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Page added on November 23, 2018

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Big Oil Doesn’t Like EV Subsidies, Just Its Own Giant Subsidy

Public Policy

You may not have heard, but electric vehicles are just another one-percenter boondoggle, Jay Gatsby’s cream-colored Rolls Royce reincarnated and partly paid for by you, the toiling masses, via various subsidies.

As an argument, it is tailor-made for an era of anger at “elites.” And it’s one with which I’ve become familiar reading recent letters from organizations such as Koch Industries Inc., affiliates of the American Petroleum Institute and Americans For Prosperity, urging federal and state bodies to forgo support for electric vehicles or their chargers. If wealthier types wish to buy them, so be it, but they should pay for it themselves. As Koch’s letter opposing an extension of the federal tax credit for EVs puts it:

I encourage you to allow innovation and consumer choice to drive this industry, not tax dollars and government subsidies.

Stirring stuff, though it does rather gloss over some niggling details.

They aren’t wrong about one thing: Subsidies for EVs tend to accrue to the wealthy. A paper published in 2015 by Severin Borenstein and Lucas Davis of UC Berkeley found exactly that 1 . One explanation is that, even when subsidized, today’s EVs are usually more expensive than regular vehicles, so they are bought by wealthier people.

This is clearly unfair. However, as Berkeley’s Borenstein and Davis wrote in a blog post summarizing that same paper:

We find that tax credits are less attractive on distributional grounds than pricing [greenhouse gases] directly … Whereas tax credits go disproportionately to high-income households, a carbon tax would be paid disproportionately by high-income households.

This uncovers the main problem with the whole elitist EVs argument: If not these subsidies, then what?

Addressing climate change means encouraging a switch away from emitting vast quantities of greenhouse gases into the atmosphere in order to power our societies. Leaving aside the unfortunate desire of certain parties to ignore or obfuscate the science framing that threat, the central question is how to encourage that switch most efficiently. In general, handing out regressive subsidies based on the government elevating this or that technology, while perhaps politically more doable, doesn’t meet that objective.

A far-more efficient method is to put a price on the stuff you want less of and then let capitalism do its thing, pushing consumption away from the undesirables and investment toward innovative alternatives. Indeed, all these letters demand government officials stand back and let the market do its thing — except their version of the market leaves out one essential element.

Greenhouse gases and the threat they pose are everyone’s problem, but the individual generating them at any given moment doesn’t pay toward dealing with that. Dump your garbage on your neighbor’s lawn and you’ll wind up paying to have it removed and probably a fine, too. Release 20 pounds of carbon dioxide into the atmosphere by burning a gallon of gasoline, and it’s a freebie.

This is an enormous effective subsidy for fossil fuels and makes a mockery of market piety. Using Yale economist and recent Nobel-prize winner William Nordhaus’s $31-per-tonne estimate of the social cost of carbon, it amounted last year to $107 billion for energy-related emissions from oil and natural gas in the U.S. Within that, emissions from transportation — the biggest source in the U.S. and the only one still growing — enjoyed a free ride worth $59 billion.

The cost of the federal tax subsidy for EVs is $2 billion at most across the lifetime of the current program, according to a study cited in the Koch letter (title: “Costly Subsidies For The Rich”). You may have noticed, too, the U.S. oil and gas industry is not exactly hard up. A quick scan of the Bloomberg Terminal indicates listed companies in the sector are forecast to make a collective net profit of $81 billion this year. What was that about handouts to wealthy elites again?

The added twist is that the negative effects of climate change fall disproportionately on the poor. Low-income countries tend to be in regions likely to suffer the worst consequences and also lack adequate resources to deal with them (see this from the International Monetary Fund). Similarly, a week before California’s most destructive wildfire ever got going this month, researchers from the University of Washington and the Nature Conservancy published a study finding poorer communities and people of color are especially vulnerable to the devastation of wildfires in the U.S.

