New $Billion Cash Hand Out To Fossil Fuel Companies Under ‘Green’ Economic Stimulus Plans

Shell in Curacao, Netherlands - Humane Care Fondation, Curacao[Updated: Monday Sept 28/09

Last Friday at the G20 countries agreed to phase out subsidies for oil and other carbon dioxide-spewing fossil fuels in the “medium term” as part of efforts to combat global warming. This article documents NEW taxpayer subsidies to some of the world’s richest corporations]


By Stephen Leahy

UXBRIDGE, Canada, May 29 2009 (IPS)

Despite the economic slow down, growing numbers of world leaders are calling for urgent action on climate change while many governments used their economic stimulus packages to increase subsidies to the fossil fuel industry.

Consider Europe, with the strongest public commitment to reduce carbon emissions that are causing climate change.

In the past five years, 8 billion U.S. dollars of public money went to Europe’s fossil fuel companies mainly to the natural gas sector. And in May the European Parliament approved an additional 3.35 billion dollars in subsides as part of Europe’s 225 billion dollars economic recovery plan, according to a new research report by Friends of the Earth Europe.

“We Europeans are supposedly leading the world on the path to a new green economy but we’re putting billions of euros into fossil fuel sector that’s taking us in the opposite direction,” Darek Urbaniak of Friends of the Earth Europe.

gulf spill nears coast Apr 30 2010 - ESA

Its complete hypocrisy,” Urbaniak told IPS from Brussels.

Perhaps recognising this fact, global business leaders at the World Business Summit on Climate Change that concluded May 26 called on governments to “strive to end the current perverse subsidies that favour high-emissions transport and energy”.
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‘Bailout’ for Oil Companies $20-40 Billion (and maybe more) every year


By Stephen Leahy

UXBRIDGE, Canada, Sep 30 ’08 (IPS)

Why do U.S. oil companies — some of the most profitable corporations on the planet — receive 20 to 40 billion dollars a year in subsidies from the U.S. government?

And, in a time of skyrocketing oil prices and profits, why did the George W. Bush administration in 2005 authorise an additional 32.9 billion dollars in new subsidies over a five-year period?

“Those are very good questions,” said Doug Koplow of Earth Track, Inc., an independent energy information research organisation in Boston, Massachusetts.

“I don’t have a good answer other than to say we’ve been subsidising American oil companies since 1918,” Koplow told IPS.

Koplow’s 2007 report to the Organisation for Economic Cooperation and Development puts the annual U.S. subsidy at an average of 39 billion dollars a year, when the costs of guarding oil lanes in the Persian/Arab Gulf, and the Alaska Pipeline are included. This does not include any costs from the Iraq war.

Official U.S. government statistics from the Energy Information Administration (EIA) offer a different picture, stating that the oil and gas industry only received 2.15 billion dollars in 2007.

“The EIA has a very narrow definition of what constitutes a subsidy,” said Koplow.econ-v-envir-franke1

Like many industrialised countries, the U.S. subsidises oil production, not oil consumption. Consumption subsidies reduce the cost of buying fuel to the public while production subsidies reduce the cost of finding and producing oil for oil companies.

Experts agree that both forms of subsidies encourage consumption and thus increase the price of oil.

Estimating U.S. oil and gas subsidies is very challenging. Subsidies rarely involve cash payments. Instead scores of U.S. government agencies and departments create hundreds of programmes to support the U.S. energy sector. And there is no requirement for the federal government to keep track of all this.

Among the most common subsidies are construction bonds and research-and-development programmes at low interest rates or tax-free, assuming the legal risks of exploration and development in a company’s stead and income tax breaks. Despite record high prices at the pump, the federal sales tax on petroleum products is lower than average sales tax rates for other goods. And on it goes.

Originally these production subsidies were intended to help the nascent industry meet a growing nation’s energy needs. Despite record-high prices, that rationale remains firmly in place. In 2007, U.S. oil giant Exxon corporation made history with 40.7 billion dollars in profits, the most any U.S. company has ever achieved in a single year.

And subsidy programmes from 1918 are still in place.

“I’m not aware of any oil and gas subsidy that has ever been phased out,” said Koplow, the leading expert on U.S. energy subsidies.

Energy subsidies are often simply hidden from public scrutiny. It’s only recently been revealed that 40 companies granted leases between 1996 and 2000 for drilling in the Gulf of Mexico do not have to pay royalties for the publicly-owned resource. This is worth nearly a billion dollars a year in lost revenue to the federal government, according to a 2008 study by Friends of the Earth (FOE), a U.S. environmental NGO, and may ultimately total 50 billion dollars.

That study also revealed that the Energy Policy Act of 2005 would generate an additional 32.9 billion dollars in new subsidies in the form of tax breaks, reduced royalty payments, and accounting gimmicks over a five-year period.

“The report only includes the explicit subsidies we could find,” said Erich Pica, an energy analyst at FOE.

For complete article see US: Great Place for the Oil Business

It gets better — June 09: New Story: New Way to Give Money to Oil Companies – Economic Stimulus Packages