What kind of/magnitude of subsidies does oil and gas enjoy?
$3.2bn / year for fossil fuels, about half of what went to renewables
https://www.cbo.gov/publication/43993#section0
In particular, the $3.2bn/year is a tax write-off sort of 'subsidy', not a grant sort of subsidy, which I believe solar has received recently (section 1603).
Without doing more digging, I can't tell whether what those oil and gas write-offs are for. Exploration? Research?
The Wikipedia article cites another article that has the breakdown (over a period of years):
1. Foreign tax credit ($15.3 billion)
2. Credit for production of non-conventional fuels ($14.1 billion)
3. Oil and Gas exploration and development expensing ($7.1 billion)
Similarly, the study counts funds used to support carbon capture and storage programs1 as a fossil fuel subsidy, despite their potential to reduce the emissions associated with burning coal.
If that's counted against oil and gas 'subsidies', that doesn't seem right.
Foreign Tax Credit ($15,300) - IRC Section 901. This is a generally applicable credit that is intended to enable taxpayers earning income or profits abroad to avoid double taxation.
Wait - so a good 40% of the total is actually a non-subsidy that is the consequence of the US having a tax treaty with a foreign country? Not being able to double-tax oil and gas companies is considered a 'subsidy'? The US has a tax treaty with just about every civilized country in the world that has provisions to avoid double-taxation because to do otherwise would be pathological. Counting that is 40% of the 'subsidy'?
If Exxon has to pay a royalty of $1/barrel to Nigeria for access to their oil fields, rather than account for the royalty 'properly', they structure the deal to pay a $1/barrel tax to Nigeria. Then they can claim that they paid taxes instead of royalties and get the offset from the foreign tax credit.
http://taxfoundation.org/blog/treating-royalties-governments...
It has a different effect on the entity being taxed. A tax write-off increases the rewards for an already profitable proposition, but tax write-off don't normally incentivise someone to do something that is a loss (unless the write-off is transferrable to other profits, but that's a separate question). Subsidies, however, can make a loss into a profit, incentivising people to do it. That's exactly the point of the original solar subsidies.
Now that the solar industry appears to be relatively well bootstrapped, it's not unreasonable to remove the straight subsidies. I think solar still enjoys many if not all of the same tax write-offs as other energy sources.
When that $x in taxes is paying for the infrastructure used, then the gas producers/users are actually getting $y+x from the government. The $x, being a service charge, cancels out, and the only thing left is $y. $y is the difference between the world we live in vs. a world where the government paid no special attention to the industry. It's the most important number.
But $x is not a service charge. It bares no relation to the amount of anything used. They can't opt out of the road part of the service charge and build their own roads. The tax is not hypothecated. Whatever the rhetoric of politicians, it doesn't bare any resemblance to a service charge.
That's exactly what I was arguing, yes. That $y is important and $x is irrelevant.
> They can't opt out of the road part of the service charge and build their own roads.
That has no real bearing on the economics of the situation. Paying $x to the government for roads and paying $x to a private contractor for roads work the same way. That's why the net subsidy is $y.
If there is a tax that's applied specifically to gas companies that isn't directly paying for infrastructure they use, then that tax can be subtracted from the subsidies. But the gas tax doesn't fit that bill; if anything it undercharges.
The gas tax is only one of many taxes that these companies pay - you have to sum all their subsidies and subtract all their taxes. That's the point. If you're not doing that, comparisons with subsidies to other industries are going to meaningless.
How can it be a fair representation of their situation to only say they receive $1bn/yr in subsidy?
You're right to say that it's not fair to only list the $1bn. It should be put in context of the $100bn of normal taxes. But reducing it to "$99bn" is not a fair representation either. It doesn't tell you if they otherwise would have paid 100 or 200.
Fossil fuels are causing incredible economic damage - but in a way that isn't captured by traditional economic models. It's going to have huge costs to future generations - if we taxed it, not only would we get off fossil fuels faster, we might then have extra cash around to soften the blow when it inevitably comes.
But the OP wants to know of the coal subsidies even Elon musk calls so huge that solar subsidies are "cents on the dollar".
How about providing actual subsidies for coal, also the difference between taxes for coal and solar. Of course they should be compared per Kwhr (which in my opinion Elon musk didn't do).
http://www.greenpeace.org/usa/news/new-report-details-how-fe...
Has a group other than greenpeace done the accounting on the 'cost' to the nation?
Are you not intrigued by the enormous error-bars on that figure ($22-$237)? Maybe this is a complete wank?
How does the nation benefit from having inexpensive coal power available? What's the value per ton generated?
Also, error bars generally make me more confident in a number. Coal can be burned in old or new plants with different levels of scrubbing for example.
I'd also point out that this conversation started with you "just asking questions" about subsidies, and you've attacked every answer you've received.
In brief, #1 means: "I don't like it, and things I don't like should be taxed more, and until they taxed more, I will call this gift of non-taxation 'a subsidy'"
As for #2, the negative-externality objectionators make a very fair point!
As a reference point the UK has about the lowest consumer energy taxes in the EU, and the highest consumer prices.
No it doesn't, not even close...
http://ec.europa.eu/eurostat/statistics-explained/index.php/...
http://ec.europa.eu/eurostat/statistics-explained/index.php/...
Unless I misunderstand what you mean by consumer prices?
Unfortunately it's too late to edit my comment for clarification.
It seems very misleading to say "taxpayer support" for a tax preference, especially when tax revenue for north sea oil is going to be well over that 6bn.
This is part of why Norway can make around £400 Billion more money than the UK from a similar amount of oil, extracted from basically the same place:
http://www.resourcegovernance.org/blog/did-uk-miss-out-%C2%A...
See also "Hollywood Accounting".
The article itself says the rest is partly because of lower taxes on the oil industry, but mostly because
1. The peaks of oil production in the UK's and Norway's fields were at different times when the market price of oil was different.
2. Norway has fewer fields but more reserves which made extraction more efficient.
It's also worth pointing out that the £6bn/year figure in the Independent article seems to be a bit of a wank too.
But we also are pretty much number one when it comes to being environmental friendly nation and no swede would deny climate change.
For the record, gas prices in Germany are similar to Sweden, maybe a couple of cents lower (currently around 1.35€ per litre—around 2.35 times the US average)
A sales tax is a tax on the consumer of the product, not the producer of the product. The producer is the one getting the subsidies.