Free The Oil Market

Let capitalism run, supply and demand, the strong will survive, and the economy will roar forward at full speed ahead. I’ve read these lines so often on social networks this year It’s my first line item to balancing the budget, obvious in this capitalist effort, we cut fossil fuel subsidies.

   Tax preferences have been around since 1916, intended to stimulate domestic oil and natural gas production. [1] Today oil and gas production, and the corporations behind that production are as strong, if not stronger than ever, yet the subsidies continue. They even got larger in many cases through several tax rules like the Foreign Tax Credit.

Our Prices are Some of the Lowest in the World, click here  

I’m not going to write all the subsidy details; you can read them here. Estimating US Governmant Subsidies to Energy Sources 2002_2008

The cost of subsidies is over $10 Billion per year based on conservative estimates. And that $10 Billion doesn’t even consider the costs of protecting and defending pipelines and shipping lanes in the Persian Gulf, our military’s direct contribution to oil corporations and their profits. If the cost of military contribution is included we can safely/conservatively add another $42 Billion in fuel subsidies.

Congressional Leaks to Oil

Several lawmakers have already introduced legislation to end some of these subsidies and the President requested similar legislation as well.  Unfortunately it has gone nowhere in spite of the conservative position of getting government out of business, perhaps a result of the money spent by industry lobbyists [2] and/or campaign contributions: “political action committees affiliated with oil and gas companies have donated $238.7 million to candidates and parties since the 1990 election cycle, 75 percent of which has gone to Republicans.” [3]

There will be impacts of course, the cost of fuel for our cars, trucks, heating, and electricity will rise over time as the costs are of course passed on to the consumer. But keep in mind: we are already paying this cost through our taxes…passing it on without the government involvement should appeal to conservatives; and we are paying in additional government incentives to conserve…which we can reduce in other budget reduction actions if we allow the market price affect consumption; energy costs in the US are far lower than other developed countries. In actual cost, the US was 44th among developed countries, if we consider cost relative to income the US fall to 50th among 55 countries. [4]

So there is our first $10 Billion plus interest of course since it is all deficit spending. I’ll get cracking on the balance sheet as we move forward.

[1] http://www.cbo.gov/sites/default/files/cbofiles/attachments/03-06-FuelsandEnergy_Brief.pdf

[2] http://www.opensecrets.org/lobby/indusclient.php?id=E01

[3] http://www.opensecrets.org/industries/indus.php?ind=E01

[4] http://mjperry.blogspot.com/2012/05/highest-cheapest-gas-prices-by-country.html

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