Govt Subsidies Oil Biz $2 Billion Year, This Undermines Renewable Energy


dumpthemonarchy
#1
It is time to end the govt subsidies to the fossil fuel industry. It is a waste of taxpayer money, it distorts the market, the industry is profitable, and prevents development of alternative forms of energy. End this corporate welfare. There is no "nurtering" required here any longer. Why is Big Oil a big baby?

Fossil fuel subsidies undermine renewables

Fossil fuel subsidies undermine renewables


By Paul Hanley, The StarPhoenix July 27, 2010



Canadian taxpayers are paying somewhere in the neighbourhood of $2 billion in subsidies to highly profitable oil, gas and coal companies every year. Worldwide, oil subsidies alone are estimated at $667 billion annually, though some estimates put the subsidy figure much higher.

To put this into perspective, worldwide subsidies to oil companies are equivalent to more than twice the global contribution to foreign aid and three times the amount invested globally in renewable energy.

The subsidies go to some of the most profitable companies in the world: The top five earning publicly traded oil companies, for example, reap $156 billion in profits annually.

Among the many reasons to object to subsidies is that they create an artificial advantage for dirty fossil fuels over clean energy sources. They make it appear that green energy is significantly more costly to develop than it really is, relative to other energy sources.

Currently, oil and gas companies enjoy several federal government support programs in Canada including programs that allow them to transfer tax-deductible expenditures back and forward as they see fit. Some of the programs include the Canadian Exploration Expenditures and Canadian Development Expenditure programs, a resource allowance, scientific, research and development tax credits and flow-through shares.

There is a movement underway to end these unfair and unwise subsidies. In 2006, the Department of Finance published a plan called Advantage Canada that committed to "enhancing the overall fairness and neutrality of the tax system," meaning that reducing tax breaks to favoured sectors should be part of the government's tax policy.

Then in 2009, Canada joined the other G20 nations to commit specifically to removing subsidies to fossil fuels. A recently leaked Finance Canada memo, which recommended the removal of subsidies, pointed out that there is no clear rationale why Canadian oil and gas producers should continue to receive these benefits.
While a number of subsidies have been reduced or are being phased out in Canada, total fossil fuel subsidies are actually up about 80 per cent from earlier this decade, according to research from the Pembina Institute.

Ecojustice, a Canadian environmental NGO, claims that in the last two years Canada has spent as much on oil and gas subsidies as on ameliorating climate change.

Removing fossil fuel subsidies worldwide would, according to a report by the International Energy Agency (IEA), result in reducing oil consumption by 850 million tonnes (6.7 billion barrels) by 2020, the combined consumption of Japan, South Korea, Australia and New Zealand, or 13 years of oil sands production at current rates of extraction.

According to the OECD, a careful phase-out of fossil fuel subsidies could be a low-cost way to reduce greenhouse gas emissions. According to new OECD analysis based on data from the IEA, ending fossil fuel subsidies could cut global greenhouse gas emissions by 10 per cent from the levels they would otherwise reach in 2050 under a "business as usual" scenario.


The subsidy figures presented so far do not include another category of subsidies called externalities. Externalities include indirect subsidies that result from avoiding the cost of dumping pollutants, such as greenhouse gases, into the environment.
You and I are charged a fee to dump our garbage in the landfill or our wastes into a sewer; coal and oil companies can dump their carbon dioxide and other pollutants into the atmosphere at no cost, which amounts to a massive subsidy that will ultimately be paid by average citizens.

Relatively speaking, renewables sources like wind or solar power are pollution free. When we properly account for all costs, including subsidies and externalities like pollution, renewable energy sources become cost effective. They are certainly more deserving of subsidy than fossil fuels.

Removing subsidies for fossil fuels would reduce energy consumption and lower greenhouse gas emissions. In addition, making fossil fuel companies pay to release greenhouse gases through a carbon tax would make renewable energy sources competitive and usher in a new era of cleaner energy.

