Clean Power david-subsidies

Published on February 25th, 2016 | by Giles Parkinson

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The Myth About Renewable Energy Subsidies

February 25th, 2016 by  

Originally published on RenewEconomy.

Ever hear the story about why renewable energy can’t compete without a subsidy? You hear it all the time from the fossil fuel industry. And the response from renewables? Take away fossil fuel subsidies, and they’d be glad to compete on level terms.

This graph below, displayed today by David Hochschild, a commissioner with the California Energy Commission, at the Energy Productivity Summer Study in Sydney, illustrates why the fossil fuel and nuclear industries don’t want that to happen.

Studies by the International Energy Agency point out that global subsidies for fossil fuels outstrip those for renewable energy nearly 10-fold. The International Monetary Fund said if climate and environmental costs were included, then the fossil fuel subsides increased another 10 times to nearly $5 trillion a year.

david-subsidies

This graph, that Hochschild sourced from DBL Investors, shows the accumulated energy subsidies in the US under federal programs. Oil and gas dominate, followed by nuclear. Federal renewable energy subsidies, in the form of investment and tax credits, are a small fraction.

“The fossil fuel industry hates to talk about that,” Hochschild told RenewEconomy in an interview after his presentation.

“There is a myth around subsidies, but there is no such thing as an unsubsidised unit of energy.”

He said the oil depletion allowance had been in place for the oil industry since 1926, and would be ongoing, despite the fact it was one of the most profitable industries in the world. He cited insurance costs for nuclear plants – met by taxpayers – “without which there would be no nuclear plants”.

For natural gas, it was the drilling, or fracking, which had been made exempt from compliance with the safe drinking water act: “That is subsidy,” he said. And he pointed to taxpayer funded rail networks that have helped coal.

By contrast, the large-scale wind and solar industries in the US have had to content with repeated changes to their federal support mechanisms. The tax credits have been changed seven times in a decade.

“How can you plan a wind turbine factory or project in those types of conditions,” he asked.

And he used this graph to illustrate the short-term nature of the subsidies that renewable energy does get. And the biggest benefit. “You put subsidies in renewable energy and costs go down” to the point where they are not needed any more. That has not happened with fossil fuels and nuclear.

david-susbidies-time

Reprinted with permission.

 
 
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About the Author

is the founding editor of RenewEconomy.com.au, an Australian-based website that provides news and analysis on cleantech, carbon, and climate issues. Giles is based in Sydney and is watching the (slow, but quickening) transformation of Australia's energy grid with great interest.



  • Chase Vermanly

    FUD – a vulgar internet slang term, often used as a pejorative, for vagina. Also used are a pejorative for a homosexual. C’mon discuss, you gonna allow this vulgarity on your posts boards. Who runs it?

  • Garth Suleman

    Meanwhile, the Solar Industry Association is lobbying for an extension of the Investment Tax Credit which expires at the end of the year. Why? According to the Executive Director of the Solar Industries Association.ninety percent of solar companies won’t be able to survive sans the subsidies.

    If we’re lucky the extension will be a year or two.

    Right.

  • Garth Suleman

    Meanwhile, the Solar Industry Association is lobbying for an extension of the Investment Tax Credit which expires at the end of the year. Why? According to the Executive Director of the Solar Industries Association.ninety percent of solar companies won’t be able to survive sans the subsidies.

    If we’re lucky the extension will be a year or two.

    Right.

    • Bob_Wallace

      FUD, bud.

      • Garth Suleman

        FUD, a vulgar, misogynist term for Vagina.

      • Chase

        FUD – internet slang for Vagina, Normally used as a pejorative. Alternate meaning, pejorative term for homo sexual.

      • Chase Vermanly

        FUD – a vulgar internet slang term, often used as a pejorative, for vagina. Also used are a pejorative for a homosexual.

  • Garth Suleman

    Meanwhile, the Solar Industry Association is lobbying for an extension of the Investment Tax Credit which expires at the end of the year. Why? According to the Executive Director of the Solar Industries Association.ninety percent of solar companies won’t be able to survive sans the subsidies.

    If we’re lucky the extension will be a year or two.

    Right.

    • Bob_Wallace

      The solar ITC extends through 2019.

  • Garth Suleman

    What the supporters of renewable energy often neglect to tell you when citing the subsides are the nature of the subsidies and the fact that subsidies are quoted not on a per kwh basis, but on a total basis.

    If you reduce subsidies to a per kwh basis, renewables are much more heavily subsidized.

  • Garth Suleman

    What the supporters of renewable energy often neglect to tell you when citing the subsides are the nature of the subsidies and the fact that subsidies are quoted not on a per kwh basis, but on a total basis.

    If you reduce subsidies to a per kwh basis, renewables are much more heavily subsidized.

    • Bob_Wallace

      Except that’s not true, Garth.

      One form of subsidy is allowing fossil fuels to not pay for the health and environmental damage it causes. Taxpayers pick up that bill, they subsidize the health and environmental costs of coal.

      Wind and solar receive 2.3 cents per kWh for the first ten years of production. Nothing after that.

      We pay between 9 and 15 cents per kWh for every year of coal production. Year after year after year….

      • Garth Suleman

        Not Interesed.

  • Garth Suleman

    What the supporters of renewable energy often neglect to tell you when citing the subsides are the nature of the subsidies and the fact that subsidies are quoted not on a per kwh basis, but on a total basis.

    If you reduce subsidies to a per kwh basis, renewables are much more heavily subsidized.

    • Bob_Wallace

      Coal and renewables do receive different types of subsidies.

      Coal is a very mature technology. After more than 100 years coal should stand on its own and pay for the damage it causes, but it doesn’t. We pay between 9 and 15 cents per kWh to cover the health damage caused by coal.

      Wind and solar are emerging technologies. They needed subsidizing to get them to a scale where they could compete with subsidized coal, with subsidized nuclear, and with natural gas. Now that they are reaching that scale their subsidies will be faded out.

      You last sentence is simply wrong. External costs paid by taxpayers are subsidies. Coal, today, receives much more subsidy per kWh.

      • Garth Suleman

        Not interested.

        • Bob_Wallace

          I sort of figured that out, Garth.

          You seem to have some sort of pro-fossil fuel, anti-renewable energy agenda. If that’s true then best you take it elsewhere. This is a fact based site.

          • Garth Suleman

            Not Interested.

          • Bob_Wallace

            Leaving on your own or do you need someone to show you to the door?

      • Bob_Wallace

        You deleted your own comment, Garth?