There are legitimate, complex issues to be dealt with in apportioning the costs of decarbonization. For example, the API’s letter mentioned above objects to proposals in Maryland for utilities to invest in vehicle-charging infrastructure, arguing ratepayers would foot the bill to the benefit of, you guessed it, “ a small group of upper-income households who use EVs.” The question of how charging points are financed is tricky, partly because the grid is built around regulated monopoly utilities serving, and billing, millions of customers. 2

But the API’s call for the creation of “a level playing field” between internal combustion engines and EVs is risible. It never grapples with the fact that the lack of a penalty for carbon emissions is the single biggest obstacle to a level playing field, and precisely why officials trying to deal with climate change resort instead to sub-optimal workarounds like subsidies. This isn’t a plea for more of those; far from it. Instead, consider it an addendum to those missives on the sanctity of markets, merely pointing out the one vital element the authors of the letters somehow forgot to include.

bloomberg



36 Comments on "Big Oil Doesn’t Like EV Subsidies, Just Its Own Giant Subsidy"

  1. Outcast_Searcher on Fri, 23rd Nov 2018 6:56 pm 

    Voters don’t want to pay the social costs for ANYTHING they consume. Fossil fuels is just one example.

    Just listen to all the crying (and voting against) any CO2 tax, including from the left, like recent proposals in Washington state.

    I’m all for a huge CO2 tax. We could get there gradually or do it quickly. But whether it’s advocates for the poor, big oil, or just liberals who like to screech about the GOP and CO2 — but don’t actually want to PAY to deal with CO2, you won’t see much support in the US.

    Pretending like oil is somehow unique in that respect doesn’t change anything.

  2. I AM THE MOB on Fri, 23rd Nov 2018 7:34 pm 

    Oil is a necessity..And EV’s are not..so that is a false equivalency..And EV”s create more pollution and are lemons..

  3. makati1 on Fri, 23rd Nov 2018 7:44 pm 

    MOB, oil is not a ‘necessity’. We managed quite well for thousands of years without it. It is only in the last 160 years that we have found a use for it in quantity. That also began the suicide of the human race and the destruction of the planet’s ecology. We are (un)lucky to be living at the end of that suicidal process as we run toward the cliff of extinction.

  4. I AM THE MOB on Sat, 24th Nov 2018 3:59 am 

    Mak

    Sorry evolution doesn’t go backwards..And we need oil to move everything..We don’t have enough horses anymore..And we need oil to grow food..The soil is ruined from petro chemicals..And it would take several decades of organic inputs to grow food organically..And society is only 9 meals away from Anarchy!

  5. Cloggie on Sat, 24th Nov 2018 4:03 am 

    “an era of anger at “elites.””

    Yeah, like poor Bloomberg, the medium carrying this article.lol

    Mind you, Bloomberg is one of the most sane voices in America when it comes to renewable energy. Credit where credit is due.

    Dump your garbage on your neighbor’s lawn and you’ll wind up paying to have it removed and probably a fine, too. Release 20 pounds of carbon dioxide into the atmosphere by burning a gallon of gasoline, and it’s a freebie.

    This is an enormous effective subsidy for fossil fuels and makes a mockery of market piety… William Nordhaus’s $31-per-tonne estimate of the social cost of carbon, it amounted last year to $107 billion for energy-related emissions from oil and natural gas in the U.S. Within that, emissions from transportation — the biggest source in the U.S. and the only one still growing — enjoyed a free ride worth $59 billion.

    Hear, hear!

    Renewable energy is going to win this fight, hook, line and sinker.

    Here is why:

    http://www.renewablegreenenergypower.com/wp-content/uploads/2012/04/RenewableEnergyPotentialVsFossilFuels.jpg

    The wind and solar radiation “fuel” come for free, no need for a huge military to provide supply security, no need for refineries, no need for roads and trucks and railways to distribute the energy, a thin powerline suffices. And renewable energy doesn’t blow up the planet like fossil fuel does. And the only current bottleneck, storage, is being dealt with as we speak. The possibilities are endless.