Copyright (c) The StarPhoenix,





 
relic
#2
What drives me is,you get all tese people who rail against oil and coal and prais renewable energy to the highest,untill someboby wants to put a windmill or even worse a wind farm anywhere near their precious property. That's when you find out how evil wind power{and to a less extent tidal}is.
Make up your fn mind! [not you dump,them}
 
captain morgan
#3
Quote: Originally Posted by dumpthemonarchy View Post

It is time to end the govt subsidies to the fossil fuel industry. It is a waste of taxpayer money, it distorts the market, the industry is profitable, and prevents development of alternative forms of energy. End this corporate welfare. There is no "nurtering" required here any longer. Why is Big Oil a big baby?

Fossil fuel subsidies undermine renewables

Fossil fuel subsidies undermine renewables

Ever asked yourself "why" global governments are falling over each other to attract oil business? A big part of that answer would be obvious if the title of the thread substituted "subsidies" for a more realistic term like tax break/incentive.
 
Bar Sinister
#4
Quote: Originally Posted by captain morgan View Post

Ever asked yourself "why" global governments are falling over each other to attract oil business? A big part of that answer would be obvious if the title of the thread substituted "subsidies" for a more realistic term like tax break/incentive.

No, "subsidies" is the appropriate term considering the history of the oil industry and its ability to corrupt almost any government with which it comes into contact. This is not something new. The oil industry has been sucking money out of governments since its inception and has gotten very good at influencing elected and non-elected governments.
 
captain morgan
#5
you should stop supporting the oil companies Bar.
 
taxslave
#6
A tax break or credit is not a subsidy. Only the dippers consider helping to create high paid employment as a subsidy. It maybe potential lost revenue but then so is the homeowners grant.
 
petros
#7
Lost income is lost income no matter how you slice it.
 
AnnaG
#8
Tax breaks are a form of gov't subsidy. Any economist would tell you that.
Subsidies include:
Common forms of government interventions in energy markets

  • Access. Policies governing the terms of access to domestic on-shore and off-shore resources (e.g., leasing).
  • Cross-Subsidy. Policies that reduce costs to particular types of customers or regions by increasing charges on other customers or regions.
  • Direct Spending. Direct budgetary outlays for an energy-related purpose.
  • Government Ownership. Government ownership of all or a significant part of an energy enterprise or supporting service organization.
  • Import/Export Restriction. Restrictions on the free market flow of energy products and services between countries.
  • Information. Provision of market-related information that would otherwise have to be purchased by private market participants.
  • Lending. Below-market provision of loans or loan guarantees for energy-related activities.
  • Price Controls. Direct regulation of wholesale or retail energy prices.
  • Purchase Requirements. Required purchase of particular energy commodities, such as domestic coal, regardless of whether other choices are more economically attractive.
  • Research and Development. Partial or full government funding for energy-related research and development.
  • Regulation. Government regulatory efforts that substantially alter the rights and responsibilities of various parties in energy markets, or exempt certain parties from those changes.
  • Risk. Government-provided insurance or indemnification at below-market prices.
  • Tax. Special tax levies or exemptions for energy-related activities.
- from The Economist magazine.
 
taxslave
#9
So how is what the oil industries get any different than the auto manufacturers in Ontario or Bombardier in Quebec?

Besides the province that gets the money.
 
captain morgan
#10
Bombardier?

Air Canada?
 
relic
#11
How about about every call centre,the govt {provincial}wil most times pay a chunk of wages for a couple or three years if the company hires x number of people.Then of course when that time is up the company lays everybody off and changes their name and moves accross town.
 
captain morgan
#12
They don't always move across town, more likely they'll move to another country. India is the base for many large-scale call centres.

What I find very interesting is that the focal point of this OP (and the issue in general) is on the value of the tax breaks but never once have I sen any kind of mention of the corp taxes paid into the system by the energy sector (let alone royalties). Factor in the indirect taxes (payroll & income of the employee base) let alone the secondary industries that are (basically) employed by the oil companies and that # increases dramatically.

Do the math on industrial sector tax breaks/incentives versus the actual tax contributions and you'll see that oil/gas and mining (among a few others) contribute vastly more than the minuscule amount they receive.

Yet, somehow this is a real problem for the free-lunch crowd out there that believes the world owes them a living.
 
taxslave
#13
As I have tried to explain to socialists and others with a poor grasp of finance business does not pay tax, never has and never will unless our tax system is changed radically. Tax is an expense for doing business and it is simply passed on to consumers in the form of higher prices. So if you raise business taxes they will raise prices until either consumers quit buying their product. When that happens one of two things will happen to the company. Either they go bankrupt or if they are able move to a more user friendly area in the world. Either way we loose the jobs and everything that goes with them.
 
