
Big Oil Doesn’t Like EV Subsidies, Just Its Own Giant Subsidy - _Microft
https://www.bloomberg.com/opinion/articles/2018-11-19/big-oil-vs-electric-cars-carbon-tax-would-level-playing-field
======
torpfactory
Here’s how I think about it: you may feel free to criticize, this is meant to
get people thinking, not as an implementable policy.

Draw a control volume around your business or product. If, during the
creation, use, or disposal of your product or business, mass or energy crosses
this boundary, you should be required to provide for any negative
externalities caused by this material or energy.

Of course, as usual with this approach, the magic is all in the drawing of the
boundary, but hear me out.

Under this framework, it may be a bit easier to see clearly what externalities
we might wish to price. I sincerely believe that if we now shrink from this
present task of properly pricing and managing these costs, human society will
perish from this earth.

~~~
semi-extrinsic
To paraphrase Johnny Depp: "... but that's called 'communism' and is frowned
upon in most societies."

Seriously, we have all the tech to radically reduce emissions starting now.
But it costs businesses money to do it, and the future benefit is distributed
across all humanity, so nobody does it voluntarily. We need governments to
agree to force everyone to do something that benefits society, which stands in
stark contrast to market capitalism.

~~~
ip26
On the other hand, one understanding of the role of government in market
capitalist societies would be contract enforcement and _ensuring the pricing
of externalities_

~~~
semi-extrinsic
Carbon taxes, as well as pricing of externalities, are both means by which a
government would force corporations to pay. We have knowledge that it should
be done, but yet we are not doing it, as this knowledge is drawn into question
by charletans and pharisees who twist and turn scientific cautiousness into
doubts and buts and ifs in servitude of the almighty dollar. This is the
nature of market capitalist societies: those who own capital seek to protect
their income, and won't let minor inconveniences like future environmental
crisis stand in their way.

Just look at the European carbon tax (ETS); it would have been effective if
reasonably priced (50-100 EUR/tonne range), but industry successfully worked
to keep the price per tonne at between 1/5th and 1/20th of what would have
spurred actual emissions reduction measures, thus it has been toothless.
Greenwashing is most all what remains.

------
djrogers
I totally understand the point of view here, and likely agree to an extent,
however calling the _lack_ of a tax that has never existed before a subsidy is
more than just a stretch, it’s an outright distortion.

I also am not sure that carbon taxes would hit the wealthy in a manner as
disproportionate as would seem to make the author happy - everyone drives, and
low income earners tend to have older, less fuel efficient cars. In the same
way that has taxes are regressive, so would carbon taxes be. The wealthy can
simply avoid them by buying EVs and solar panels, while low income earners
would be stuck with the tab.

~~~
mrpopo
> calling the lack of a tax that has never existed before a subsidy is more
> than just a stretch, it’s an outright distortion.

This is not correct, this is simply finally accounting for the negative carbon
externality. Industries pay extra for all kinds of negative externalities, and
without these regulations, markets are inefficient.

[https://en.wikipedia.org/wiki/Externality](https://en.wikipedia.org/wiki/Externality)

~~~
jdhn
I really dislike this argument because it implies that as soon as something is
deemed "bad", a tax should placed on it.

~~~
aidenn0
If you put scare quotes around bad then yes it's a bad argument, but the
argument is actually "causes harm to others."

If you think we should discourage causing harm to others then your choices are
roughly:

1\. regulation 2\. taxation 3\. torts (i.e. anyone who is harmed can sue those
who did the harm)

------
NoblePublius
Assuming half your taxes goes to the DoD and half the DoD budget goes towards
protecting the oil trade, gas costs about about $30 per gallon if you make
$150k: (40% to fed govt x .5 x .5 ) / 1000 gallons gas per year.

~~~
creato
The first assumption is way off [1].

The second assumption also is suspect. It is probably more correct to say that
half the DoD budget goes towards protecting _all_ trade, not just the oil
trade.

Another (unstated) assumption is that oil fuels a lot more than just personal
vehicle gas consumption. I don't know where that 1000 gallons of gas per year
statistic comes from though.

40% in taxes to the federal government is also very high. The top marginal tax
rate is 35%, and 150k isn't close to getting you into the top bracket, let
alone by a significant enough factor to consider that an effective tax rate.

Don't get me wrong, I strongly believe there should be larger subsidies to
alternative energy sources to counteract the externalities of fossil fuels. I
just think this particular estimate is wildly misleading.

1\.
[https://en.wikipedia.org/wiki/File:U.S._Federal_Spending.png](https://en.wikipedia.org/wiki/File:U.S._Federal_Spending.png)

~~~
NoblePublius
You’re right. Trump cut my taxes.