    Renewable energy, a no-brainer.

  6. I AM THE MOB on Sat, 24th Nov 2018 4:06 am 

    CLogg

    Renewable’s are a false hope you uneducated dimwit..I know you have a low IQ so let me show you stupid..

    Solar and Wind produced less than one percent of total world energy in 2016 – IEA WEO 2017
    https://www.iea.org/publications/freepublications/publication/KeyWorld2017.pdf

    UC Davis Peer Reviewed Study: It Will Take 131 Years to Replace Oil with Alternatives
    (Malyshkina, 2010)
    http://pubs.acs.org/doi/abs/10.1021/es100730q

    University of Chicago Peer Reviewed Study: predicts world economy unlikely to stop relying on fossil fuels (Covert, 2016)
    https://www.aeaweb.org/articles?id=10.1257/jep.30.1.117

    Renewable energy ‘simply won’t work’: Top Google engineers
    http://www.theregister.co.uk/2014/11/21/renewable_energy_simply_wont_work_google_renewables_engineers/

    At this rate, it’s going to take nearly 400 years to transform the energy system
    https://www.technologyreview.com/s/610457/at-this-rate-its-going-to-take-nearly-400-years-to-transform-the-energy-system/

  7. I AM THE MOB on Sat, 24th Nov 2018 4:08 am 

    Clogg

    You love the elites ie Trump/Putin..You love an alpha male to submit yourself to..You closet faggot..I guess we know now why you have no kids..

  8. I AM THE MOB on Sat, 24th Nov 2018 4:23 am 

    Oil Prices Likely Headed Higher Despite Recent Plunge, Analysts Say

    PLUMMETING OIL PRICES this week prompted fretting about a supply glut, but analysts project that rising demand and an impending supply shortage could spur a bounce-back that will send prices higher in the coming weeks and months.

    Wood Mackenzie warned of a crunch over the long haul, one that could be felt as soon as the 2020s as discoveries of new oil deposits have failed to keep pace with expected growth in global demand.

    “The warning signs are there – the industry isn’t finding enough oil,” the firm warned.

    https://www.usnews.com/news/politics/articles/2018-11-23/oil-prices-likely-headed-higher-despite-recent-plunge-analysts-say

  9. Cloggie on Sat, 24th Nov 2018 4:28 am 

    You love the elites ie Trump/Putin..You love an alpha male to submit yourself to..You closet faggot..I guess we know now why you have no kids..

    You know nothing about my personal life. And “submitting” is not in my genes. For instance I love stomping you and your water carrier empire dave in the face, when I dominate you both with history and lustfully do with you both what I want.

    https://www.rt.com/usa/444589-tulsi-gabbard-trump-bitch/

    Here btw is a rare Dem I actually like and respect: Tulsi Gabbard. She could become to the Dems what Trump has already become to the Reps: a ZOG-dissident taking over the party from “the elites/establishment”. She had the nerve to travel to Syria and visit Assad on a fact-finding mission. If she would take over the Dems, ZOG would be finished completely.

  10. I AM THE MOB on Sat, 24th Nov 2018 4:40 am 

    “The trouble with Fascism is that eventually you run out of other people to blame”

    There fixed that Thatcher quote..

  11. I AM THE MOB on Sat, 24th Nov 2018 4:46 am 

    Clogg

    If you stomp me in history then why wont you get your theories verified by an independent third party historian?

    Stupid people like you are the reason countries like China censor the internet..

    Do you ever get dizzy from the mental gymnastics required to believe your BS?

  12. dave thompson on Sat, 24th Nov 2018 4:56 am 

    Any Gasoline not burned by an EV will still be sold elsewhere and burned. Crude oil is made up of different components and gasoline is part of that mix. As long as crude oil is refined gasoline will be a product to be sold and burned. An EV is a feel good toy for the wealthy. An EV is only practical in mild climate conditions, below freezing or in summer heat they do not fare well.

