Are US Oil Companies Subsidized?

Over and over we have heard that “the American oil companies are subsidized” by taxpayers. And that such-and-such candidate is going to “end the oil company subsidies”.

Environmentalists have been saying it for decades. Yet let us consider reality.

If you want to talk about “subsidies” then you need to consider the overall issue, i.e., does a person, group or industry survive on subsidies? Take occasional subsidies? Or no subsidies at all?

Think about a person living totally on welfare and food stamps versus a hard-working father who pays his own way but is taking a tax break for his children’s education. One is totally dependent on taxpayer subsidies while the other pays full taxes but takes a tax break for one thing – education.

See the difference?

Yet if you wanted to disparage the hard-working father you could say that he is getting a ‘subsidy’ and that he is the same as the person on welfare. This is a tactic used by Democrats called “moral equivalency”, for instance when a shoplifter is compared to a murderer, i.e., they are both criminals and thus they are the same.

Imagine a company in a small town that produces $5 million per year in paychecks for the citizens of the town and pays $1 million in taxes to the town. It provides good jobs for the people in the town. Those are all great contributions to the town.

Then imagine that the town gives the company a $100,000 tax break for a project that the company is working on to improve its business and expand its payroll.

Thus the town fathers have decided that the tax break is going to make things better for the town. But if you considered just the tax break alone you could say that the company is being “subsidized”. It is a very selective choice of facts.

Various American states, mostly on the conservative side, are routinely criticized by liberals for giving “tax breaks” to companies to locate in, or move to, those states.

Yet those tax breaks/credits/reductions are designed to induce the companies to locate in those states and contribute many times the amount of the tax breaks in jobs, payroll and tax revenue to the states. But still liberals oppose the tax breaks.

On the other hand the Tesla electric car company has taken $5 billion in federal taxpayer money since it opened its doors in 2003. Tesla has only earned a profit in two quarters since then. Meanwhile every single Tesla car that is sold gets a federal tax credit and so Tesla’s few quarters of profit rely on those subsidies too.

In other words Tesla would be out of business without 16 straight years of subsidies either directly to the company or indirectly to people who buy its cars. Yet liberals are not screaming about “tax breaks” for Tesla since Tesla is a ‘green’ company.

Windmills all require subsidies. They would not exist without them. Solar panels are all subsidized. They would not exist without them. calculates that solar and wind are often subsidized 100%.

Now let us look at the oil companies. It may be true that American oil companies have received tax breaks, tax credits or tax subsidies here and there. But that does not consider the real issue – that oil, coal and natural gas are responsible for almost all of the world’s economic output, which is $85 TRILLION per year. Oil, coal and natural gas power the world and have done so for centuries. They are responsible for our high standard of living and for all of our modern technology.

Not only that, but oil, coal and natural gas companies also produce:

*Trillions of dollars in royalty payments to government worldwide.
*Trillions of dollars in tax payments to governments worldwide.
*Trillions of dollars in paychecks to oil industry workers worldwide.
*Great job opportunities for millions of people.

On the other hand, we may see American oil companies getting a few billion dollars here and there in tax credits, tax breaks and tax subsidies and socialists going wild over that.

But in comparison to their overall contribution to the global economy the credits, breaks and subsidies are a tiny miniscule fraction of what the oil industry produces for the world economy every year. Thus overall the oil, coal and natural gas industries are a massive plus for the world

Yet we hear ‘greenies’ say over and over that the oil companies are “subsidized” and that these subsidies must end. That’s baloney.

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