        The one that said –

        “What the supporters of renewable energy often neglect to tell you when citing the subsides are the nature of the subsidies and the fact that subsidies are quoted not on a per kwh basis, but on a total basis.

        If you reduce subsidies to a per kwh basis, renewables are much more heavily subsidized.”

        And then reposted it. What strange behavior….

  • Bob_Wallace

    At some point below I may have screwed up the math. Big numbers. Don’t have enough fingers and toes to do the billions stuff. Let me copy over from a spreadsheet, just in case.

    For 2014 the EIA reports that the US generated 1,581,710 Thousand MWh of electricity with coal.

    That’s 1,581,710,000 MWh

    And 1,581,710,000,000 kWh

    http://www.eia.gov/electricity/annual/html/epa_01_01.html

    In 2014 there were 318,900,000 people in the US. That works out to 4,960 kWh from coal per person.

    At $140 billion for health care costs created by coal it works out to 8.8c/kWh or $438 per “average” person.

    At $242 billion for health care costs created by coal it works out to 15.3c/kWh or $757 per “average” person.

  • Marc

    The subsidies to Green Energy are of the “Here’s a million dollars, go generate a million kilowatt hours”. The Subsidies to non renewables are more of the tax break variety – to attract investment. Further to that, what the renewable energy doesn’t want you to know about is on a per unit of energy basis, the ten fold advantage non renewables have over renewables more than reverses.

    • Bob_Wallace

      Mark, wind and solar receive either Production Tax Credits (PTC) or Investment Tax Credits (ITC).

      You should be able to tell by their names that both are “tax break variety” subsidies. There’s no direct payment to solar or wind farms.

      Your last sentence doesn’t make sense. Could you explain what you were trying to say?

      • Marc

        Bob – it’s not easy to figure out the nature of all of the billions of dollars of subsidies on either Fossil Fuels or Wind/Solar. You make the statement they are either PTCs or ITCs.

        You are wrong. Not all are of this variety.

        Renewable energy advocates like to cite the fact that renewables receive less than fossil fuels. That’s true, but only because the amount of renewable energy generated world wide is much less than the amount of fossil fuel energy generated world wide. On a subsidy per unit of energy renewables are much more heavily subsidized.

        • Bob_Wallace

          Over the first 15 years of these energy sources’ subsidies, oil and gas received 5 times what renewables got (in 2010 dollars) and nuclear energy got 10 times as much. (Most of the renewable subsidies went to corn farms for ethanol, not wind, solar and other renewable electricity technologies.)

          Between 1918 and 2009 oil and gas received average annual subsidies of $4.86 billion. (92 x $4.86 billion = $447 billion)

          Between 1947 and 1999 nuclear received average annual subsidies of $3.50 billion. (53 x $3.50 billion = $185.6 billion)

          Between 1980 and 2009 biofuel received average annual subsidies of $1.08 billion. (29 x $1.08 billion = $31 billion)

          Between 1994 and 2009 wind and solar received average annual subsidies of $0.37 billion. (15 x $0.37 = $5.6 billion)

          http://www.dblinvestors.com/documents/What-Would-Jefferson-Do-Final-Version.pdf

          Since the 2009 cutoff above wind and solar have been receiving subsidies in larger amounts. This is because many subsides are now based on new production. (If any new nuclear had come on line it would also received PTC subsidies.)

          Out of curiosity I made a rough stab at calculating the amount wind and solar have received since 2009.

          Based on EIA production numbers from the beginning of 2010 through 2013 solar produced 16,625,000,000 kWh. During the same period wind produced 762,483,520,000 kWh.

          Ignoring the fact that some wind/solar farms chose the 30% ITC rather than the $0.023/kWh PTC and doing the math as if all wind and solar chose the PTC, wind and solar subsidies would have received subsidies (had their taxes lowered) by $19.5 billion.

          Between 1994 and 2009 renewables received subsidies of $5.6 billion. Adding in the 2010 to 2013 (roughly calculated) subsidies the total comes to $25.1 billion.

          Between 1947 and 1999 nuclear received subsidies equaling $185.6 billion.

          Wind and solar received 11% as much as nuclear when we carry the numbers to the end of 2013. Of course there are subsidies for nuclear which are not included in the $185.6 billion.

          Here’s another interesting statistic.

          In 2013 nuclear produced 19.4% of all US electricity. Wind and solar produced 4.33%.

          Nuclear has received 7.4x as much subsidy over time and yet is producing only 4.5x as much electricity. We are currently getting 1.6x more electricity per dollar subsidy with wind and solar.

          Another indication that we seem to have wasted our money on nuclear.

          And let’s not forget the $140 billion to $242 billion taxpayers spend each year treating health problems caused by coal. That subsidy totally dwarfs everything.

          And so often overlooked is the calculated value of taxpayer assumed liability for nuclear reactor disaster which runs $2.2 billion dollars per year per reactor. Roughly $200 billion per year to cover the current 99 reactors.

          • Marc

            Again, on a per kwh basis, Green Subsidies are much much higher. You failed to divided by energy produced.

  • SA Kiteman

    What would Jefferson do? Well, first off, he wouldn’t lie so blatantly with his chart.
    Hell, “renewables” only since 1994? But nuclear since 1947? Wht about all the research that went into figuring out optimum airfoil shape that sindmills use. What about all the research that went into developing the PV in te first place. What about the hundreds of billions if not trillions of dollars that ent into building all those dams in the thirties?
    A report I read last year shows that counting from 1950 to today, renewables have gotten about 3 times the subsidies as nuclear power while producing about 1/3 the energy. That means that the taxpayers have provided about 10X the subsidy to “renewables” as they have to nuclear.

    • tmac1

      SA Kiteman
      OK I will bite.

      I think the Fleet of Nukes we have now should be kept going as long as possible.
      New Nukes are not going to cut on many fronts:

      SAFETY/INSURANCE
      Show me any self insured nuclear plant in the US
      You cannot
      The insurance industry refuses to insure nukes.
      The clean up costs of any disaster from Fukushima to Three mile Island will be swept up by you and me and the ratepayer.
      How do you figure in the cleanup of Fukushima into the price of KWHR in Japan? That is a huge subsidy
      Solar emergency / Solar SPill happens to be a nice sunny day

      COST
      Show me a nuclear program that has decreased the costs of production or done things on time.
      You cannot.
      The Nuclear industry has consistently run late and way over budget.
      The Nuclear plant in England and the Vogle reactor in Georgia are the latest bloated and late nuclear plants to demonstrate just how bad the nuclear industry is. Unlike every other industry, which shows that the longer you make a product the quicker and cheaper it gets to be, think Moores law of semiconductors, EV batteries, Flat screen TV, Nuclear gets slower and more expensive.