  13. Cloggie on Sat, 24th Nov 2018 4:57 am 

    “The trouble with Fascism is that eventually you run out of other people to blame”

    The natural born masochist mobster wants to be stomped in the face again over history knowledge:

    Internal death toll 1933-1939:

    Fascist Italy: less than 10
    Natzi-Germany: ca. 600
    Great-Britain: ca. 600
    USSR: millions

    The USSR was run by psychopaths like the forum neocon mobster, who doesn’t even try to hide the fact that he wants to murder millions of Russians in an unproved nuclear strike and rape white women and gloats about the 9/11 false flag.

    If you stomp me in history then why wont you get your theories verified by an independent third party historian?

    Why should I outsource my historical judgment to somebody else, if I have a solid brain to form my own judgment? A brain you don’t have. You (and davy) are too stupid to even reiterate the official lies of the empire.

  14. Davy on Sat, 24th Nov 2018 5:18 am 

    “The wind and solar radiation “fuel” come for free”
    You are one cheerleading fool. Nothing is free neder especially renewables. There are costs everywhere in your euroland and you are ignoring them. If renewables were so cheap why are your electric rates among the highest in the world? The worst part for you are the cost ahead when the really big changes occur when you start pushing the market penetration of renewables above that point where storage and a rationalized grid is required. Antius has shot down you cheerleading almost every time you do it.

    “storage, is being dealt with as we speak. The possibilities are endless.”
    Whenever I see talk like this I see a fraud.

  15. Davy on Sat, 24th Nov 2018 5:24 am 

    “You know nothing about my personal life.”
    Come on neder, I know a lot about your life following you now for years. You are not an open book but when one must is careful he finds all kinds of tidbits of the real neder. You are so proud of yourself you give away many aspects without knowing it.

    “For instance I love stomping you and your water carrier empire dave in the face, when I dominate you both with history”
    LOL, whining like a wounded animal daily because I moderate your extremism? LOL. OH, and history do you mean revisions that point to fantasy futures? You have to watch what you call history.

  16. Davy on Sat, 24th Nov 2018 5:33 am 

    “I’m all for a huge CO2 tax. We could get there gradually or do it quickly. But whether it’s advocates for the poor, big oil, or just liberals who like to screech about the GOP and CO2 — but don’t actually want to PAY to deal with CO2, you won’t see much support in the US.”

    CO2 taxes are a joke unless they have teeth and they deal with bad behavior with additional measures. You can’t tax bad behavior away alone. Too many ways to dance around it with lawyers, accountants, and political corruption. CO2 taxes can help but you need real efforts that make certain activities illegal. You also educate why these behaviors are bad. The US is not ready for real and effective carbon policy. A CO2 tax is just a Band-Aid. I am OK with it but quit being fake green and think it is a significant solution. Let do it and try to do other things and together we will see some results but not much. Until behavior changes and this process has grass roots and widespread support these actions are halfhearted and impotent.

  17. I AM THE MOB on Sat, 24th Nov 2018 5:33 am 

    Clogg

    A solid brain? HAHAHA!

    You wont get them tested because you know they are not true..

    The truth fears no questions..

  18. Cloggie on Sat, 24th Nov 2018 6:18 am 

    You wont get them tested because you know they are not true..

    The truth fears no questions..

    Then present me “the truth”, as you see it. You won’t because you can’t. You have no clue about history.

    Have questions regarding history? Just ask! I’m here to help the intellectual impotent, like you, who can’t make sense of the world.

    Dear reader, neither mob nor davy will ever ask questions, let alone present us their views of history. They have no view, only propaganda lines. But after I presented them with my views they realized that they sound reasonable, but they don’t like the truth as it opposes US propaganda and they want to clamp themselves to it.

