Now here’s an idea at Washington Monthly I can get behind, ending energy subsidies:
Energy subsidies are the sordid legacy of more than sixty years of politics as usual in Washington, and they cost us somewhere around $20 billion a year. To put that sum in perspective, that’s more than the State Department’s entire budget. It’s also enough to send half a million Americans to college each year with all expenses paid. Energy subsidies undermine the working of the free market, and they make rational approaches to long-term energy challenges and climate change impossible. They are not an aid to energy independence or environmental stewardship. They are an impediment.
Energy subsidies take many forms. Some of them are direct outlays of taxpayer dollars, like payments to corn producers for ethanol. Most are in the form of tax benefits, such as the deduction for “intangible drilling costs†(labor, repairs, hauling, you name it) in oil exploration—a notoriously abused provision of the tax code. The sheer number of subsidies is part of what makes them so hard to track.
but then the author goes off the rails in the mistaken belief that ending energy subsidies will help solar, wind, and other so-called “green” energy strategies. That’s mistaken. The subsidy for solar energy is 96 cents per kilowatt-hour compared to one cent per kilowatt-hour for fossil fuels.
However, let the competing strategies compete on their own merits. Stop subsidizing energy production. If you must subsidize something energy-related subsidize energy transmission. The incentives for the industry to improve the transmission grid on its own are terribly low.
The green types fall for the notion that an unsubsidized price of traditional fuels will rise to become competitive with green sources without understanding the subsidy math you cite. Similarly, now making the rounds are reports of “doubling of lithium battery efficiency” without understanding how small numbers work, leaving batteries still woefully inefficient. It’s concept over numeracy. I recently read an article about projects underway at Purdue aimed at increasing battery efficiency. It’s all good stuff but it is also basically blocking and tackling engineering. No magic bullets; it will take considerable time.
As for R&D or exploration type tax credits, that’s a convenient whipping boy, but a narrow view. I’m not a Deloitte accountant, but as a business owner I can tell you expenditures are considered holistically. The people, training, false starts, ancillary operating expenses leading up to full commercialization etc etc all count. It’s not just the contraption an accountant labels a capital asset.
There is no Moore’s Law for batteries. Period. The improvements in batteries they’re looking for may simply be impossible.
I tend to favor storing more of the energy from solar as heat (something we know how to do already) but that’s a local solution. It won’t put solar into the bigs.
That figure doesn’t include the military subsidy, meaning we have an army, air force and navy deployed to ensure oil keeps flowing around the planet.
Even if we pumped no oil they’d be deployed to ensure the free flow of goods. Our imports have to get here somehow.
BTW, those imports include rare earth elements needed to produce solar panels or the panels themselves since most are produced in the PRC.
@Ben, how would you calculate this subsidy? The U.S. invaded Afghanistan which doesn’t have oil. U.S. policy expanded to include threats posed by Pakistan, which has minor amounts of oil. We invaded Iraq which is a significant source of oil, but the opposition party complaint is that it redirected troops that would have served in Afghanistan and abandoned it. Meanwhile, we have or will pass some metric where U.S. investment in Afghanistan is greater than Iraq anyway. We helped knock off Gaddafi, fairly cheaply, and greatly reduced oil production in the process. And then there is Yemen, where the U.S. has fought some sort of Quasi War against the forces of darkness, which is a minor producer of oil (less than Vietnam)
I don’t think oil is irrelevant, even in Afghanistan, because of indirect support from the Sauds, but I don’t know how you could meaningfully quantify it or even say it is the primary factor in these engagements or what troops would not exist, but for the importance of oil.