Bar Sinister
#14
A number of years ago one of the few honest politicians in Canadian history was asked by the them Prime Minister to undertake a study of the various tax breaks, subsidies, and what have you handed out to private business in Canada. The politician, a man called Erik Neilsen , the Prime Minister, Brian Mulroney. Neilsen reported that at the time government tax breaks and handouts to big business amounted to $19 billion a year, constituting a major loss of revenue at a time when the government was running large deficits. Neilsen also concluded that there was no apparent benefit from these government handouts. Indeed Neilsen's findings echoed the phrase coined by NDP leader Steven Lewis who referred to large corporations as "corporate welfare bums" for their willingness to accept government subsidies.

Quote: Originally Posted by taxslave View Post

As I have tried to explain to socialists and others with a poor grasp of finance business does not pay tax, never has and never will unless our tax system is changed radically. Tax is an expense for doing business and it is simply passed on to consumers in the form of higher prices. So if you raise business taxes they will raise prices until either consumers quit buying their product. When that happens one of two things will happen to the company. Either they go bankrupt or if they are able move to a more user friendly area in the world. Either way we loose the jobs and everything that goes with them.


Given the horrific budgets passed by right wing governments in recent years it is not only socialists who have a poor grasp of economics.

And of course business pay taxes - especially foreign owned businesses like resource extraction companies that cannot pass off their taxes to Canadians. What do I care if BP, EXXON, or Shell, and a variety of Japanese and American forestry and mining firms have to pay higher taxes in Canada? None of them are Canadian. They can pass on the taxes to their own populations.
 
dumpthemonarchy
#15
Every industry is different. We offer breaks for homeowners who do not pay tax when they sell their houses. This is because it is a good thing people own their own homes as it offers a feeling of security and well being in the country. A house is not a stock or bond, it is something we live in and it is properly treated differently.

Yet, the oil/hydrocarbon biz is crucial for our industrial civilization, to offer these businesses tax breaks, for a nonrenewable resource, now makes no sense. They have to be used very sensibly because they may run out. Alberta's conventional oil production has peaked despite billions invested over the past decade.
 
Stretch
#16
Quote: Originally Posted by relic View Post

What drives me is,you get all tese people who rail against oil and coal and prais renewable energy to the highest,untill someboby wants to put a windmill or even worse a wind farm anywhere near their precious property. That's when you find out how evil wind power{and to a less extent tidal}is.
Make up your fn mind! [not you dump,them}

very true, having the same problem here as we type
 
Kakato
#17
Quote: Originally Posted by captain morgan View Post

Ever asked yourself "why" global governments are falling over each other to attract oil business? A big part of that answer would be obvious if the title of the thread substituted "subsidies" for a more realistic term like tax break/incentive.

Your absolutely right,In B.C. when the govt started subsidizing exploration,the mines used it and explored which opened up new ventures and ten year mine plans where there was none before,I worked in the exploration field during this time so I know what effect it had,it was put on hold for a couple years and exploration and new projects got put on hold so it definately was good bang for the bucks when 2 million worth of exploration subsidies can produce 40 high paying jobs that will last 20 years and thats only at the mine level and not counting all the spin off jobs that come with growth.

In the oil patch I also saw the direct effect of exploration incentives,considering that the oilsands are the economic engine driving Canada's economy right now It would be wise to put more incentives into more exploration and development.

As long as we have oil and gas in the ground we will depend on it and by the time it gets scarce I'm sure we will have safer and cleaner alternatives.
Diesel fuel runs the country right now,if it dissapeared all of a sudden a lot of Canada would come to a standstill in a few days.

I'm all for altenative green energy and live next to one of Canada's biggest wind farms and also close to Canada's biggest and cleanest coal deposits(low sulpher) which is mainly sold to China and some to the USA where it's blended with their dirty coal to make a cleaner product.

Quote: Originally Posted by dumpthemonarchy View Post

Every industry is different. We offer breaks for homeowners who do not pay tax when they sell their houses. This is because it is a good thing people own their own homes as it offers a feeling of security and well being in the country. A house is not a stock or bond, it is something we live in and it is properly treated differently.

