The International Monetary Fund (IMF) put it this way: “Fossil fuel companies were subsidized around the world to the tune of $ 5.9 trillion in 2020. That’s $ 11 million per minute! “(Https://www.imf.org/en/Publications/ WP / Issues / 2021/09/23 / Still-Not-Getting-Energy-Prices-Right-A-Global-and-Country-Update-of- Fossil-Fuel-Subsidies-466004)
Ramesh Bhatt’s opinion piece for The Colorado Sun is a revelation. It opens with the IMF statement above. He goes on to say that 71% of Colorado’s oil wells produce so little product that they are exempt from tax on severance pay. Wells are left on the books, continue to emit methane, and cleaning and plugging those wells will likely end up becoming a financial burden on the taxpayer, not the businesses that operate and profit from the wells. (https://coloradosun.com/2021/11/26/oil-wells-cleanup-responsibility-opinion/?mc_cid=20b5a41385&mc_eid=58018e49da)
Our Colorado legislature is supposed to address the issue with Senate Bill 19-181 (https://leg.colorado.gov/bills/sb19-181) but the implementation of the bill is difficult. The rules are so complex that they guarantee that very few operators will pay anything because of the loopholes. Bond requirements to ensure operators clean up their own mess are almost non-existent. “Overall, the Oil and Conservation Commission staff rules are convoluted, inadequate, ill-defined, and do not protect public health and the interests of taxpayers. They certainly do not meet the requirements of SB19-181.
We’ve written before about the welfare granted to oil and gas companies in the form of leases well below market value, leases at rates barely changed over the past 100 years.
Right now, many of us are shocked by the price of gasoline. But how many of us remember that in 2020 gas prices hit historic lows? “The drop in fossil fuel prices and consumption caused by the Covid-19 pandemic this year is expected to reduce global fossil fuel consumption subsidies to $ 180 billion in 2020, which would be the lowest annual figure since that the IEA started tracking data in 2007. ”(IEA (2020), Low fuel prices offer historic opportunity to phase out fossil fuel consumption subsidies, IEA, Paris https: // www. iea.org/articles/low-fuel-prices-provide-a-historic -possibility of phasing out fossil fuel consumption subsidies) Countries like the United States have artificially low fossil fuel prices due to consumer subsidies, “encouraging unnecessary consumption among the wealthier segments of the population and increasing emissions across economies as a whole.”
The same IMF report is referenced in an E360 Digest article published by Yale in October 2021, the United States, Russia, India, and Japan – account for two-thirds of global subsidies. (Https://e360.yale.edu/digest/fossil-fuels-received-5-9-trillion-in-subsidies-in-2020-report-finds) A Brookings Institute report from July 2021 says in which on the preservation of production subsidies “many lobby groups are devoting time and resources to promoting policies that favor the production of fossil fuels on behalf of the big oil and gas companies. This is particularly common in Canada, Europe and the United States. Likewise, wealthy fossil fuel producers will often support political candidates who defend their interests, entrenching themselves further in the system. (Https://www.brookings.edu/research/reforming-global-fossil-fuel-subsidies-how-the -united-states-can-restart-international-cooperation /) Brookings further writes that in United, oil and gas tax subsidies from 2019 to 2023 are expected to reduce federal revenues by about $ 11.5 billion. These numbers come from a 2019 fact sheet from the Environmental and Energy Study Institute. (https://www.eesi.org/papers/view/fact-sheet-fossil-fuel-subsidies-a-closer-look-at-tax-breaks-and-societal-costs)
Recently, the US Department of the Interior released a report regarding the leasing of oil and gas. (https://www.doi.gov/pressreleases/interior-department-report-finds-significant-shortcomings-oil-and-gas-leasing-programs) The widely divergent views of the far right and far left criticize the proposed changes, between wanting to maintain the well-being of companies with the status quo, or insisting on an immediate transition from all or nothing towards sustainability. This quote concisely articulates the positive aspects of the administration’s efforts: “” This report makes incredibly compelling arguments both economically and environmentally for bringing the federal oil and gas leasing program into the 21st century. century, ”said Collin O’Mara, president and CEO of the National Wildlife Federation. “Implementing these overdue reforms will ensure that taxpayers, communities and wildlife are no longer harmed by below-market rates, insufficient protections and poor planning. ”(Https://apnews.com/article/business-environment-and-nature-ee63e75fb0b4005aa3341b4dfa2a8aba)
The AP article also points out that despite politically motivated accusations, the price of gas is not the result of the actions of the Biden administration, but that “experts say that economic factors, including a slow rebound of the pandemic, curb US production of oil and gas. . As the economy recovered, production fell behind and prices hit a seven-year high in October. “
A quick search of historical gasoline prices gave us some interesting links. That from GasBuddy shows that by mid-2020 the price of gas had fallen to around $ 1.70, a price that had not been this low in 5 years, since January 2016 when POTUS 44 was administered. By the inauguration of POTUS 46 in January 2021, he had returned to $ 2.38, before he officially became president. That’s an increase of over 30% in the 6 months before Biden took office. (https://www.gasbuddy.com/charts) Another graph showing historical gas prices adjusted for inflation can be found on this site: https://www.usinflationcalculator.com/gasoline-prices-adjusted- for-inflation /
As a nation, we have been paying artificially low prices for our gasoline habit for many years. We have argued in the past for a carbon dividend, which would impose costs on fossil fuel producers, who currently receive exorbitant taxpayer-funded subsidies for their highly profitable and excessively polluting industries. This dividend would be distributed to US taxpayers, who can use the dividend at the pump, or as they see fit.
It is time for us to stop the flow of funds to the fossil fuel industry and direct the funds to subsidize R&D in sustainable and new technologies that will benefit all American citizens.