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I received some rather heated emails in response to a post I made on a wind energy forum.   In the post, I gave my response to a (rather lengthy) post calling for government mandated alternative energy goals, subsidies for alternative energy, mandatory replacement projects, and in general complaining that their pet project/business wasn’t being paid for with tax money - or government mandated private spending.

Most were of the “we’re subsidizing Big Oil, why not (insert pet project here) too?” variety, along with a couple of ”Big Oil/utility companies/automotive industry/government are suppressing alternative energy development” type conspiracy types mixed in.

Anyway, it got me to thinking about “big oil subsidies”, so I decided to do a bit of research to see just how much tax money is spent on “big oil subsidies.”

To summarize about 8 hours or research - I can’t find any.  Zip, nadda, zilch.  If anyone can point me to an example of a direct subsidy to the oil industry, I would appreciate it.

Note: I’ve read arguments where the federal and state gas taxes are a subsidy to big oil - because without state and federal highways, the oil industry couldn’t sell as much oil.  In a word, bullshit.  If all cars were running on hydrogen fuel cells (with the hydrogen being generated by solar power) we’d still need highways - where would the money come from without gas taxes?  I won’t belabor the point - think about it.

Some claim that “big oil gets special tax breaks” so I also looked at Exxon’s (the biggest of “big oil”) 2007 annual earnings statement.  Go to page 38 to see these numbers.

While it’s true that Exxon made over $70 billion in 2007, what’s often not reported is that they paid almost $30 billion ($29.864 billion to be precise) in taxes on that $70 billion of income.   That’s a 42% tax rate! 

Chevron made $32 billion in 2007, and they paid $18.6 billion in taxes.  That’s a 58% tax rate!

For comparison, GE made $26.6 billion in 2007, and paid $4.1 billion in taxes. That’s a 15% tax rate. 

IBM made $14.4 billion in 2007, and paid $4 billion in taxes.  That’s a 27% tax rate.

Google made $5.6 billion in 2007, and they paid $1.4 billion in taxes.  That’s a 25% tax rate.

Would someone please explain how “big oil” is getting a tax break in comparison with other “big” companies/industries?  Anyone? 

As to the argument that the oil companies are making too much money while we’re suffering at the pump and at home with huge heating bills - you need to remember that the oil companies have purchased rights to the oil they’re selling at market prices.  It’s the same as a farmer making triple the profit of the previous year because corn or soybeans have tripled in value.  Crap, now I’m gonna rant….

You want to talk about subsidies, look out your window the next time you’re flying across the country.  See those amber waves of grain?  Did you know that those farmers received over $5 billion in DIRECT payments in 2007?

I emphasised DIRECT because that’s tax dollars straight to the pockets of farmers as subsidies.  That’s not counting the $1.8 billion that we (via the federal government) are paying farmers NOT to farm almost 37 million acres under the CRP program in 2008 - despite record corn, soybean, and wheat prices. 

Meanwhile, despite the high cost of fossil fuel, alternative sources of energy still aren’t competitive without tax dollars.  There are thousands of websites dedicated to showing you how to collect subsidies for solar power, and over 80% of the wind energy generated is MANDATED to be purchased.  In addition, the federal government alone (not counting state and local subsidies) spent $745 million in DIRECT subsidies for wind power.

I want someone, anyone, to show me how we do the same with “big oil”.  Please. 

Is the government directly paying oil companies NOT to produce oil - like they do with farmers?  Is the government directly making  payments to oil companies to support the price of their product - despite record commodity prices - like they do with farmers?  Is the government directly paying oil companies for every barrel of oil they produce - like they do with wind and solar power?

If so, I’m sorry, I can’t find it.   Show me.

All that being said, I don’t think we should pay subsidies to anyone, for anything.  To those who have emailed me saying “nuclear/hydro/solar/hydrogen is subsidized, why shouldn’t (insert pet project) be subsided too?” I say tough shit sherlock.

I don’t want tax dollars to be spent on ANY pet projects.  No tax breaks for anyone, in any industry.  Everyone should pay the same tax rate - you make more, you pay more.   Any questions?

If no subsidies means that wind and solar (or biomass or hydrogen or whatever your pet project is) isn’t competitive with traditional energy sources at the current price levels, so be it.  Maybe it will be competitive when oil is $200/barrel, or $400/barrel. 

I don’t have time left to get into the whole ethanol issue tonight, but suffice it to say that I don’t think ethanol subsidies (or special tax breaks!) are a good idea either.

Here’s the really weird part - I fully support alternative energy sources.  Until about a year ago, I lived in a marginal wind resource area in MO, and I REALLY tried to make the numbers work so I could install a wind turbine on my property.  I even seriously looked into buying some land in Northwest MO where I could lease it to utility scale operations.  Because of my job,  I now live in Knoxville TN, and the wind resource here isn’t even close to making the numbers work.

If I had a chunk of change socked away, I’d be buying land in good wind resource areas like Texas and western Oklahoma and North Dakota right now, because I think wind will eventually be competitive with traditional energy sources, and I’d like a piece of that economy.  But I’m still paying off my house in Knoxville, and I won’t speculate with my money until I’m personally secure financially.

One email response I received to the post (remember the post above that started all of this?) suggested that this discussion didn’t belong on the message board, because “this is a small wind discussion list, not a forum on government policies.” 

If that’s the case, why are messages supporting wind subsidies (even urging members to write their congressmen about particular bills) deemed perfectly fine, but any message opposing that socialist point of view deemed unfit?

I’m been a member of the AWEA Wind Home forum on Yahoo for a couple of years, and I’ve learned a lot.  I guess I’ll go back to lurking quietly since my preferred methods differ from those expressed by some alternative energy nazis.

gk