Re: Why do energy producers subsidize oil consumption?
Posted: Sat 10 Nov 2007, 23:30:04
Man other large oil producers, such as the U.S., Norway and Canada don't subsidize oil consumption, except perhaps indirectly by highway spending.
Speak for Canada and Norway. The US government spends half a trillion dollars a year on subsidizing oil through the military to make sure that it is other nations like Zimbabwe, Myanmar, and other African nations that are facing shortages and not us. And that that will be the status quo in the future as well, for as long as the oil runs.
20,000,000 bpd x $80/barrel (average)= $1.6 bln/day -> $500-600 billion/year. So the real price of gasoline in the US is closer to $4-5/gallon (at least), rather than $3/gallon. That's a pretty large subsidy. (I know this isn't the best way to look at the subsidy as much of the defense budget would exist w/o a need for oil protection, but just an estimate to show that the subsidy does exist and is substantial.)