Exposing the true costs of fossil fuels
I have worked in the Canadian oil and gas business for 30 years and I can’t think of one example or instance where the Alberta or Canadian government has subsidized the oil and gas business. The government does not provide direct or indirect subsidies to oil and gas. Could you provide me with examples of the programs or laws that you believe are part of the subsidies that you claim in your analysis. Thank you in advance.
Those who claim to be “free market” advocates of competition would do well to ask why profitable corporations require welfare payments in the form of subsidies, tax incentives, or encouragement to remain profitable. Is this not a game of picking winners and losers? Except for the fact that the alleged winners today are oil, gas and coal companies and the public tax payer and consumers are the losers. If ever there were “perverse incentives” to undermine ecological resilience of air, vegetation and oceans these subsidies are classic examples of the wrong policies, at the wrong time, and for the wrong reasons.
‘A subsidy is any government measure that alters market prices or costs in favour of energy producers and/or consumers’.
For fossil fuels, subsidies can directly or indirectly impact the price and target either the consumer or producer.
Canada has several subsidies that act on the producer. An example is providing tax breaks for exploration of oil and gas. This can allow newer companies to get off the ground promoting fossil fuel companies.
An example of a consumer subsidy would be the dual pricing. Currently, Canada has a minimum and maximum pricing for gasoline. This regulates the price of gasoline so that it is always affordable for Canadian’s and promotes the sale of fossil fuels.
The OECD has a good summary of some of the fossil fuel subsidies that have gone under reform and are currently acting in some of the provinces of Canada (link below).
There are laws and regulations that exist in Canada that act as fossil fuel subsidies. It is important to note that the lack of law and regulation is also subsidation of fossil fuel companies. As an example, fossil fuels pollute the environment and there is no monetary cost for doing so. There are regulations that control this such as manufacturing standards for machinery and plant directives, but they only charge if you go over a limit, rather than accounting for the cost of pollution/climate change contribution.
In conclusion, fossil fuel subsidies are subject to scrutiny. From my research, my opinion of a fossil fuel subsidy is anything that promotes fossil fuel extraction. This includes allowing air space to be polluted for free but does not include road traffic accidents as a result of fossil fuel use in cars, as stated by the IMF’s latest report.
What do you think? 🙂