Many views on fuel subsidies

There are a lot of possible angles on fossil fuel subsidies. It's easy to draw a chart like this that makes them seem way out of proportion with renewable fuel subsidies in the U.S.:

But there are also other ways to cut the data, like in proportion to total energy consumption, which give the opposite picture - according to, fossil fuels receive 71% of subsidies while providing 86% of U.S. energy in 2007 (94% if nuclear is excluded). Oil and gas taxes also far outweigh subsidies, so counting only the subsidies provides a distorted picture.

Geoff Styles argues that the "level playing field" argument is misleading, because of the strange economics of oil and other subsidies for renewables. He calculates the gasoline subsidy on a per volume basis and compares with that corn ethanol; ethanol subsidies are higher, unsurprisingly, but this alone isn't a generalizable argument, because corn ethanol subsidies don't have much support from greenies either.

Enough about the U.S., how about developing countries? According to The Economist, they spend an order of magnitude more than developed countries on fuel subsidies ($310 bn vs. $20 bn):

Ultimately, I find The Economist quite sensible on this issue - they applaud the recent G20 resolution to phase out fossil fuel subsidies (although being appropriately skeptical of the vague "medium-term" timeline) because ultimately, subsidized fuel consumption is both bad for energy efficiency and not particularly effective as an investment in poverty alleviation. And if developing countries eliminate their subsidies, the paying field levels, weakening at least one of the arguments against doing the same here in the U.S.

No comments:

Post a Comment