    That’s OK, just like you don’t want to tell 5 year old’s that Santaclaus is a myth (brought to American by the Dutch), you do not want to hurt the feelings of our resident juveniles regarding the falsehood of US (kosher) propaganda.

    https://en.wikipedia.org/wiki/Sinterklaas

    Here we see Sint/Santa giving the mobster a good spanking for incessant lying:

    http://www.jefdejager.nl/je_admin/up/sint.jpg

  19. Davy on Sat, 24th Nov 2018 6:23 am 

    “Dear reader, neither mob nor davy will ever ask questions, let alone present us their views of history. They have no view, only propaganda lines. But after I presented them with my views they realized that they sound reasonable, but they don’t like the truth as it opposes US propaganda and they want to clamp themselves to it.”

    Translation: The whining of a wounded animal

  20. Cloggie on Sat, 24th Nov 2018 7:11 am 

    “Translation”

    You aren’t very good at languages either.lol

    And again davy evaded discussion. Davy merely participates on a discussion forum… to evade real discussion.

    I’m sorry you have to live with yourself.

  21. Cloggie on Sat, 24th Nov 2018 7:25 am 

    “Paris is burning”

    https://www.dailymail.co.uk/news/article-6424117/Paris-riot-police-blast-water-cannon-demonstrators-protesting-Macrons-fuel-tax-rise.html

    Macron may like to put himself on the center of the world stage by correcting Trump, insisting on making “ze wurld great again”, the painful truth is that the drive for renewable energy is hardly existing in France. That’s mostly Denmark, Germany, Norway, Scotland.

    Currently there are huge anarchistic protests going on in France against a fuel tax, intended to reduce the consumption of fossil fuel.

    As French president de Gaulle already knew: “France is a beautiful country, a pity though it is inhabited by the French”

    https://youtu.be/y1z12D5bx7c

  22. Davy on Sat, 24th Nov 2018 7:30 am 

    Paris is burning because Euroland is fracturing but the board euro-extremist will put a happy face on it…somehow.

  23. Cloggie on Sat, 24th Nov 2018 7:38 am 

    “Paris is burning because Euroland is fracturing but the board euro-extremist will put a happy face on it…somehow.”

    This is about fuel tax, not the EU.

    I just made the point that Ukraine and Russia are anxious to enter the European world as members, not imperial gate crashers and bombers like you.

    In the end of the day, you folks from the other side of the Atlantic will be begging too to be let in in the European Valhalla… after the break.

  24. Davy on Sat, 24th Nov 2018 7:53 am 

    I told you neder would happy face it. LMFAO. Reality is optional for neder and his pals.

  25. I AM THE MOB on Sat, 24th Nov 2018 8:38 am 

    Clogg

    Put it to the test or shut the hell up..You paranoid whack job..

    Losers are more likely to believe in conspiracy theories, study finds
    https://www.psypost.org/2017/09/losers-likely-believe-conspiracy-theories-study-finds-49694

  26. I AM THE MOB on Sat, 24th Nov 2018 8:39 am 

    Peak Oil & Drastic Oil Shortages Imminent, Says IEA
    https://cleantechnica.com/2018/11/22/peak-oil-drastic-oil-shortages-imminent-says-iea/

    Trump supporters can’t get enough of what is coming to them..

    Sorry Clogg..Your fantasy future of make believe will never happen..

    Another ignorant boomer destroyed with Facts and Logic!