Yet, the oil/hydrocarbon biz is crucial for our industrial civilization, to offer these businesses tax breaks, for a nonrenewable resource, now makes no sense. They have to be used very sensibly because they may run out. Alberta's conventional oil production has peaked despite billions invested over the past decade.

It's peaked?
You obviously have'nt been to fort mac murray or have any idea of the new projects coming online,you aint seen nothing yet.

I expect oilsands and SAGD production to double or maybe triple in the next ten years so make sure you have them in your portfolio for mutual funds allthough most people do and dont even know it.
 
captain morgan
#18
Quote: Originally Posted by taxslave View Post

As I have tried to explain to socialists and others with a poor grasp of finance business does not pay tax, never has and never will unless our tax system is changed radically. Tax is an expense for doing business and it is simply passed on to consumers in the form of higher prices. So if you raise business taxes they will raise prices until either consumers quit buying their product. When that happens one of two things will happen to the company. Either they go bankrupt or if they are able move to a more user friendly area in the world. Either way we loose the jobs and everything that goes with them.


Realy great synopsis. The only other additions I'd suggest are that while taxes are an expense item, the actual amount (in the end) that is received/saved by the corp is the 'balance' of monies after the tax rate has been applied. The message being that these companies (or individuals) that take advantage of these breaks still leave lots of cash on the table.

That said, I still can't get my head around those folks that elect to believe that there is no long-term benefits to incentive programs. The corporate bodies are the ones that employ people and are (essentially) ground zero for engaging an economy that in turn powers the gvt which provides all of th services/infrastructure that everyone demands.

Quote: Originally Posted by Kakato View Post

Your absolutely right,In B.C. when the govt started subsidizing exploration,the mines used it and explored which opened up new ventures and ten year mine plans where there was none before,I worked in the exploration field during this time so I know what effect it had,it was put on hold for a couple years and exploration and new projects got put on hold so it definately was good bang for the bucks when 2 million worth of exploration subsidies can produce 40 high paying jobs that will last 20 years and thats only at the mine level and not counting all the spin off jobs that come with growth.

In the oil patch I also saw the direct effect of exploration incentives,considering that the oilsands are the economic engine driving Canada's economy right now It would be wise to put more incentives into more exploration and development.

As long as we have oil and gas in the ground we will depend on it and by the time it gets scarce I'm sure we will have safer and cleaner alternatives.
Diesel fuel runs the country right now,if it dissapeared all of a sudden a lot of Canada would come to a standstill in a few days.

It's peaked?
You obviously have'nt been to fort mac murray or have any idea of the new projects coming online,you aint seen nothing yet.

I expect oilsands and SAGD production to double or maybe triple in the next ten years so make sure you have them in your portfolio for mutual funds allthough most people do and dont even know it.

No doubt Kakato. The AB experience has yielded real benefits and the development of the infrastructure required to support the industry. I think that will be the one sticking point for Sask and BC. It won't stop the industry, just slow it a bit.

On the investment side of things, stay away from the mutual funds and invest directly in the stocks of the companies. It's way more liquid and you be exposed to the magnification on the upside (but also exposed to downside too).

Out of curiosity, is anyone using bacteriological remediation up in Ft Mac these days?
 
Kakato
#19
Quote: Originally Posted by captain morgan View Post


Out of curiosity, is anyone using bacteriological remediation up in Ft Mac these days?

Cant say for sure as im in the Tailings Reduction Operations and were just starting to find new ways to get mature fine tailings to settle in the ponds,this is so new that everyday improvements are being made in ways to speed up getting rid of the ponds,were useing polymer injection to settle the MFT(mature fine tailings) which makes the clay particles bond so the water will evaporate from them.The geotech I live with says they are trying co2 also in the recipe at his operations.

We have increased drying time for MFT from 21 days to about 8 so it's all trial and error and mostly at the operations side where improvements are being made and not at the lab but it's coming.Considering it takes ten plus years to get MFT to settle naturally in the ponds this is a big breakthrough.
We are the pilot project for most oilsands operations and the others have just begun building their polymer injection plants.