------
dbrower
A better argument than imputed carbon offset is the oil depletion allowance,
which is a pretty explicit subsidy for extraction industries.

~~~
Lazare
Being able to amortize an investment over the productive life of an asset is a
_subsidy_? Under what definition of the word?

~~~
Retric
Time value of money, if you can deduct something in 2020 vs 2021 you get 1
year of interest on that deduction. Even if you don’t directly invest it,
inflation make paying 2020 debts in 2021 dollars a net win.

However, a larger issue is percentage depletion makes it possible to write off
more than the cost of the asset. If I buy something for X, then the sum of all
of my depression should be X or less.

~~~
ip26
You are deducting that investment today against the revenue it is producing
today, and when you deduct in 2021 you are deducting against 2021 revenue.

We could argue about the shape of the curve we want, but it would not make any
sense to deduct at retirement of the asset.

~~~
Retric
Accelerated Depreciation is a net win for companies. So, the shape of the
curve is very much an issue worth considering.

Consider, a company buys and new car and the car’s resale value may tank the
day they buy it. Further, companies regularly use things they which have a
book value of zero.

------
lsiebert
Getting away with carbon pollution, if it's a subsidy, is just part of the
subsidies the fossil fuel industries get in the U.S.

The 20 billion the United States provide each year in national fossil fuel
subsidies is a real issue. (per 2015 see
[https://www.odi.org/publications/10058-empty-
promises-g20-su...](https://www.odi.org/publications/10058-empty-
promises-g20-subsidies-oil-gas-and-coal-production)).

I see other numbers that are lower then 20 for different years (This says 8+
billion for 2016 [https://newclimate.org/2018/11/14/brown-to-green-
report-2018...](https://newclimate.org/2018/11/14/brown-to-green-
report-2018/)).

I'd guess there are different ways of measuring subsidies, but all of the
measures for fossil fuel subsidies I could find were multi billion per year
while EV subsidies were only 2 billion over the entire lifetime of the
program.

------
DalekBaldwin
> Using Yale economist and recent Nobel-prize winner William Nordhaus’s
> $31-per-tonne estimate of the social cost of carbon, it amounted last year
> to $107 billion for energy-related emissions from oil and natural gas in the
> U.S. Within that, emissions from transportation — the biggest source in the
> U.S. and the only one still growing — enjoyed a free ride worth $59 billion.

But what is the net tax/subsidy in plain monetary terms? I just did a cursory
bit of Wikipedia research so I may have gotten something wrong, but the
article neglected this aspect completely:

[https://en.wikipedia.org/wiki/Energy_subsidies#United_States](https://en.wikipedia.org/wiki/Energy_subsidies#United_States)

> On March 13, 2013, Terry M. Dinan, senior advisor at the Congressional
> Budget Office, testified before the Subcommittee on Energy of the Committee
> on Science, Space, and Technology in the U.S. House of Representatives that
> federal energy tax subsidies would cost $16.4 billion that fiscal year,
> broken down as follows:

> Renewable energy: $7.3 billion (45 percent) > Energy efficiency: $4.8
> billion (29 percent) > Fossil fuels: $3.2 billion (20 percent) > Nuclear
> energy: $1.1 billion (7 percent)

$3.2 billion in fossil fuel subsidies (including categories besides motor
fuel), versus...

[https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_State...](https://en.wikipedia.org/wiki/Fuel_taxes_in_the_United_States)

> Federal fuel taxes raised $35.2 billion in Fiscal Year 2014, with $25.0
> billion raised from gasoline taxes and $10.2 billion raised from taxes on
> diesel and special motor fuels.

That's not counting state taxes, which are even higher:

> The United States federal excise tax on gasoline is 18.4 cents per gallon
> and 24.4 cents per gallon for diesel fuel... On average, as of January 2017,
> state and local taxes and fees add 31.04 cents to gasoline and 31.01 cents
> to diesel, for a total US average fuel tax of 49.44 cents per gallon for gas
> and 55.41 cents per gallon for diesel.

