An Uphill Battle:
Clean Alternatives to oil need a level playing field

Check out The Price of Oil blogs on alternative energy

Visit End Oil Aid - our coalition site that details international subsidies to the oil industry.

In the immediate future, the transition away from oil will no longer be a question of if (yes) or even when (asap) – the big question soon will be how. Oil Change International favors alternatives that are clean, green, and economically viable – such as some forms of plug-in hybrids, efficiency (and fuel economy) improvements, solar, wind, and mass transit.

We certainly believe that all consumers, and Americans in particular, will need to do more to use much less energy. But we also believe that not all energy consumers are created equal – and in the short term, setting up the proper incentives in government is key to changing our collective course. In the United States and most industrialized countries, the Federal Government still strongly favors the oil industry with subsidies.

Estimates of the value of US federal subsidies to the domestic oil industry range from $31.6 billion in public dollars over the next five years (roughly $6 billion a year), to an amazing $39 billion annually. There are several reasons for this discrepancy. First, accounting methods vary. Second, while environmental and consumer groups tend to calculate the total amount of revenue to the American taxpayer that these subsidies cost, others note that “many subsidies have a higher value to recipients than their direct cost to the government.” Finally, the higher estimate includes a portion of defense spending (more info on defense subsidies to oil here and here).

In other words, the higher values are more indicative of the corporate welfare given to the already highly profitable oil industry annually, while the more conservative figures are a better estimate of how much the elimination of these subsidies would save the U.S. taxpayer. It should be noted that while this high estimate does include some of the cost of US military “defense” of the Persian Gulf region, it does not specifically incorporate any increase in defense spending relating to Iraq, or any quantification of the environmental externalities associated with oil. Both numbers include modest estimates of how much “royalty relief” costs US taxpayers. Neither includes any amount of international subsidies, or Oil Aid.

While the estimates of how much subsidies are worth varies, estimates of the relative levels of funding of energy types are consistent. The chart below illustrates that the vast majority (two-thirds) of subsidies still go to fossil fuels.

These energy subsidies are completely out of step with a nation that now broadly accepts the need to end our collective “oil addiction”. According to Democratic pollsters Greenberg, Quinlan and Rosner, “the public overwhelmingly supports the development of alternative energy, higher mileage standards, hybrids, and incentives to produce more energy-efficient appliances.” (pdf)

Out with the old, in with the new…

What if all the money currently being handed out to Big Oil was put into alternative energy instead? What would our new energy economy look like? Maybe something like this (144k PDF), tempered by this. Clean, renewable energy like wind and solar to power our homes and businesses, greening our grid to power our plug-in hybrid vehicles, coupled with efficiency technologies to help us stop paying at the pump.

So how do we transform oil companies into energy companies and jumpstart the new energy economy? The first step is a Separation of Oil & State – including an end to governmental subsidies to Big Oil and an investment in renewable energy alternatives and energy efficiency instead.