Unpublished G-20 Report: Fossil fuel subsidies cost the world $557 billion
World governments undermine themselves and their nations’ infrastructure and cost the global economy half a trillion dollars each year by subsizing the oil and coal industries, according to a scathing report–still unpublished–that ministers from the G-20 nations received in Toronto this weekend.
The White House released a brief but colorful summary of the report this afternoon:
Their report has found that fossil fuel subsidies displace important public investments and drain government finances, worsen balance of payments, lead to underinvestment in infrastructure, and can contribute to energy shortages.
The report estimates that fossil fuel consumption subsidies cost the global economy $557 billion in 2008, and unless eliminated can be expected to impose similar costs in the future. Additionally, the report found that subsidies do not provide meaningful, widespread benefits to low-income households, and that other types of targeted support for low-income families serve as a more effective social safety net.
The report was prepared at the request of ministers of the 20 largest economies by the International Energy Agency (IEA), the Organization of Petroleum Exporting Countries (OPEC), the Organization for Economic Cooperation and Development (OECD), and the World Bank.
Barack Obama may not have been able to plug BP’s oil geyser in the Gulf or pass a climate bill through the sphincter of the Senate, but he’s continued an effort to pull the plush rug out from under the oil industry that the world’s government’s have obligingly provided for decades.
On Sunday the G-20 nations meeting in Toronto reaffirmed a 2009 pledge to phase out fossil-fuel studies, using toughened language that describes those oil and coal company perks as “inefficient fossil fuel subsidies that encourage wasteful consumption.”
On Friday, India announced it would deregulate the price of gasoline and raise the price of diesel, kerosene, and liquid petroleum gas. Mexico has also begun phasing out motor-vehicle subsidies.
Obama began an effort to roll back U.S. subsidies for fossil fuels almost immediately after taking office. His 2009 federal budget eliminated subsidies worth $12.7 billion during Obama’s first term and an estimated $31.5 billion over the decade. The budget implemented an excise tax that restored royalty revenues that had been omitted from leases on off-shore drilling sites in the Gulf of Mexico.
Congress restored those subsidies, and Obama rolled them back again in his budget proposal for 2011.
Exxon-Mobile Corp. earned $1,300 per second in 2007, setting a record for American companies with its $40.6 billion profit that year. In 2008, it broke the record, reaching $45.2 billion. (BP, for contrast, earned a profit of $13 billion last year.) Those numbers followed a series of record years for the industry, 2001-2006, during which oil companies accumulated $120 billion in what the Consumer Federation of America called “excess profits.”
At the same time, the oil industry enjoyed tax cuts, deductions, and exemptions from royalties owed the American public that were worth $2-3 billion per year.