      Contrast plummeting costs of solar.

      TIME
      Nuclear takes a decade to complete ( I know I know its because those nasty regulators
      In contrast Wind and Solar can deploy Megawatts capacity in under a year or two

      In summary Solar wind win on safety cost and time. Once we get cheap storage watch out FF and Nukes.

      Coal is just about dead,
      New Nuclear is going nowhere
      Gas is here for a while but hopefully we can get rid of this as well.

      • SA Kiteman

        Re insurance: False.
        You are flat out wrong. Insurance companies not only insure nuclear power plants but they willingly do so to the maximum that the Federal Government allows them to insure ANY company. Then, beyond that, they self insure for 40 times as much.

        Whoever told you that insurance crap LIED to you. Perhaps you should rethink your reliance on their “wisdom”.

        The complete cost of TMI clean-up, INCLUDING business losses due to the unecessary evacuation, have already been paid by TMI’s insurance company. They didn’t even have to delve into the industry self insurance fund. As for Fukushima, TEPCO is 100% liable for the costs. How they and the JapGov have arranged for them to pay it all is not in my ken.

        Actually, the big subsidy is the money Japan is paying to the fossil fuel companies. They have spent about 4X as much on the EXTRA fuel needed because of the shuttering of all their nuclear plants as is being spent on Fukushima cleanup and decommissioning.

      • SA Kiteman

        Re: Cost: False.
        Of the nuclear power plants built recently, the large majority of them have been built on time and within budget. Only in Europe and maybe the US, where anti-nupow activists can simply and cheaply impede the building process, is there a propensity for late and thus over-budget nuclear plants. Meanwhile, in South Korea, nuclear plants are routinely being built for ~$2(US)/W.

        True, Hinkley C is shaping up to be another costly attempt to build an EPR. So far, even the Chinese have had difficulty with that design. Vogtle, the AP1000, is not doing badly for a First of a Kind build. And the energy generated will still be much cheaper on a reliable kWh basis than any other low carbon source save hydro. But hydro is basically built out.

        Yes, it is amazing how cheap something can get when it is being subsidized to the tune of $2.4/kWh. Hell, for that level, nuclear would be free!

      • SA Kiteman

        Re: Time. False.
        While history shows that ittakes much longer to build each nuclear power plant than it does to install a solar panel or wind turbine, they don’t have to build one unit at a time. And because of tis, and the fact that each nuclear power plant produces VASTLY more energy than a solar panel or wind turbine, history also shows that the fasted increase in per capita electricity production is dominated by nuclear power. The 7 fastest increases in low carbon capacity (ignoring hydro) has been nuclear power.

  • bart889

    A couple of things are interesting. The study that graph is taken from is five years old, and it never mentions subsidies on a dollar per unit of energy delivered basis. Of course, doing so would be embarrassing in the extreme for those whom wind and solar have ascended to a sort of religion.

    It is also built on the lies that allowing the oil and gas industries to deduct expenses from revenues and allowing the depreciation of capital is somehow a “subsidy”. If that is the case, then every single business in every single line of work in the US is “subsidised”.

    • Frank

      If I run into your car, I have to pay to fix it. If you pollute the air, and cause me to get sick, it’s free. Why? BTW, have you ever looked at what happens to Florida if the Greenland ice melts? What is that going to cost? Seen what has happened to the price of renewables in the last 6 years?

      • Epicurus

        {crickets}

        Winner by a knockout–Frank!

        Externalities are the Achilles heel of free market fundamentalism. Something like 150,000 people die prematurely in the U.S. because of air pollution caused by fossil fuels. The health care costs are astronomical. It’s far worse in some other parts of the world.

        • tmac1

          Epicurus
          “Externalities are the Achilles heel of free market fundamentalism”

          Brilliant, as a matter fact I am going to steal it
          I said it first and I am going to use it as the title of my new book.!

          • Epicurus

            The subject of external costs deserves a book, and a huge chapter in economics text books.

            I would like to read it. Let me know when it’s coming out and where to buy it.

            The “free market” causes a lot of harm and distorts rational choices unless external costs are added back into the costs of the products that engender them. Coal generated electricity couldn’t compete with wind or solar if some of its major costs weren’t socialized. The righties never acknowledge this simple truth.

          • bart889

            Every basic microeconomics textbook spends a lot of time talking about externalities. Everybody who studies this issue gets told a lot about market failure. If you had ever opened a textbook, you would know this.

            Market systems are imperfect, but fundamentally better than the central planning and authoritarianism you seem champion, which have brought death and misery to billions over the past century.

          • Epicurus

            Yeah, clean energy advocates are all authoritarians and central planners. In your mind.

        • bart889

          “Something like 150,000 people die prematurely in the U.S. because of air pollution caused by fossil fuels.”

          And by how many person-years are lives extended and improved by the use of fossil fuels? Do you think electricity and transportation of persons and goods are simply trifles that are ancillary to life? Do you really want to go back to the 17th century? Just how enjoyable do you think life was back then?

          Looking solely at costs without considering benefits is deliberate myopia. It is selective blindness, which is a form of self-imposed mental handicap. I understand that life is simpler when you only look at one side of a coin, and I understand why “simple” has such an appeal to you, but have you ever considered stepping out from under the umbrella of your religion and looking at the world, and the complex issues facing it, in its entirety?

          • Epicurus

            God, what a straw man.

            The issue is not fossil fuels versus not having energy. The issue is using fossil fuels and suffering their external health and other costs or using clean energy. Putz.

          • Frank

            That whole argument only makes sense when renewables are expensive, and they were, but now they aren’t. If it doesn’t cost more, or maybe even cos5s less, wouldn’t you prefer clean energy which causes fewer costly problems? Isn’t the simplest way to do that is put a price on it, and let the market figure it out?

      • rockyredneck

        The problem with your argument is that no industry or individual is without guilt. None of the costs come without gains and there is no doubt our present standard of living is largely a result of resource use, fossil fuel and otherwise. As for Florida, it might be more valuable if it was largely under water. Most of the results are not actually destruction, but only change. Of course, most people are more frightened of change than of imminent threats.

        • Frank

          Oh I’m guilty too. Here is the thing. If we put a reasonable price on what goes up the smokestack, or out the tailpipe, and reduced taxes elsewhere, it would actually improve our economy. Our economy would favor renewables which are a better deal now. The fact that pollution is free rewards the more costly technology.

      • bart889

        What do you consider to be the optimal amount of pollution? Zero? Put another way, what do you consider to be the optimal amount of humans on the face of the earth? Maybe you think that should be zero too.

