In a piece Nuclear Industry Subsidies Part I: Definitions, author Charles Barton looks at the definition of subsidy and what it meant to fledgling technologies as they first developed consumer applications in such areas as radio, jet aircraft, and the energy industry.
Mr. Barton notes how the United States domestic oil industry benefited greatly from government subsidies in the form of tax laws. From the article:
An abandoned oil well, one of tens of thousands abandoned wells around the world, leaking toxic materials into the environment.
(1) expensing of intangible drilling costs (IDCs) and dry hole costs, introduced in 1916;
(2) the percentage depletion allowance, first enacted in 1926 (coal was added in 1932);
(3) capital gains treatment of the sale of oil and gas properties.
Oil depletion allowances amount to a huge government subsidy of the oil and gas business. Robert Bryce described the operation of oil depletion:
“An oilman drills a well that costs $100,000. He finds a reservoir containing $10,000,000 worth of oil. The well produces $1 million worth of oil per year for ten years. In the very first year, thanks to the depletion allowance, the oilman could deduct 27.5 per cent, or $275,000, of that $1 million in income from his taxable income. Thus, in just one year, he’s deducted nearly three times his initial investment. But the depletion allowance continues to pay off. For each of the next nine years, he gets to continue taking the $275,000 depletion deduction. By the end of the tenth year, the oilman has deducted $2.75 million from his taxable income, even though his initial investment was only $100,000.”
President John Kennedy was fighting to repeal the oil depletion allowance at the time of his death, and a Democratic attempt to repeal it was recently killed in the Senate.” –Charles Baron
Gulf Awash 27,000 Abandoned Wells from Associated Press.
Mr. Barton also examines various reports on the costs of wind energy, in particular, the Cape Wind Project which plans 130 turbines off the coast of Nantucket, Massachusetts in the United States to produce up to 420 MW of electricity.
Critics of the project point to its heavy subsidies totaling “at least a $730 million dollar subsidy from the Federal government, half of its total costs” while projections for the cost of the generated electricity range from $0.12 to $0.14 per kwh on the low-end to $0.20 to $0.24 per kwh on the high end. That’s “still far above today’s 6 to 8 cents for natural-gas generated electricity.”
Energy industry R&D is paltry compared to other industries.
If patents aren’t issued, government is not only withholding funding, it’s inhibiting the technological development of clean energy.
Working to ensure the new-energy movement has funding from both private and government entities includes demanding federal laws and tax-breaks that support new-energy researchers and companies developing clean LENR technologies.
Talk to your Senators, Congresspersons, and elected officials today.
Tell them to move away from subsidizing dirty fossil fuels and dangerous nuclear power plants and support LENR research now.
In the US? Contact your representatives here.
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Supporting Links:
Charles Barton Nuclear Industry Subsidies Part I: Definitions.
Charles Barton Nuclear Industry Subsidies Part II: The Mining Sector
Cape Wind Project http://www.capewind.org/
I Want to Believe by Ruby Carat May 18, 2011
Union of Concerned Scientists report Nuclear Power: Still Not Viable Without Subsidies 2011
USA.gov Contact your Elected Officials
I think its ok to end government subsidies for oil, but I think the investor that puts money into wells should have a bigger subsidy. Let the little guy get big rewards for investing.
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Ask any oilman how many wells he’s drilled for only $100,000 and it returned $10,000,000 over ten years. The answer would be perhaps one in a million; further, that one well was likely preceded by a good number of expensive dry holes. Most of the general public has no understanding of the level of cost and risk associated with exploring for oil and natural gas.
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I would suggest that “subsides” are not “tax deductions” but money given by the government or forced by the government to be given.
For example: forcing electric utilities (their clients) to pay higher rates for the energy delivered by home solar PV or money directly given by the government when someone build a wind farm or for kWh of energy produced by the wind farm or loans with lower than market rates given or guaranteed by the government.
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Government subsidies for energy companies will end soon, because there is another technology that is clean and 1/5 the cost. LENR using nickel. Google the Rossi E-Cat. It will be on the market the first quarter of 2012. A super tanker full of crude oil (2 million barrels) is the energy equivalent of less than one ton of nickel. Did I mention that nickel is 3% of the mass of the Earth? Wow – one gram of nickel has about 1.7 billion calories using the Rossi E-Cat.
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