Oil Company Subsidies
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Electric vehicle financial support is dwarfed by oil company subsidies. It is estimated that fossil fuel subsidies outrank renewable energy subsidies by as much as eight to one. Although oil companies are far and away among the most profitable businesses on the planet, they still get large amounts of taxpayer support.
Subsidies are provided by governments worldwide. They vary from tax breaks to cheap gasoline. The bottom line is hundreds of billions of dollars from public funds spent to prop up petroleum products every year.
World petroleum product subsidies are estimated by the IEA (international Energy Agency) to have gone from $343 billion (USD) in 2007, to $558 billion in 2008, and $312 billion in 2009. The subsidy is directly linked to the price of oil.
The International Energy Agency and the OECD estimates that fossil fuel subsidies added up to $409 billion in 2010 – an increase of $110 billion over 2009, likely exceeding $600 billion by 2012. These subsidies include all petroleum products, of which gasoline and diesel fuel are a large part.
Who gets what and how?
In developed countries like the USA, petroleum subsidies are in the form of tax breaks. Recent attempts to end these billion dollar breaks in the US failed.
In so-called developing and emerging economies, subsidies take the form of cheap petroleum products. It has been reported, for instance, that gasoline is cheaper than bottled water in some places. Recent oil strikes in Kenya have prompted comments
from local citizens such as "when will they find water."
Not the majority of the population in most countries. Low gasoline prices only benefit those who can afford it. It happens that 80 percent of gasoline and diesel subsidies go to the wealthiest 40 percent of the population.
The biggest gasoline subsidies tend to be in the biggest oil producing countries. This includes, but is not limited to: Saudi Arabia, Iran, Russia, Venezuela, Indonesia, and the UAE.
Take Saudi Arabia: Government subsidies have recently placed the consumer price of one liter of gasoline at $0.12, or twelve cents US!
What's the big deal?
Subsidies naturally lower the price of gasoline to the consumer. This causes an increased demand. Consumers tend to drive inefficient larger and older vehicles. This in turn creates much more car pollution. Governments in turn are able to sell less of their own oil at market prices.
Subsidies and gasoline prices
The effect to the consumer of oil company subsidies is to lower gas prices. Countries producing a lot of oil tend to also directly subsidize gas prices. The average world price
of a gallon of gasoline is well over $5.00 USD. Countries significantly below the average likely have some kind of direct subsidy to the consumer. Those significantly above the
average impose high taxes on gasoline.
Countries with high taxes and gasoline prices are also those with assertive electric programs. Norway, for instance, has nearly the highest gas prices and also the most
electric cars in the world.
Oil Company Revenues
The chart below shows that major oil companies are
among the largest on the planet as of 2011. It does not appear that these companies require public assistance any more than other companies on the list do.
If you consider the fact that many subsidy programs take the place of taxes that would normally be paid by the consumer, the actual value of the subsidy nearly doubles.
The petroleum product subsidy for one year (about $300 billion) is about six times the subsidies for electric vehicle programs (about $50 billion) over the past 3-5 years.