https://en.wikipedia.org/wiki/Energy_subsidies#United_States
$3.2bn / year for fossil fuels, about half of what went to renewables
$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.