Fossil Fuel Subsidies, Employment, and Inequality By Michael Slager In 2009, the G20, a group of countries that represents 85 percent of the world’s GDP, announced that it wanted to reduce fossil fuel subsidies to the international oil and gas industry. A newly released report called “The fossil fuel bailout: G20 subsidies for oil, gas and coal exploration,” found that many of the governments of these countries collectively spend 88 billion each year subsidizing the fossil fuel industry. Among the study’s findings, the US gave 5.2 billion in tax breaks to a variety of large oil companies like Exxon Mobil. Australia followed with 3.5 billion in tax exemptions. Russia was in third place, coming in at 2.4 billion, and the UK gave 1.2 billion in subsidies. Many of these complicated financial deals are highly integrated and mutually beneficial to the respective countries’ fossil fuel industries. For example, A US company such as Chevron might engage in oil or gas exploration in another country. When it finds profitable reserves, it will then develop oil and gas fields or offshore drilling platforms. The US government will not deduct the taxes that Chevron pays to the host country. This is one of many ways that large fossil fuel corporations can avoid extra costs. The same arrangement, however, can be made on US itself. The reason for the exemptions, industry spokespeople say, is that high-risk exploration in far-flung places can attract investment and offset costs. It should be noted that this is financed with taxpayer money. The report raises questions about the fairness of these deals that come at the expense of the general population. Despite industry claims that it pays upwards of 40 percent in taxes (much of this is in the form of what their employees pay in income taxes, for which their employers take credit), most American oil companies do not pay the US federal tax rate of 35 percent. The tax breaks that the study discusses go a long way to effectively reduce what the government can levy. Exxon Mobil made 11.7 billion in profits this year. Shell claimed an 8.6 billion profit, and Chevron reported 7.25 billion, almost double its return over last year. The steady financial gains are due in large part to tax and other subsidies for oil exploration. Taxpayers for Common Sense, an industry watchdog group, claimed in their latest report that on average, the 20 largest US oil companies paid an effective federal tax rate of 11.7 percent. Another oil industry think tank, Citizens for Tax Justice, reported that from 2000 to 2005, the federal tax for fossil fuel companies was 13.4 percent. Not only do some companies not pay very much in tax, they receive tax rebates. In the US, much of this lost revenue could be used to help pay for the strapped public education system, elder care, job creation programs, much-needed infrastructure repair, and investing in renewable sources of energy. It should be noted that these are not mutually exclusive concerns. Funding for science and technology programs in public high schools and colleges could help those with an interest in these fields to receive training for jobs in the growing field of renewable energy. It could also mean that tens of thousands of prospective students do not need to take on huge debt to receive an education. So, too, could such education be dedicated to engineering and related professions in order to rebuild bridges and roads that are in dire need of repair. With so many public services in serious decline, funneling massive amounts of public money upwards to the some of the wealthiest people in the country simply maintains acute social and economic disparities, which have long-term negative effects on the country. In the US, there are an estimated 700-800 water main breaks every day. Billions of gallons of clean water, a total of 18 percent, is lost every day because of dilapidated infrastructure, some of it almost a century old. The US Federal Highway Commission claims that nearly 67, 000 bridges are structurally deficient. In addition, the agency says that almost 85, 000 bridges, many of which were built in the 1960’s and 70’s, are functionally obsolete. This means that if a section of a bridge fails, other parts of it are not designed to compensate for its lack of structural integrity. As I mentioned above, the renewable energy sector (wind, solar, hydroelectric, and biomass) could be greatly expanded with, in part, money from corporate tax breaks and subsidies. (Not just those that benefit the fossil fuel industry). As a point of comparison, in 2000, Germany’s renewable energy sector accounted for just 6 percent of its total source energy. By 2014, that number climbed to almost 30 percent. The country hopes to reach 80 percent renewable energy use by 2050. In total, almost 400, 000 people are employed in the solar, wind, and hydroelectric industries. Other countries are reaching similar goals. For example, Denmark boasts 40 percent wind and solar use. Uruguay quadrupled funding for renewable energy and the Dominican Republic has quintupled it. The US, an incomparably wealthy country with huge reserves of technically skilled people, could easily invest in such industries. With the offshoring of most productive labor in manufacturing over the last three decades, the US has much skilled labor that is simply idle, representing many thousands of people who are either unemployed or underemployed. The expertise of highly trained workers and professionals in an array of fields could be tapped into for the rebuilding of public services. youtube/watch?v=bRiLQKEkGnY
Posted on: Mon, 17 Nov 2014 20:21:13 +0000
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