Oil prices (was Re: Kyoto, Driving our car (composite reply))

Wayne Hayes (wayne@cs.toronto.edu)
Thu, 11 Dec 1997 11:52:37 -0500

Michael Lorrey <retroman@together.net> writes:
>[Oil] prices remained above $23.00 per barrel for oil until the late 80's.
>While supply may have been high, government policies kept oil prices
>higher than they should have been.

Could you please cite these policies and explain how they kept oil
prices "higher than they should have been"? Then explain why the
US has the cheapest oil prices in the world? As far as I understand
it, the oil industry in the US receives tens of billions of dollars per
year in direct and indirect subsidies from the US taxpayer. Here's
a quote from http://www.wallowa.com/kerr/kerr9.htm:

}Most industrialized nations heavily tax petroleum because government
}spend lots of money keeping the oil flowing and cleaning up the messes
}caused by oil. But not in the USA where income and property taxpayers
}pay through the nose since the tax on gasoline doesn't come close to
}covering the costs
}The Institute for Local Self Reliance has issued "Oil Slickers: How
}Petroleum Benefits at the Taxpayer's Expense" (www.ilsr.com or $10
}from 1313 5th St. SE, Suite 306 Minneapolis, MN 55414), a compelling
}analysis of the hidden costs of oil.
}Economists call them "externalities." They are costs that are
}reflected in the price of product. For example, all the damages caused
}by cigarettes isn't paid for by the tax on a pack of cigarettes.
}ISLR estimates that the additional costs in tax subsidies, military
}protection, and environmental and human health costs is between $42
}and $350 billion annually. (The range is so wide because it depends on
}what and how you count.) For perspective, the federal governments
}deficit this year is less than $200 billion.
}First is the $3.3 to $10.9 billion of tax breaks to the oil companies.
}They have convinced Congress to grant them a whole list of tax
}subsidies from the oil depletion allowance to accelerated depreciation
}and a bunch of other breaks given to no other industry. The statutory
}rate of taxation for American business is 35% before deductions. The
}oil companies pay about 11%. Most other industries are much closer to
}35%. Taxes that the oil companies don't pay means that other
}taxpayers---or our grandchildren in the form of debt---do pay.
}It's not just federal taxes that are being tapped to meet our
}petroleum addiction, but also local property taxes. ISLR estimated
}that if the transportation taxes paid it's full freight in
}Minneapolis, rather than some of the burden being paid by property
}taxes, gasoline would cost another 18 cents/gallon.
}Second, taxpayers spend $26.6 to $70.7 billion to pay for military
}protection in the Middle East and elsewhere. This figure is in
}dollars, not in American blood (and health) that was lost in Oil War I
}(you may remember it as the Gulf War) or could be lost in the upcoming
}Oil War II.
}One Defense Department official recently told Congress that the last
}war in 1991 might keep things quiet for 10 years.
}Third, and the hardest to quantify precisely-but likely the most
}expensive of all-is the estimated $25.5 to $267 billion annual costs
}in the form of environmental and health costs associated with

He goes on to interpret this data in ways I don't agree with, but up
to this point his "facts" jive with what I've heard elsewhere.

In conclusion, Americans should be the last people on earth to be
complaining about the price of oil. What you *should* be doing
is complaining about billions of your tax dollars subsidizing it's