footprint. That will do it, then we can point fingers at those evil folk for messing everything up and we can condemn them. The problem for us is that they know this and are investing heavily, subsidizing, alternative fossil fuel industries that will leave us behind.

Meanwhile we bicker and borrow and import.