More than most mainstream publications, The Economist has regularly covered energy subsidies and consistently called for their elimination. Too many newspapers pick and choose which subsidies they care about. The Wall Street Journal, for example, rails on subsidies to renewables -- particularly wind and corn ethanol. But government largesse to fossil fuels and nuclear power always seems to be illusory figments of greenie imaginations. Midwest publications too often turn a blind eye on subsidies to ethanol or the corn (and water) that makes it.
New Earth Track analysis shines a light on fossil fuel subsidies through tax-exempt master limited partnerships (MLPs)
If a company or an industry is going to get subsidized, there are good ways and there are better ways for it to happen if one is sitting in the corporate suite. Among the best is to receive big subsidies that, while not flowing to your competitors, arrive in a form that nobody seems to notice. The benefits of this structure are clear: while the recipient gets a large slug of financial support, because few people see or understand the largesse, the political cost to both obtain and retain the subsidy is relatively low. Master Limited Partnerships, the subject of Earth Track's most recent
Special legislative provisions have allowed a select group of industries to operate as tax-favored publicly-traded partnerships (PTPs) more than 25 years after Congress stripped eligibility for most sectors of the economy. These firms, organized as Master Limited Partnerships (MLPs), are heavily concentrated in the oil and gas industry. Selective access to valuable tax preferences distorts energy markets and creates impediments for substitute, non-fossil, forms of power, heating, and transport fuels.
For the past decade imports of tar sands crude oil or bitumen have been increasing. Tar sands is stripmined and drilled in an energy‐and water‐intensive process from under the Boreal forests and wetlands of Alberta. In the process, Canada is destroying critical habitat while releasing three times the greenhouse gas emissions as conventional oil production.
The value of the Russian government’s support to the upstream oil and gas activities is very significant. The subsidies to oil and gas producers in Russia that have been identified and quantified in this report amounted to 4.2 per cent and 6.0 per cent of the total value of oil and gas production in Russia in 2009 and 2010 respectively. These subsidies also amounted to 8.6 per cent and 14.4 per cent of the industry’s total tax and other payments to the federal government in 2009 and 2010 respectively.
Faced with expiration of the ethanol blender's credit in only a few months, the ethanol lobby has been working the halls Congress to fashion together a fallback mix of subsidies -- even though mandates to use ethanol in vehicles remains in force. Taxpayers for Common Sense summarizes the state of play, including assorted loan guarantees, support for new pumps and pipelines, and extension of the blender's credit, albeit at a slightly lower rate.