        • Frank

          The beauty of putting a price on what goes up the smokestack, or out the tailpipe, is that the market automatically reaches for the low hanging fruit first, like when an old coal plant retires, you don’t build a new one, you put up renewables, but if there was a price on what was coming out of the tailpipe of my prius, I just pay it till the Tesla model 3 comes out, or maybe comes off lease.

    • Epicurus

      “The graph . . . never mentions subsidies on a dollar per unit of energy delivered basis.”

      Right, and it would be interesting to see the cumulative amount of subsidies per unit of energy. Percentage depletion has been around since the 20’s, and it was 27.5% for most of the time.

      “It is also built on the lies that allowing the oil and gas industries to
      deduct expenses from revenues and allowing the depreciation of capital
      is somehow a ‘subsidy’.”

      You don’t really know anything about oil and gas subsidies (or incentives, as some of us refer to them), do you?

      How do you justify intangible cost deductions–the expensing of costs that would otherwise be capitalized?

      Cost depletion is analogous to depreciation but not percentage depletion. Everybody elects percentage depletion. I do. How do you justify percentage depletion?

    • Epicurus

      “It is also built on the lies that allowing the oil and gas industries to
      deduct expenses from revenues and allowing the depreciation of capital
      is somehow a ‘subsidy’.”

      Where did you get this ridiculous straw man? From talk radio?

      You really don’t know what tax subsidies the oil and gas industry enjoys, do you?

      • bart889

        I am a market analyst in the oil and gas industry, so, yes, I do know. Question: do you consider depreciation and cost-expensing in the wind and solar industries to be “subsidies”?

        • Epicurus

          Depreciation is only a subsidy to the extent it is accelerated depreciation and expensing of costs is only a subsidy to the extent they are costs which would ordinarily be capitalized (like IDCs).

          Do the wind and solar industries get accelerated depreciation, and do they get to expense capital costs?

          I don’t know. I have been in the oil and gas industry for several decades.

        • Epicurus

          Does the oil and gas industry enjoy any tax incentives that non-mining industries do not, and if so, what are they?

          Would the American oil and gas industry exist as it is today without tax incentives?

  • Can we get a link to the original presentation and a description of the data, assumptions and methodology used, please. Unfortunately this article just repeats what’s at RenewEconomy.

  • Billy Bangle

    If this article is correct, then it’s funny that electricity in Germany & France is twice the cost of that in France, isn’t it?

    • Ninjaneerd

      “If this article is correct, then it’s funny that electricity in Germany & France is twice the cost of that in France, isn’t it?”

      Trying to follow your comment but I think it’s missing something?

      Maybe “Germany and France” needs to be replaced with “Germany and XXXXX”

      Or maybe it’s actually a true statement if Germany and France each spent the same on electricity, then it would be true that together they spent twice than one of them.
      (haha!, I’m guessing that’s not what you meant)…

    • Good grief, man. You can’t even state the insider group’s article of faith correctly!

      This is a reference to Germany and Denmark and their exceptional deployment of wind and solar and comparing it with France’s exceptional deployment of Nuclear to try and show that renewables are far more expensive and don’t scale and the only solution is Nuclear power. Amirite? That argument is so lame and ignores numerous other factors. And it’s not hard to reverse it to reach completely the opposite conclusion. eg. The only reason French Nuclear electricity is so cheap is because of the vast government subsidies paid for out of excess taxation.

    • Ivor O’Connor

      France’s nuclear reactors were subsidized. Despite already being built the French government says they are too expensive and want to replace them with wind and solar.

      Germany’s electricity was more expensive before they started their energiewende program. Apparently the utilities and fossil fuel industry thought they had an unbreakable monopoly.

      • Germany and Denmark’s electricity is also expensive because it’s the most highly taxed in Europe. And there are strong arguments for taxing energy use heavily to encourage a push for efficiency.

        • Billy Bangle

          There are levies in Germany & Denmark that are used to cross-subsidise within the energy industry, but there’s no tax with the sole intent of pushing the price up. I also don’t think China or India would agree that you need to make energy expensive for its own sake. Fossil-fuel energy needs to be made more expensive to cover the damage to the environment.

  • Epicurus

    How about allowing solar and wind producers to take 15% of their production income tax free? That’s what the current depletion allowance does for oil and gas producers.

    Or 27.5%–that’s what the depletion allowance was for most of its existence. Everybody and his dog would be building wind turbines and solar farms.

  • Epicurus

    Deductions for intangible drilling costs are a significant subsidy too (allowing expensing of costs that would otherwise be capitalized).

    A graph showing the amount of money involved for each subsidy would be nice.

  • eveee

    Nice article Giles. And have the oil, gas, and nuclear subsidies been phased out after a many decades? No. They are mature industries that are not getting better. Subsidies to oil, gas, and nuclear are wasted bringing no return.
    They are swimming in free dollars while hypocritically claiming renewables are using subsidies.
    Historical US renewable subsidies are dominated by renewable fuels, mainly ethanol. So only a fraction of historical renewables subsidies went for wind and solar.
    The claims against renewable subsidies are a complete sham. Truth is, without subsidies, renewables competition would fail.

  • sjc_1

    Depletion allowances are a big tax break. They would argue you turn on your lights and drive your car, so you should be grateful.

    • eveee

      Thats what they argue when they have a monopoly. Now that their monopoly is crumbling, they are arguing that they should have subsidies while their competition should have none.

      • JJA_S

        Correct me if I’m wrong here, but isn’t the depletion allowance the exact same as any other company using depreciation for capital assets to offset their main assets?

        • eveee

          You would have to ask an accountant or someone like that, but IMO, there is just nothing like the subsidies oilcos get. If they drill a dry hole its completely written down. No taxes. They have Master Limited Partnerships. Lets put it this way. I don’t think there is any other field that has so much subsidy bragging rights. Just go to an investor page and read how ecstatic they are about all the tax advantages. You won’t find anything like it in any other field.

          For a definition,

          “Depletion allowances let oil companies treat the oil in the ground as capital equipment, and thus allows them to write off a certain percentage for each barrel that comes out.”

          http://thinkprogress.org/climate/2013/03/01/1654501/oil-subsidies-century/

          Lets see if that applies to farming. All the peaches and apples on Farmer Johns orchard are capital and are allowed a depletion allowance.

          Nope. don’t think so.

          • Cabbage Head

            Of Note: Produce isn’t taxed.

          • Tim

            Elucidation acceptable. I feel for this poor Farmer Jones guy. He can’t rip taxpayers off like the dirty oilmen can. Your most important point is still “…wasted bringing no return.”

