Why fossil fuel subsidies seem impossible to kill

Mar 18, 2024

Last year, the United States was one of 200 countries to sign an accord at the United Nations COP28 climate summit to eliminate subsidies for coal, oil, and gas. Yet for the fourth year in a row, Congress will likely reject President Joe Biden’s proposal to eliminate federal tax breaks for coal and oil and gas companies. The latest request calls for eliminating $35 billion in tax breaks to the fossil fuel industry over the next ten years. The oil and gas industry receives nearly a dozen tax breaks, including incentives for domestic production and write-offs tied to foreign production. The Fossil Fuel Subsidy Tracker, run by the Organization for Economic Cooperation and Development, calculates that the industry received around $14 billion in subsidies in 2022.

One of these tax breaks, known as “intangible drilling costs,” has been in place for over a century, and allows companies to write off up to 80 percent of the costs of drilling, employee wages, and survey work in the first year of operation. The oil and gas industry is expected to get $1.7 billion in 2025 from the intangible drilling tax break, and $9.7 billion over the next 10 years. Another tax break known as the “depletion allowance” is estimated to give $880 million in benefits in 2025, and $15.6 billion by 2034.

“Everybody agrees fossil fuel subsidies are wasteful, stupid, and moving things in the wrong direction,” said Michael L. Ross, a political science professor at the University of California, Los Angeles. “Getting rid of them seems to be one of the hardest things to achieve on the climate agenda.”

Like President Biden, President Barack Obama attempted and failed to eliminate these tax breaks in nearly every budget cycle. Pro-industry lawmakers from both parties have stymied these efforts every year.

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Quote of the day

In my conversations with community members, there are two general responses I get to the proposal to designate a national monument for the Dolores River Canyon Country. One is a pessimistic, fear-based response that disregards facts. The other, vastly more common response is agreement that the Dolores is a truly special place and curiosity about whether a national monument might be the right tool for stewarding this landscape.”

Scott Braden, director of the Colorado Wildlands Project, Montrose Press

Picture This

three young foxes in the desert

Good things come in small packages!

As the smallest fox in North America, desert kit foxes spend most of their days in dens scattered around semi-desert shrublands, which are important for raising young pups and avoiding predators.

They seldom need to drink, getting all their water from the food they eat and by having a digestive tract that is super-efficient at absorbing every drop.

Photos at the Simpson Springs Pony Express Station by Brian Clopp

Featured image: Oil and gas infrastructure in California. Bureau of Land Management