So about $80 billion in net taxes, which exceeds the estimated social cost of
carbon from US auto emissions. Of course, fuel taxes go toward the maintenance
of infrastructure for motor transportation, circling back and resubsidizing
it, but electric vehicles enjoy the same benefits from that maintenance (as
well as other subsidies for the generation of the electricity that powers
them).

~~~
lsiebert
You have to also look at the department of energy spending on wikipedia since
they do fossil fuel development, which adds an additional half billion. So 3.7
billion per year, at least. But oil companies are also some of the main
beneficiaries of things like the foreign tax credit, so you have to consider
that as well.

------
potiuper
All consumers will very shortly be paying the price for the fuel that is
wasted using inefficient internal combustion engines as a disincentive
compared to EVs. Also, consumers could capture the CO2 upon combustion
themselves or may not ever transform the fuel they purchase into CO2 (gas
leaking, etc.). Getting rid of the oil subsidies and enhancing those for non-
carbon energy sources would be so much simpler and more effective than
bickering over what would be the marginally least unaccountable tax for
reducing the use of carbon based fuels. The day the government gets rid of
subsidies for oil will be the first day I actually consider solar along with
any tax rebates. This article is a written by a yuppie. Over the course of
just a few weeks, a major fire can pump more carbon dioxide into the
atmosphere than California’s many climate change programs can save in 12
months.

------
tomohawk
Great use of NewSpeak, but the absence of a tax is not a subsidy.

There is a pretty big subsidy for the non-Saudi companies that are part of
ARAMCO, though.

The Saudis wanted a bigger slice of the pie when the company was formed, but
instead of just splitting the revenue along those lines, they worked out a
deal where the Saudi government would tax the non-Saudi companies to an amount
that would split the pie the way they wanted it. The American companies can
write off that foreign tax. So American taxpayers are subsidizing the
arrangement.

~~~
pdpi
There’s a reasonable argument to be made that letting you get away with
something with negative externalities, which then have to be dealt with by
spending public money, is effectively the same as giving you that money
directly.

~~~
tomohawk
Only if those "negative externalities" are illegal for everyone. In this case,
they're perfectly legal activities. It's not a "break" or "subsidy" just
because someone's allowed to carry on a perfectly legal activity.

Look, if it is bad to use oil for fuel, then just tax it. But playing these
word games is lame.

------
partiallypro
Wow, what a weak argument. If you're using this method why aren't you
including carbon emissions from EVs entire manufacturing process to mining of
its materials to get the true subsidy cost to society? Economists already know
about negative externalities but calculating their cost is incredibly
difficult. Comparing a direct subsidy to a negative externality is just
laughable.

~~~
millstone
This but unironically. Yes, let's absolutely compare the total lifecycle cost
of electric and IC vehicles, and price them accordingly. If you have a
politically feasible proposal for this, by god, share it share it, the planet
depends on it.

If not: who cares what "economists already know" about accurate pricing of
externalities? The existing zero price for CO2 emissions is wildly off. Say we
radically lurch in the opposite direction, setting the price of CO2 much too
high (a hilariously sci-fi premise). We foolishly over-develop technologies
that mitigate CO2 emissions. What a catastrophe, we learned how to suck CO2
out of the air instead of further refining fracking. We built a better world
for nothing!

~~~
partiallypro
You assume there are no negative externalities to pricing CO2 too high? There
would be a lot, including pushing more people into poverty.

I don't deny that CO2 has a cost, but the entire premise of the article is
that oil is "subsidized" because of CO2 emissions, but that is just bunk. You
could argue that about literally every item, ever. From manufacturing to food
production, to child bearing, to breathing. If you argue that oil is
subsidized because of CO2 emissions, you also have to say so ever -everything-
including EV and every point of the supply chain. You might accidentally be
causing people to release less CO2 and replace it with something even worse.

How you treat CO2 in a cap and trade method is up for debate, but again to
claim oil is subsidized though CO2 emissions but EV isn't is nonsense. Lithium
mining is -incredibly- dirty, batteries in landfills are -incredibly-
toxic/flammable. If you think those too are a form of indirect subsidy then
the EV subsidy is already high without the direct subsidy. And if you break it
down to which has the biggest subsidy per kilowatt/hour, you might find they
are not as far apart as you suspect...but the article doesn't measure that, so
how would they know or even have the capability to write such an article?

------
zxcvvcxz
> the social cost of carbon, it amounted last year to $107 billion for energy-
> related emissions from oil and natural gas in the U.S. Within that,
> emissions from transportation — the biggest source in the U.S. and the only
> one still growing — enjoyed a free ride worth $59 billion.

> The cost of the federal tax subsidy for EVs is $2 billion

OK, except the latter is an actual subsidy given directly, while the former is
some made up pie-in-the-sky napkin calculation towards something we don't
like.

Let's talk about the "social cost of tobacco" then. Or alcohol.

Or how about the "social cost of fast food" leading to obesity?

What about the "social cost of single motherhood?" No other social factor
predicts crime and prison time nearly as well, not to mention lack of future
educational achievement and lack of future economic output.

If anyone wants to play the theoretical existential threats game, I'll trade
an acknowledgement of "global warming" for an acknowledgement of single
motherhood.

Anyways I don't think it's sensible to compare theoretical future economic
costs to _real_ costs paid by taxpayers right now.