  27. GetAVasectomy on Sat, 24th Nov 2018 8:42 am 

    https://www.youtube.com/watch?v=UQw_-DRER0I

    French is the street right demand lower gasoline price

  28. I AM THE MOB on Sat, 24th Nov 2018 8:45 am 

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows
    https://www.wsj.com/articles/iea-says-global-oil-discoveries-at-record-low-in-2016-1493244000

    There will be an oil shortage in the 2020’s, Goldman Sachs says
    https://www.cnbc.com/2018/11/09/goldman-sachs-there-will-be-an-oil-shortage-in-the-2020s.html

    Growing demand for oil will lead to shortage and high prices in 2020s
    https://www.newscientist.com/article/2185046-growing-demand-for-oil-will-lead-to-shortage-and-high-prices-in-2020s/

    German Military (leaked) Peak Oil study: oil is used in the production of 95% of all industrial goods, so a shortage of oil would collapse the world economy & world governments
    https://www.scribd.com/document/387459134/german

    Imminent peak oil could burst US, global economic bubble – study
    https://www.theguardian.com/environment/earth-insight/2013/nov/19/peak-oil-economicgrowth

  29. I AM THE MOB on Sat, 24th Nov 2018 9:18 am 

    Black Friday madness extends to grocery stores apparently..

    https://i.imgur.com/yLwafW3.gifv

    White people! So dumb and ignorant! Must have my bacon at half price!

    LMFAO!

  30. I AM THE MOB on Sat, 24th Nov 2018 9:27 am 

    This is how Arab newspapers are drawing Trump

    https://i.imgur.com/roDUI5Y.jpg

  31. Эй, братья, пожалуйста, ударьте антиамериканскую собаку, которую я сделал из гранитного форума on Sat, 24th Nov 2018 9:50 am 

    neder please listen to supertard. ure living in dreams time to face reality

  32. Pete Bauer on Sat, 24th Nov 2018 10:42 am 

    Notorious oil companies were enjoying the subsidy for more than 40 years, its time to cut it. All energy subsidies should be cut and this will pave the way for conservation which will reduce pollution, foreign oil, global warming.

    Energy is wasted in such a large scale.

  33. Pete Bauer on Sat, 24th Nov 2018 10:50 am 

    “oil is used in the production of 95% of all industrial goods”

    Methanol can also be converted to plastics use the Methanol to olefins technology and Chinese are already doing that. As natural gas supply increases, slowly more plastics will be produced from this source. This will leave oil only to transport.

    https://www.honeywell.com/newsroom/news/2016/07/china-turns-coal-into-plastic-with-honeywell-technology

  34. Dredd on Sat, 24th Nov 2018 1:58 pm 

    Big Oil-Qaeda will go down with this ship (In Search Of Ocean Heat).

  35. Davy on Sat, 24th Nov 2018 5:55 pm 

    “Venezuela Is Leaking Oil Everywhere”
    https://tinyurl.com/y928cf3a

    The once-mighty PDVSA is polluting waterways and farmland, unable to clean up its messes after years of neglect, scant investment and corruption scandals.

  36. Davy on Sun, 25th Nov 2018 12:25 pm 

    “Oil Sends A “Crude Warning”
    https://tinyurl.com/ycgorgq2

    “oil prices are a reflection of supply and demand. Global demand has already been falling for the last several months and oil prices are now waking up that reality. More importantly, falling oil prices are going to put the Fed in a very tough position in the next couple of months as the expected surge in inflationary pressures, in order to justify higher rates, once again fails to appear.

    “there is another enormous problem currently for the oil and gas sector currently at risk – the debt. For the last few years, oil companies have been taking of the extraordinarily low interest rate environment to leverage up to chase marginally productive drilling in high-depletion rate shale wells. Since energy-related bonds make up about 15% of the high-yield index, and with a substantial number of corporate bonds on the verge of falling below BBB ratings in the months ahead, the potential impact of falling energy prices (a reduction in revenue) and higher borrowing costs is a potential double-whammy to an important sector of the economy.”

    “The collapse in oil prices, which is a direct impact to revenue for oil and gas companies, is going to make already nervous lenders even more adverse to lending to the sector. Secondly, demands to shore up credit-lines, increase loan covenants, provide additional collateral, or simply increase borrowing costs could have a materially negative impact on the sector as a whole.”

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