The scale of corporate welfare for the oil and gas industry

We hear a lot about the power of the markets to sort things out. It is one of the tenets behind the attack on the welfare state and privatisation of public services. But don’t for a minute think that the Government is against welfare support for some and that markets can be trusted to resolve things like energy security.

Screen Shot 2015-06-08 at 12.31.19Although we hear a lot about unsustainable or unjustifiable subsidies for renewable energy from Tory rags like the Mail and Telegraph, the truth of the matter is that are totally dwarfed by subsidies to fossil fuel companies that we have been forking out for decades.

The following is an extract from a recent Guardian article about a stunning report published by the IMF last month, entitled HOW LARGE ARE GLOBAL ENERGY SUBSIDIES?  This attempts to include the indirect subsidies, as well as the direct subsidies (shown in the graph above).

Extract from Guardian article:

Fossil fuel companies are benefitting from global subsidies of $5.3tn (£3.4tn) a year, equivalent to $10m a minute every day, according to a startling new estimate by the International Monetary Fund.

The IMF calls the revelation “shocking” and says the figure is an “extremely robust” estimate of the true cost of fossil fuels. The $5.3tn subsidy estimated for 2015 is greater than the total health spending of all the world’s governments.

The vast sum is largely due to polluters not paying the costs imposed on governments by the burning of coal, oil and gas. These include the harm caused to local populations by air pollution as well as to people across the globe affected by the floods, droughts and storms being driven by climate change.

Nicholas Stern, an eminent climate economist at the London School of Economics, said: “This very important analysis shatters the myth that fossil fuels are cheap by showing just how huge their real costs are. There is no justification for these enormous subsidies for fossil fuels, which distort markets and damages economies, particularly in poorer countries.”

Lord Stern said that even the IMF’s vast subsidy figure was a significant underestimate: “A more complete estimate of the costs due to climate change would show the implicit subsidies for fossil fuels are much bigger even than this report suggests.”

The IMF, one of the world’s most respected financial institutions, said that ending subsidies for fossil fuels would cut global carbon emissions by 20%. That would be a giant step towards taming global warming, an issue on which the world has made little progress to date.

Ending the subsidies would also slash the number of premature deaths from outdoor air pollution by 50% – about 1.6 million lives a year.

Furthermore, the IMF said the resources freed by ending fossil fuel subsidies could be an economic “game-changer” for many countries, by driving economic growth and poverty reduction through greater investment in infrastructure, health and education and also by cutting taxes that restrict growth.

It has been blindingly obvious to the scientific community that we have to leave most of the reserves we already know about in the ground if we are to avoid climate change catastrophe around the globe. Yet the industry spent over $700 billion searching out new reserves, money effectively given to them in our names by our governments!

Click on the image below for a good video summary of the KEEP IT IN THE GROUND argument:

Screen Shot 2015-06-08 at 11.32.10

However, given the corrupt crony capitalist system that prevails (with every neoliberal government – be it Tory or Labour – we keep electing), these arguments are simply ignored. It is the high level power games of foreign policy that are allowed to dictate the agenda these days, and are especially being turned to and relied upon by the frackers. The following Guardian video explains this succinctly and clearly enough. (Click on image)

Screen Shot 2015-06-08 at 11.42.21

So beware the spin, the smoke and mirrors. Welfare cuts for me and you would be completely unnecessary if corporate welfare was dismantled. If the supposed capitalists truly believed in their precious markets, and supply and demand were allowed to prevail, we could have the true energy security and ridiculously cheap energy that can be achieved with renewables (not that I’m arguing for unfettered markets – I’m just pointing out how they do not even consistently benefit capitalist interests).

But that would eliminate the ill-gotten gains of the fossil fuel oligarchs that dominate the world market for government favours. They are not going to give it all up easily, but this is the battle we need to see fought and won.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s