          • Epicurus

            Farming. Interesting point. I suspect the trees are the capital costs and that their costs are depreciated (i.e. trees have a useful life). Trees don’t deplete like a mine or well.

            I assume you don’t have a problem with businesses amortizing the costs of their depreciable assets over their useful lives. Businesses have to be able to replace those assets when they wear out in order to continue to exist..

          • eveee

            The whole depletion allowance is a fraud. OIl is not capital no matter what the oil industry thinks.

          • sjc_1

            The orchard was planted, those trees are capital and should be depreciated, but are not. Oil is a land resource, thus NOT capital.

          • Epicurus

            Yes, fruit and nut trees (and vines) are depreciated (you could have googled that before you opened your pie hole).

            https://www.irs.gov/publications/p225/ch07.html

            There is a conceptual difference between depreciation and depletion.

          • Epicurus

            Depletion and depreciation are two different concepts related to the nature of different industries.

            Shouldn’t extractive industries, like timber, mining and oil, have a cost recovery method for their assets like manufacturing industries do?

            “Unlike depreciation and amortization, which mainly describe the deduction of expenses due to the aging of equipment and property, depletion is the actual physical depletion of natural resources by companies.”

          • Epicurus

            Thinkprogress is not the best source for understanding accounting concepts.

          • Marc

            On a per unit energy basis, renewables are subsidies much more heavily than non-renewables. I don’t have a problem taking away the subsidies on nonrenewables, but if you to the same to renweables, the industry would fail.

          • Bob_Wallace

            Actually that’s not correct, Marc.

            We subsidize coal by allowing coal to duck paying for the damage it causes to health and the environment. Taxpayers cover those costs – which make that a subsidy.

            If coal had to pay for its external costs the cost of electricity would be close to $0.20/kWh.

            The unsubsidized price of onshore wind is now under $0.04/kWh. About one-fifth the actual cost of coal.

            The unsubsidized price of PV solar is now about $0.06/kWh. About one-third the actual cost of coal.

            The new nuclear reactors now being built in Georgia have received taxpayer guaranteed loans (wind and solar don’t get that). Taxpayers are on the hook for most of the cost of a major nuclear disaster (not a possibility with wind and solar). And when/if the reactors come online they will receive PTC subsidies similar to what wind and solar receive.

            Make coal pay its full costs and the coal industry would shut down extremely fast. Same for nuclear (which is really dead anyway). Solar and wind installations would quickly ramp up to take their place.

            The wind and solar industries would absolutely love to see all sources of electricity lose subsidies and have to pay their external costs. Absolutely, totally love it.

          • Marc

            Show me the evidence that says you can produce solar energy at 0.06 per kwh.

          • Bob_Wallace

            Wind = $0.0235/kWh average 2014 PPA (subsidized).

            DOE “2014 Wind Technologies Market Report”

            http://energy.gov/eere/wind/downloads/2014-wind-technologies-market-report

            Solar = $0.05/kWh PPAs (subsidized) being signed in the US Southwest. Working backwards through a LCOE calculation extrapolates a cost of about $0.02 higher for the less sunny Northeast.

            Lawrence Berkeley National Laboratory entitled “Utility-Scale Solar 2013: An Empirical Analysis of Project Cost, Performance, and Pricing Trends in the United States”

            http://emp.lbl.gov/sites/all/files/utility-scale-solar-2013-report.pdf

            PPA prices for wind and solar are lowered about 1.5 cents by PTC (Production Tax Credits). Both wind and solar are eligible for 2.3 cent/kWh tax credits for each kWh produced during their first ten years of operation. Half of 2.3 is 1.15, but getting one’s money early has value. That means that the non-subsidized costs of wind are a bit under 4 cents and solar is running 6.5 to 8.5 cents/kWh.

            http://energy.gov/savings/renewable-electricity-production-tax-credit-ptc

            And here are some prices which are even lower….

            .

            http://c1cleantechnicacom.wpengine.netdna-cdn.com/files/2016/05/Low-Solar-Prices-May-1-2016.png

          • Marc

            Bob I went to the first link. The figure 0.06 is not there.

            Please be more specific. You said solar energy was 6 cents. Please prove this, and please, don`t give me just the URL, give me the page.

            I refuse to read a 93 page document to find something when you can just tell me.

          • Bob_Wallace

            Take your fingers off your keyboard, read what I posted, and think.

          • Marc

            Bob

            1) I will read what you post when it challenges positions I hold and

            You said very clearly that the cost of solar power is 6 cents.

            Prove it.

          • Bob_Wallace

            repeated question

          • Marc

            The last link was about a tax credit. I am not going to scour a document about tax credits to find a piece of information about costs.

            I see a figure, 0.023 tax credit. Was this the 0.0235 figure you cited?

          • Bob_Wallace

            Marc, please read what I posted.

            $0.023 tax credit for the first ten years of production. For a typical 20 year PPA that makes the average subsidy 1.15c/kWh of the term of the contract.

          • Marc

            Bob I will read what you write when
            1) You are a little less verbose
            2) You do not challenge me on a position I do not hold

            Please prove to me that solar costs are less than 6 cents per kwh

          • Bob_Wallace

            repeated question – last time I’ll even bother explaining.

          • Marc

            The diagram is about “Solar Bids” I have no idea what a “Solar Bid” is.

            I don’t think this advances your argument that the cost to produce a kwh solar is 6 cents.

          • Bob_Wallace

            A solar bid is a contract to furnish electricity from a solar farm at an agreed on price.

            In the US utilities contract for electricity using Purchase Power Agreements (PPAs). The price is agreed upon by buyer and seller and then the facility is built.

            Did you not note the date on the solar prices above? They are “stale dated” because the NREL does not release new data early in the year. And sometimes lags a year.

            6.5c/kWh in 2013.

            Utility solar has been dropping about 15% per year over the last few years. It doesn’t take any sort of advanced math to realize that with those sorts of installed solar prices we’re now under 6c/kWh.

            .

          • Marc

            1) In answer to your questions: Yes I did note the date.

            I’m not sure how the solar bid related to the cost of producing solar power. Perhaps indirectly.

            You made the following statement: It costs 6 cents per solar kwh
            Please prove it.

          • Marc

            First time I’ve seen this pic. Where is it from.

          • Bob_Wallace

            Greentech Media does a quarterly report on US solar installed amounts and prices. I keep track of the prices and graphed them.

            Just noticed – the title should be GTM, not GMT.

            Two quarters ago they started reporting the cost of tracked utility separate from fixed mount. CF for tracked is considerably higher which makes the cost per kWh much lower. I’m guessing that tracked utility solar is now well under 5c/kWh.