~~~
millstone
Global warming mitigation is not diverting resources from tobacco cessation.

> I don't think it's sensible to compare theoretical future economic costs to
> real costs paid by taxpayers right now.

"We should permit environmental destruction for economic gain benefitting
today's taxpayers."

~~~
zxcvvcxz
Keyword: _theoretical_.

We are coming out of an ice age from over 10K years ago, and the rate of
temperature increase has been slowing on that scale.

[https://en.wikipedia.org/wiki/Global_temperature_record](https://en.wikipedia.org/wiki/Global_temperature_record)

(Hint: don't worry so much about zooming into the 1970s to today, which is
less than 0.01% of the time span of a larger trend.)

Pollution is a problem, yes. Go to China and talk to them before you lecture
me about paying carbon taxes in Any City, USA.

But when it comes to this theoretical warming, we are likely to be a spec of
noise in the overall trend of the planet doing its thing.

~~~
Jweb_Guru
The temperature has increased more rapidly in the last one hundred years than
we can find it has at any period we have good data for (there is some evidence
that at times in the distant past it rose _fairly_ rapidly, though we can't
tell exactly how fast, but that usually coincided with massive extinction
events). This has been largely caused by the release of large amounts of CO2
in accordance with very well-understood warming processes. The idea that some
nebulous "natural processes" of the earth just automatically overwhelm
anything we can do is totally bizarre; we are a sizable portion of the active
energy production on the planet's surface at this point (obviously, we have
nowhere near the effect of the _sun_ , but the sun's radiance does not and has
not changed rapidly enough to explain the changes in temperature).

~~~
zxcvvcxz
Alright. Let's say I'd be willing to concede that our CO2 emissions play some
part in changing the environment.

But I've also done some research, and I've found that the Earth has wonderful
negative feedback mechanisms to ensure that each additional molecule of CO2
released has less overall affect then previous ones - so there's a limited and
saturating nature to this phenomenon (hence why we haven't exploded or flooded
terribly, etc).

Nobody is willing to discuss the nuance of saturated effects, and limited
changes that we should be willing to endure so that hundreds of millions
(billions) of Africans, Indians, and Chinese can get out of poverty.

And while we're at it - why are we subsidizing the paper industry, cutting
down all those trees? Or the hydroelectric industry ruining aquatic life and
other actual environmental concerns.

The fact is that nobody is willing to look at the trade-offs of FOSSIL FUELS
and just wants to write them off as evil, "unfairly subsidized", etc. But if
you took a true holistic look at the costs and benefits, you'd find that few
other industries have been as positively impactful to our lives as those born
from hydrocarbons. So people should think _really hard_ before ignorantly
demonizing them.

If people are wondering how I could hold a viewpoint so contrary to the Hacker
News/Liberal dogma, I strongly recommend checking out the following, which can
explain much more elaborately than myself:
[https://www.youtube.com/watch?v=EaNPBZ6BZZ8](https://www.youtube.com/watch?v=EaNPBZ6BZZ8)

~~~
adrianN
The Earth unfortunately also has wonderful positive feedback mechanisms like
releasing Methane from permafrost and lowering albedo due to reduced ice cover
that can lead to runaway hothouse climates that last tens of thousands of
years until geological processes sequester enough carbon to reduce the
greenhouse effect sufficiently. So perhaps you should trust the conclusions of
the scientists who have studied the topic for their entire careers and have
been sounding the alarm since the seventies at least.

