Fossil-fuel subsidies: Helping the richest get richer


Last week, the Senate voted on a proposal by New Jersey Sen. Robert Menendez to end some of the billions of dollars in handouts enjoyed by the fossil-fuel industry. The Repeal Big Oil Tax Subsidies Act was a curiously skimpy bill that targeted only oil companies, and just the five richest of them at that. Left out were coal and natural gas. Even so, the proposal didn’t pass.

But that hasn’t stopped President Obama from calling for an end to oil subsidies at every stop on his early presidential-campaign-plus-fundraising blitz. And this month Vermont Sen. Bernie Sanders will introduce a much tougher bill that tackles all fossil fuels and their purveyors.

Even if Congress can’t pass a bill to end them, those subsidies are worth focusing on. After all, we’re talking about somewhere between $10 billion and $40 billion annually (depending on what you count) in freebie cash for an energy industry already making historic profits.


We should be outraged, but there’s a problem: The very word “subsidies” makes American eyes glaze over. It sounds so boring, like something that has everything to do with finance and taxes and accounting, and nothing to do with us. But bring yourself to focus on fossil-fuel subsidies for just a minute, and you will realize just how loony our policy is.

Start this way: You subsidize something you want to encourage, something that might not happen if you didn’t support it financially. Take education. We build schools, pay teachers and give government loans and grants to college kids. Families too have embraced education subsidies, with tuition often being the last big subsidy we give the children we’ve raised. The theory is: Young people don’t know enough yet. We need to give them a hand and a chance when it comes to further learning, so they’ll be a help to society in the future. From that analogy, here are five rules that should be applied to the fossil-fuel industry.

Don’t subsidize those who already have plenty of cash on hand.

No one would propose a government program of low-interest loans to send the richest kids in the country to college. We assume that the wealthy will pay full freight. Similarly, we should assume that the fossil-fuel business, the most profitable industry on Earth, should pay its way. What possible reason is there for giving, say, Exxon a tax break? Year after year the company sets records for money-making. Last year it managed to rake in a mere $41 billion in profit, just failing to break its own 2008 all-time mark of $45 billion.

Don’t subsidize people forever.

If students need government loans to help them get bachelor’s degrees, that’s sound policy. But if they want loans to get their 11th bachelor of arts, they should pay themselves. We learned how to burn coal 300 years ago. A subsidized fossil-fuel industry is the equivalent of a 19-year-old repeating third grade yet again.

Don’t abandon important subsidies just because in one instance they didn’t work out.

The government gave money to a solar power company called Solyndra. The company went belly-up. That stung. But since we’re in the process of figuring out how to perfect solar power and drive down its cost, it still makes sense to subsidize it. Think of it as the equivalent of giving a high-school senior a scholarship to go to college. Most of the time that works out. But a few kids are going to spend four years drinking; consider them human Solyndras. The subsidy wasn’t well spent on those kids, but we don’t shut down the entire college loan program as a result.

Don’t subsidize something you want less of.

At this point, the greatest human challenge is to get off fossil fuels. If we don’t do it soon, the climatologists tell us, our prospects as a civilization are grim. So why are we lending a significant helping hand to companies intent on driving us toward disaster? It’s like giving a fellowship to a graduate student who wants to pursue a thesis on “Strategies for Stimulating Doughnut Consumption Among Diabetics.”


Don’t give subsidies to people who have given you cash.

Most of the men and women in Congress who vote each year to continue subsidies have taken campaign donations from big energy companies. In essence, they’ve been given small gifts by outfits to whom they then return large presents, using public money, not their own. Oil Change International estimates that fossil-fuel companies get $59 back for every dollar they spend on donations and lobbying. It’s no different from sending a college financial aid officer a $100 bill in the expectation that he’ll give your daughter a scholarship. That’s bribery. And there’s no chance it will yield the best energy policy or the best student body.

These five rules don’t get at the biggest subsidy we give the fossil-fuel business: the right to pour their waste into the atmosphere for free. But they would be a start, a statement that we no longer will be played for suckers and saps. There’s just no reason to hand the richest industry on Earth a bonus to help them wreck the planet.

Bill McKibben is a professor at Middlebury College and founder of the global climate campaign A longer version of this piece appears at