You’ll Be Shocked To Learn How Much We Spend on Fossil Fuel Subsidies

Fossil fuel subsidies deservedly get a lot of flak for greasing the palms of excessively wealthy oil tycoons, but I’ve got to imagine that people would be even angrier when they realize just how much we spend on these subsidies. According to a new International Monetary Fund report, the world collectively spends about $5.2 trillion in subsidies each year, with the U.S. accounting for well over $650 billion of that.

As Forbes notes, that subsidy cash is way more than the U.S. federal government spends on its (wildly bloated) defense budget and ten times the amount allocated for education. At what point can we say our priorities are completely out of whack?

At the very least, the same people who champion “the free market” should get real about just how much money they’re spending to prop up antiquated energy sources. Particularly at a point where energy is getting more competitive, it’s ridiculous that the U.S. is spending more on fossil fuel subsidies today than it was a few years ago.

Moreover, if the government is going to spend money to support certain energy industries, why not allocate that to the renewable sources that won’t destroy our planet or cause financial ruin down the road? Instead, we’re funneling the subsidies to the very products that are liable to kill us. How stupid is that?

Yes, renewable energy has needed subsidies to get off the ground, but it’s a smart long-term investment, and the cost of this energy has dropped dramatically in a short period of time. What worthwhile excuse is there for the cost of oil increasing in that same span of time?

Here’s the part that really matters: By the IMF’s estimates, if governments had scaled back on fossil fuel subsidies appropriately to better reflect the true price of this energy, carbon emissions would have probably dropped about 28 percent and air pollution deaths could have decreased by nearly half.

In other words, the world is still relying on fossil fuels in large part because the subsidies make oil and gas unnaturally inexpensive. Surely we’d see more of a switch to alternative sources if top governments weren’t actively incentivizing sticking with the fossil fuel industry.

Another IMF estimate is that, on average, governments would increase their GDP revenue by 3.8 percent by cutting a big chunk of that subsidy spending. With hundreds of billions still on the table, fossil fuel companies aren’t going to pack up and leave (if only!) just because they’re no longer receiving an elaborate form of government welfare. Their record-breaking profits may take somewhat of a dip, though – poor things.

No doubt, if governments weren’t wasting all that money on fossil fuel subsidies it could go somewhere more productive. “There would be more public spending available to build hospitals, to build roads, to build schools and to support education and health for the people,” said IMF’s Christine Lagarde. “We believe that removing fossil fuel subsidies is the right way to go.”

Lagarde is right. It’s time to kick these subsidies to the curb. We need a better way forward, and no longer paying companies extra to destroy our future seems like an obvious first step.

143 comments

Alea C
Alea C4 hours ago

DON'T VOTE REPUBLICAN!!!!

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Alea C
Alea C4 hours ago

Back again for butterfly points.

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Alea C
Alea C4 hours ago

Back again for butterfly points.

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Annabel Bedini
Annabel Bedini10 hours ago

Dr Jan H
Just out of curiosity, what are you thanking for? The article? Or the comments some of us are still trying to carry forward despite Care2 having disappeared? I wish we had news of some sort about what is going on......

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Dr. Jan H
Dr. Jan H12 hours ago

thanks

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Alea C
Alea Cyesterday

This isn't shocking. Trump not being impeached or already in prison is shocking.

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Alea C
Alea Cyesterday

Tyfs

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Alea C
Alea C2 days ago

Annabel, keep commenting! we're still getting points for doing so!!!

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Alea C
Alea C2 days ago

Care2 is still giving commenting points. (I said earlier that Care2 wasn't but I was wrong.

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Annabel Bedini
Annabel Bedini2 days ago

Alea C
Thanks for the un-delivered green stars! I don't think I have never posted my profile on the site so I don't know why it's called 'private'. I'm grateful you and I are still managing to communicate but I do wish Care2 would either come back or at least let us know what's going on.

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