The one thing poly doesnt do is get rid of all the old bitumen but theres barely enough to see with the naked eye in our finished MFT product but thats where bacteria could play a big role.

There's millions to be made with this new technology and the doors are wide open for anyone who has better ways of speeding up the process which will lead to final reclamation of the ponds one by one.

With a polymer injection plant allready mixing the MFT then it wouldnt be hard to inject bacteria or anything else into the recipe to speed up drying and get rid of all the other left over baddys like Napthic acid.
 
petros
#20
Quote:

Currently, oil and gas companies enjoy several federal government support programs in Canada including programs that allow them to transfer tax-deductible expenditures back and forward as they see fit. Some of the programs include the Canadian Exploration Expenditures and Canadian Development Expenditure programs, a resource allowance, scientific, research and development tax credits and flow-through shares.

Show me the money.
http://www.cra-arc.gc.ca/E/pub/tg/t100/t100-08e.pdf
http://www.cra-arc.gc.ca/E/pbg/tf/t101b/t101b-06e.pdf

http://www.cra-arc.gc.ca/E/pbg/tf/t100c/t100c-04e.pdf
 
Bar Sinister
#21
Quote: Originally Posted by Kakato View Post

It's peaked?
You obviously have'nt been to fort mac murray or have any idea of the new projects coming online,you aint seen nothing yet.

I expect oilsands and SAGD production to double or maybe triple in the next ten years so make sure you have them in your portfolio for mutual funds allthough most people do and dont even know it.

He was referring to conventional oil. Read what he said, not what you want him to say. Conventional oil production in Canada peaked in the 1970s. As you can see from this link most Alberta oil is now non-conventional.

Alberta's Total Oil Supply
 
captain morgan
#22
that # is even lower if you look at conventional Brent crude oil that is no more than 1500 meters below surface in the Loch End field.
 
dumpthemonarchy
#23
Quote: Originally Posted by Bar Sinister View Post

He was referring to conventional oil. Read what he said, not what you want him to say. Conventional oil production in Canada peaked in the 1970s. As you can see from this link most Alberta oil is now non-conventional.

Alberta's Total Oil Supply

Correctomundo. And tar sands oil depends on cheap conventional crude to be profitable. Just like the rest of our civ.

Good example of mindless hype from tar sands junkies.
 
captain morgan
#24
Quote: Originally Posted by dumpthemonarchy View Post

Correctomundo. And tar sands oil depends on cheap conventional crude to be profitable. Just like the rest of our civ.

Good example of mindless hype from tar sands junkies.


I don't understand your logic. Cheap conventional oil competes directly with oil sands.
 
TenPenny
#25
Quote: Originally Posted by Kakato View Post

It's peaked?
You obviously have'nt been to fort mac murray or have any idea of the new projects coming online,you aint seen nothing yet.

Are you trying to say that all of these projects are conventional oil? Wow, that is news.
 
dumpthemonarchy
#26
Quote: Originally Posted by captain morgan View Post

I don't understand your logic. Cheap conventional oil competes directly with oil sands.

CCO makes anything and everything possible, cheap food from 10,000 miles away, space travel, etc.

The EROEI (energy return on energy invested) used to be 100-1 in 1900. Now for CCO it is about 25-1. Tar sands oil is 5-1. Tar sands is tough oil, not the easy stuff, and the easy stuff makes the hard stuff-tar sands, profitable. Because it takes a lot of energy to get energy and tha rate is increasing over time. That's why we're in the Gulf of Mexico with pressures like that of space. Not a long term solution.

Non-CCO is a civ game changer. Would we use expensive CCO (a contradiction in terms) to extract tar sands oil? Maybe, but I think not because gas at $2-3 a litre changes everything. If the price of everything else doubles or triples, then we just consume a lot less of everything.
 
captain morgan
#27
I see your perspective now... Thanks for the explanation
 
dumpthemonarchy
#28
Gracias. No problemo senor, northemericano govts are on a march of folly. I remember being told in 1980 that we'll star saving gas when it's all gone. We're not here for a long time, but a good time it seems. Party on dudes. Live fast, die young. Pedal to the metal.
 
captain morgan
#29
Sounds like you have a little James Dean in ya
 
dumpthemonarchy
#30
A littlle perhaps. Didn't James Dean ride over a cliff?
 

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