          • Bob_Wallace

            “As for environmental costs, I will not defend a position I do not hold.”

            I don’t understand. You don’t recognize the fact that fossil fuels cause significant health damage and costs therefore you allow yourself to ignore those costs?

            “Here is my position. If you wish to challenge me, please challenge this point only.

            1) Green energy receives subsidies on a per kwh basis that are more than fossil fuels.

            2) Green energy subsidies are of a different nature than fossil fuel subsidies.”

            I agree with both 1) and 2). As I previously stated.

            1) Currently wind and solar receive more per kWh produced than coal in terms of tax breaks. That’s tax breaks only. It ignores health and environmental costs.

            Of course when one choses to ignore health and environmental costs in order to support fossil fuels one is being dishonest, but whatever floats your boat.

            2) Green subsidies are investments which are allowing us to avoid the ongoing costs of fossil fuel damage. Green subsidies are different in that they are time limited. In about 14 years they will all be paid out with annual decreases starting soon and continuing down to zero.

            Were we to continue to use fossil fuels we’d continue to pay out for the external costs for FF for the next 100, 200 years.

            Renewables are beginning to replace FF. Thanks to wind and solar our use of FF has dropped about 5% to date. That’s a 5% drop in the health and environmental damage caused by fossil fuel use.

            .

          • Marc

            Bob

            Please review my original position.
            I’m not a very smart man and I”m only capable of dealing with one or two points issue at a time. I’ll repeat them for my benefit.

            1) On a per kwh basis renewables are much more heavily subsidized
            2) Renewable energy subsidies are of a different animal.

            Before we debate the merits of renewable, such as the health costs, and I’ll be happy to debate this at a later time, we need to sort this out.

          • Marc

            Ok, let’s not ignore health costs.

            1) $140 Billion divided by $7 Billion people is $20. $20 divided by 365 is 5 cents per day. If ignoring the concept of per capita floats your boat, well not much I can do.

            2) I agree they cause you to avoid the ongoing cost of fossil fuel damage, but that works out to a small number. I agree subsidies are time limited. Subsidies don’t represent what renewable energy needs, it represents what people think they need.

            3) Please prove to me that solar power costs less than 6 cents per kwh.

          • Bob_Wallace

            Quit asking already answered questions.

            Slow down. Read replies. Take on new information. Think.

            Your 1) math is wrong. I gave you the right number in another post.

            Your 2) argument is flawed. Another 100 years of $140 billion to $242 billion is incredibly far from “a small number”.

          • Marc

            Bob, you’re the one who went off on tangents.

            You have not proven to me that solar energy costs 6 cents per kwh. You’ve asserted it.

            1) Your math assumed 1,585,697 kwh was 1,585,697,000 mwh. You multiplied instead of divided.

            2) Bob, again you neglect the concept of per capita.

            Look, I don’t mind debating, but I’m getting tired

            Let’s agree to debate one point at a time.

            If you can agree to that, I’m in. If not, I’m not.

          • Bob_Wallace

            If I wrote “1,585,697 kWh” that was a typo. The EIA reports generated electricity in millions of kWh. It should have read 1,585,697 million kWh.

            I’m probably not going to “debate” you for awhile. I’ve got stuff to do. In the meantime please read what I posted and get on top of the numbers.

          • Marc

            1,585 million kwh per year is a half of a kwh per year per person. There`s something suspicious about that number. It`s too low. I`m not going to edit your math.

            And stop being so insulting. I`m not going to ask you again. You`re the one who can`t divide, not me.

          • Bob_Wallace

            2014 Coal Net Generation = 1,581,710 Thousand Megawatthours

            http://www.eia.gov/electricity/annual/html/epa_01_01.html

          • eveee

            That’s a misleading perspective. Every emerging technology has higher r and d costs of than status quo. A real comparison would compare subsidies fo each during equivalent development phases. When that is done, oil, nuclear, and other sources have. Enjoyed massively more subsidies that wind and solar combined.

            Furthermore, the subsidies for renewables are often distorted by the renewable fuels like ethanol, which have been historically the lions share of renewable subsidies.

            Renewable subsidies for wind and solar have only risen recently, and unlike the moribund aging fossil fuel and nuclear Industries, wind and solar costs are falling in response to investment.

            Oil by comparison, is at the end of its rope.

            http://thinkprogress.org/climate/2016/06/02/3767486/peak-oil-decline-financial-times/

            The resulting report, What Would Jefferson Do? The Historical Role of Federal Subsidies in Shaping America’s Energy Future–released in September–claims that American federal government support for the oil industry is five times the amount for renewables power annually; support for nuclear power was twice the commitment to renewables. The report was co-written by Ben Healey, a Yale University graduate student, and DBL Investors Managing Partner, Nancy Pfund, who presented the data on a media and investors call this Monday.

            Whereas the government spends around $8 billion a year on oil subsidies and $3.3 billion on nuclear power subsidies, it only spends $400 million on incentives for all renewable power combined, said Pfund.”

            What we should do is fund the emerging inevitable change, rather than back money wasting losers like coal, oil, and nuclear.

            “Last year, renewables accounted for nearly half of all new generating capacity worldwide. The Paris climate agreement will lead to further growth in the renewable energy sector. In a recent report, Trancik and her colleagues estimated that by 2030, wind generating capacity could multiply threefold and solar generating capacity could multiply fivefold. This could lead to significant reductions in cost — 25 percent for wind and 50 percent for solar photovoltaic.
            What are needed now are policies that will level the playing field for renewables. And, while the politics of climate change are often dismaying, policymakers understand the potential for clean energy.”

            http://thinkprogress.org/climate/2016/01/11/3737538/intellectual-property-renewable-energy/

            http://rameznaam.com/wp-content/uploads/2014/10/Solar-and-Wind-Price-Reduction-2009-2014-Lazard-With-National-Grid-Costs3.png

            The trend is clear. Those that see the future will succeed and benefit. Those that don’t will suffer and fail.

          • Marc

            You would be correct except for two factors.
            1) The ratio of subsidy per kwh for renewables isn’t just a little more than for fossil fuels, its a lot more

            2) Renewable energy has been around for forty years. How long does it need subsidies for.

          • Bob_Wallace

            We’re subsidizing coal between $140 billion and $242 billion a year just to cover the external health costs. That does not include the external costs of environmental damage.

            Billions more dollars are spent on the health damage caused by transportation fuels.

            There are no external health costs for wind and solar.

            Let’s generate a “worst case” subsidy number for wind and solar.

            In 2015 we generated 190,927 million kWh with wind and 38,614 million kWh with solar.

            Assuming all received the 2.3 c/kWh PTC subsidy (first ten years of production, amount spread over a 20 year PPA = 1.15c/kWh) that comes out to about $26 billion.

            Add up the $140 billion to $242 billion for coal, tens of billions more for petroleum, tax avoidance credits for fossil fuels. We’re well over 10x as much per year for fossil fuels.

            That does mean that on a per kWh wind and solar receive more, but there’s a huge factor that must be considered. The subsidies for wind and solar expire. The subsidy contracts already granted are time limited. The wind and solar subsidy programs fade out in a couple of years.

            If we keep burning fossil fuels those health costs keep occurring year after year after year.

            Subsidies to wind and solar are investments in future much lower cost electricity. By subsidizing wind and solar for a few years we avoid the longer term recurring annual costs of fossil fuels.

          • Marc

            Again, you are not dividing by energy produced. Green Energy has been trying to make it for forty years, and it has failed.

          • Bob_Wallace

            Try reading again, Marc.

            And give some thought to the two types of subsidies. Those which are used to bring a new product/service to large enough scale to compete and those which are used to support an already mature product/service.

            The first is an investment. The second is an ongoing cost.

          • Marc

            Bob,

            Your essay asserts a position, it does not prove it.

          • Bob_Wallace

            Sorry, Marc. If you came here with a closed mind then nothing anyone posts to help you out is going to get through to you.

          • Marc

            Ah, finally your true colours come through, and you resort to the old “This guy is unwilling to listen”.

            Please you quite clearly said solar power costs 6 cents per kwh.

            Tell you what. Let’s have an honest debate on that point.
            Prove it. Then we can proceed.

            But this bullshit practice of characterizing your advesary rather than address his argument is beneath you.

          • Bob_Wallace

            See those PPA prices below – the 2014 prices? Just above 5c/kWh.

            Take out the subsidies (about 1.15c/kWh) and the price goes up to just above 6c/kWh. And understand that the ~6c includes owner profit along with any other solar farm costs which do are not part of actual production costs. That drops it back toward 6c.

            Then look at what has happened to the installed cost of solar over the following year. Second graph.

            $1.61 (Q4 2014) to $1.33 (Q4 2015) per installed watt. A 17.1% cost drop. 17% less than 6 is 5.

            .

          • Marc

            If you examine my original position is was this.

            Renewables receive a much higher subsidy on a per kwh basis. I am only willing to defend this position. The reason I didn’t read your post was because I could see after reading the first few lines that it did not challenge my position. After reading more fully, it’s quite clear that you agree with me. Renewable energy is more heavily subsided on a per kwh basis. This is something the supporter of renewable energy never mention.

            The contracts may be limited, but the need for subsidies isn’t.

          • Bob_Wallace

            Look, Marc, you set up a dishonest comparison between wind, solar and coal.

            You want to count only tax credit subsidies. If you limit yourself to that position then, yes, wind and solar receive more per kWh than coal.

            If you add in same-year health and environmental damage then coal receives far more subsidy per kWh.

            If you also allow for the potential long term tax credit subsidies along with health and environment costs of coal then you’d understand that wind and solar receive a tiny portion of the subsidies given to coal.

            You want to “win”? Set up a fake competition and crown yourself champ.

            We’ll laugh at the chump….

          • Marc

            Look Bob, I made a simple statement.

            “On a per unit energy basis, renewables are subsidies much more heavily than non-renewables. I don’t have a problem taking away the subsidies on nonrenewables, but if you to the same to renweables, the industry would fail.”

            I’m not sure where the dishonesty is.

            You say when you ad health costs, the subsidy to renewables are justified, but you did not quantify them other than to give a total.

            I did not make an unproven assertion. You did.

          • Marc

            No, I don’t want to “Win”.

            I made a very specific point. You have not refuted it – in fact you agreed with it.

            You made a very specific assertion, solar energy costs 6 cents per kwh to produce. I asked you to prove it. You haven’t. I even said, if you bother to read my posts, that I would concede that point. You didn’t.

            I addressed the $140 Billion in health care. You have not responded to that.

            You want to “Win”? Set up a fake competition an crown yourself champ.

            We’ll laugh at the champ.

          • Bob_Wallace

            Marc, I’m not going to play Whack a Mole with you.

            Any further repeats of the same question will be taken down. Even if that repeated question is embedded in a comment with a new question.

          • Marc

            $140 Billion per year. I’m not sure how easily that number is calculated but for the sake of argument, let’s work with it.

            $140 Billion per year. That works out to $20 per person, or 5 cents per day per person. The average North American uses, in home costs say an average of 400 watts. World wide, let’s say that works out to 100 watts (home use). Let’s double that to account for travel and work, so we’re up to say 300 watts, or 7.2 kwh per day, or less than 1 cents per kwh.

            So the health costs associated with fossil fuel use is less than 1 cent per kwn.

          • Bob_Wallace

            So what, Marc?

            We’ve been paying out those health costs for a hundred years and if we don’t quit using coal we’ll pay them out for another hundred or two hundred years.

            Our subsidies for wind and solar are time limited. They only started recently and will be gone in not much more than a decade.

            Now, let’s do the math the right way…

            In 2014 the US generated 1,585,697 million kWh of electricity from coal. That’s 1,585,697,000 MWh.

            Estimates of the cost of health damage caused by coal run from $140 billion to $242 billion per year.

            http://www.chgeharvard.org/resource/explore-true-costs-coal

            $140 billion / 1,585,697,000 MWh = $88.3/MWh or $0.09/kWh.

            $242 billion / 1,585,697,000 MWh = $152.6/MWh or $0.15/kWh.

          • Marc

            1) So the health care costs aren’t as bad as you suggest.

            2) There isn’t a problem paying things for another hundred years if you have a hundred years to pay for them.

            3) I agree the subsidies are limited. Not because at the end of the limit the renewables will be self sustaining, but because the contracts will run out. (At least you haven’t made a case that they’ll be sustaining)

            4) You know, You’re getting insulting. I’ll follow suit.
            Yes, let’s to the math right, instead of dividing by the population I should have multiplied. Let’s see $140 Billion multliple by 7 Billion is 980 Quintillion. You’re right, there’s no way anyone can afford to pay $980 Quintillion dollars for electricity. I don’t know what I was thinking. I’m not a smart man do I often divide when I should multiply.

            I concede you are absolutely right.

          • Bob_Wallace

            The health costs are not as bad as “I” suggest? Those number are from a Harvard study. I gave you the link. There are similar studies for Europe demonstrating the same sort of costs.

            What do you not understand about recurring costs and the value in eliminating them?

            Your heating bill is high. You spend money to insulate your house. You get that (insulation investment) money back in three years via lower energy bills. You save that money as long as you live in that house. A return on investment in the form of eliminating a recurring expense.

            Yes, renewable subsidies will end. After 2019 (three years from now) wind and solar subsidies will decrease and be gone after three more years. Ten years after that all of those subsidy agreements will have expired. There is no scheduled termination of coal and oil subsidies. There is no plan to charge coal and oil for their external costs.

            Now, let’s look at a possible future turn of event. It may be, a few years from now, that we get a lot more concerned about climate change and we will decide on a new program designed to increase the rate of renewable installation in order to kill off fossil fuels earlier. That might happen by creating a price on carbon or a reinstatement of a renewable subsidy. Just saying that so that you can’t say you haven’t heard anyone mention the possibility.

          • Marc

            Bob, sit down, relax and read my post.

            I quite clearly point out a flaw in your math. I’ll repeat it.

            1,585,697 kwh is not 1,585,697 mwh.

            If you divide 1,585,697 kwh by 300 million people it works out to 0.000 5 kwh per person per year.

            Please fix this, then we can proceed. Don’t go off on tangents because you get multiple discussions.

            I will answer your questions and we can have five simultaneous discussions. But I am going to answer them as you pose them, not as you intend, and leave it to you to make those corrections.

            Yes the health care costs are not as you suggest. Your math was bad, I can’t address it until you correct it.

            I agree insulation is an investment. I agree with this concept, but I won’t think it advances your argument.

            I agree subsidies will end. This does not advance your argument, unless you can prove that the industry will be able to be self sustaining.

          • Bob_Wallace

            1,585,697 million kwh.

            I left out “million” in my comment.

          • Bob_Wallace

            No, checking back I did say “1,585,697 million kwh”.

            You left out the million.

          • Marc

            No Bob, let`s not look at the future. Let`s settle the questions we can now.

          • Bob_Wallace

            Trying to tilt the pool table in your favor Marc?

            Let’s ignore inconvenient facts?

          • Marc

            Ok

            Bob you said solar energy was 6 cents per kwh, You lied.

          • Bob_Wallace

            We don’t allow name calling on this site, Marc.

            You might benefit by reading the site commenting rules.

          • Marc

            You see Bob your true nature is coming through. You levelled the first insult, then get upset when I called you a name. What name?

          • Bob_Wallace

            Here’s your original comment to which I was replying –

            “Bob you`re a troll.

            If you want to ignore inconventient facts, by all means.

            I won`t.”

            You edited that post in order to deny something that you said.

            And with that dishonesty you have earned a swift kick out the exit door.

          • Marc

            No, it`s just that you seem unable to stick to one point.

          • Bob_Wallace

            Marc, for the last hour or so I’ve been responding directly to your questions and incorrect claims.

            I’d suggest you not try to turn this into a pissing match.

          • Marc

            Bob, you turned it into a pissing math not me.

            You said Solar Power was 6 cents per kwh.
            You said I was dishonest in my original post.

            You have not proven your assertion.

        • Epicurus

          Cost depletion is analogous to depreciation. Mines (and wells) deplete over time as they are produced, like equipment wears out. But producers can elect cost depletion or percentage depletion. Percentage depletion is unrelated to the amount of money invested to create the mine or well.

    • Epicurus

      There are huge risks in drilling oil and gas wells. Ever heard of dry holes?

      No one in their right mind would take these risks without incentives.

      Now that we want clean energy, the best way to get it is to grant similar incentives to build wind turbines and solar farms. The more incentives, the more clean energy we will have.

      • rockyredneck

        The biggest incentive for investment by any individual or corporation is the potential for profit.
        Most direct subsidies and tax breaks are not secure enough for the long term but do provide a bit of risk reduction.
        Loans at low guaranteed rates or guaranteed markets reduce risk more and can be very low cost to governments.

        • Epicurus

          True. The biggest incentive for investing in oil and gas wells is the possibility of getting a return on investment of several times your investment. Unfortunately, clean energy lacks this feature, but on the other hand, there aren’t any “dry holes” with solar panels or wind turbines. But the ROI in clean energy projects is usually not very exciting.

          In addition to the huge ROI potential in oil and gas, the ability to shelter current income is a huge incentive for attracting non-industry investment.

      • SA Kiteman

        The trouble with this logic is that it just BEGS for corruption. X, Y, and Z form a small company that drills a hole to within 50′ of a suspected deposit in 10 locatios and come up “dry”. They go “bankrupt”. Then Y,Z,X,&T form another company, buy the bankrupt company’s assets, pennies on the dollar. They then drill the last 50′ and “suprise, suprise”! The upshot, the taxpyer has drilled their holes for them.

        • Epicurus

          Just about any business is an opportunity for the criminal mind. Ever see “The Producers” about the Broadway theater business?

          Not sure what you mean by “the taxpayer has drilled their holes for them.”

          Every business, every taxpayer, is allowed to write off business and investment losses.

          • SA Kiteman

            There is a vast difference between “writing off” and getting a tax credit. Perhaps you need a bit of review?

          • Epicurus

            I know the difference between deductions and tax credits very well, but I’m still not sure what you mean by “the taxpayer has drilled their holes for them.” I think you are the one who needs to review tax law. State specifically how you think the taxpayer ends up paying the drilling costs.

          • SA Kiteman

            Back when I was interested in this stuff, I found out that the cost of drilling a failed well could be credited against your taxes while the cost of a production well was merely a business expense which is a simple income deduction. So, a company would create subsidiary company that would drill a well near a known field but for some reason the well would be dry. So the subsidiary company would take the tax credit. Then they would sell the well to another subsidiary of the big company for pennies on the dollar. The new company would say, “ya know, we should try it again” and start drilling. Then what do you know, another 50′, 100′ down and shazaam, OIL!!!

            The taxpayers who had to cover the cost of the “failed well” paid the cost of the production oil well. THAT is a subsidy. I don’t know whether THAT scam is still going on, but I’m pretty sure that SOMETHING like it is.

          • Epicurus

            You were misinformed.

            Dry hole costs are deductions, not tax credits.

            There are indeed tax incentives for the oil and gas industry, but that isn’t one of them.

            You are close to describing an age old scam where investors incur all the risk for finding a new reservoir and the promoter ends up with most of it risk-free. That probably is what you are thinking about.

          • SA Kiteman

            It was the way I described back when I was investigating it. Umm, 80s time frame?

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