93 comments on Are Subsidies to Oil Companies Ever Justified?
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How about the "hidden subsidy" the US armed forces have provided the oil industry for the safe transport for oil tankers and more over the last few decades. Its free to the Oil companies. What about the drilling contracts the govt has with some. That too is a hidden subsidy. The effort in protecting oil has grown in the last ten years. There's a feedback loop for you.
The amount of money the US taxpayer is spending in efforts to protect oil for the oil industry is huge. What does,.. say.. something like, the fifth fleet, cost to run a day. This is just normal everyday stuff, not including Iraq etc.
Quid Clarius Astris
Ubi Bene ibi patria
The National Defense Council Foundation did a study, updated in 2006, which put the externalized costs (military and otherwise but not including US environmental impacts) of middle east oil consumed in the US as gasoline at $8.35 / gallon on top of the retail price visable at the pump.
Summary of study here:
http://ndcf.homeip.net/ndcf/energy/NDCF_Hidden_Cost_2006_summary_paper.p...
A long standing, legitimate use of Naval forces is that of Escort. Always has been. Indeed, I have long been against the drawdown in US naval forces, from the near 600 ship peak to the now ~300 ship Navy for just this very purpose. While frigates are not the most glamorous of naval combatants, they and the diesel subs are important for escorting and keeping shipping lanes safe.
Do the oil companies pay taxes? Or even more importantly, to the oil company owners (shareholders, including a great number of retirement portfolios) pay taxes?
You're asking me if the oil companies pay Taxes. Don't you know. Do shareholders pay taxes on their profits. Again, don't you know how the markets work. Do you understand capital gains tax and when it occurs. What the current capital gains tax is.
Keeping the shipping lanes free. Excuse me, but who are we protecting the lanes from.
Providing escort is long standing tradition. Really, in times of peace. When did this start. Do we also escort ships bringing in goods from China. What flags are the oil tankers/ships flying. Are they flying US register flags, or from countries other than the US. If other countries why is the US providing cover for ships registered to other countries.
What other industries also receive safe passage for their vessels that come to the US.
Long standing tradition. Please give examples of this when not at war or a real hazard is in place. What is the hazard now.
What other countries benefit from our "cover" that do not contribute toward the expense. Do all the ships that get cover all port in the US for their oil to be offloaded or do numerous other countries also have ships that divert once out of certain waters and go to other countries.
Time of War for oil is one thing, and its for military purpose.
I would like to know all the other Escort ships being used besides those for oil also. Can you provide a list.
Quid Clarius Astris
Ubi Bene ibi patria
You are obviously unaware of the problems of piracy, which is an issue today as it has always been. In particular, the Indian Ocean and the waters of SE Asia. Additionally, off the African coast there have been issues with Islamic groups working through piracy. So that is one issue, or basket of issues.
The escorting of non-US flagged ships is not really a big deal - if the ship is coming into or going out of a US port (or one of our allies') then it matters to us, thus the legitimacy of using a US Naval escort.
Case in point would be west African waters, where western navies likely will have to maintain a presence for quite awhile. While many of the workers/companies may be from elsewhere (China, Korea, etc.) those nations don't have navies to do the job (or don't do them well), and while the Russian navy is capable they just don't care (I suppose they'd rather sell their own oil...). The Japanese navy is capable but is currently restricted (consitutionally) in their use, though the current PM would like to change that.
And while you may not believe it, there is a need to "show the flag" in contentious waters (e.g., Persian Gulf.) You probably do not believe that, but that is a discussion on foreign policy/philosophy that is probably beyond the scope of TOD and involves many fundamental beliefs which, were we to discuss them here, would end up being very long posts.
The other issue is the very, very long lead times wrt naval forces and their maintenance - you can't just turn on/off a fleet. We "mothball" ships but even that is time consuming process, and it is always expensive to bring a ship online. Not to mention the manpower/training issues. In other words, if you want an effective Naval force you need to maintain one, even in times of (relative) peace. In WWII we were fortunate to have had the world's largest industrial base and oil supply, so we could quickly crank out (relatively crude by today's standards) ships. Not so today.
You have not addressed the issue that amounts to a subsidy for the oil company. The US taxpayer is paying for this protection.
Piracy. What size ship do these pirates have. how do they board an oil tanker. Does the oil tanker not have protection on their ship. Piracy is not terrorism, and pirates would not blow up a ship because it didn't stop, because they know what that would get them.
The issue is WHO PAYS.
You also did not address the issues with how much corporate tax the Oil industry paid to the US last Year. The argument that the shareholders should bear the burden instead of the company is also a cop out.
You did not address what other industries also have protection for their ships. I guess that is because you couldn't find one.
The flag ship matters to "us", who is "US".
The argument that our navy would be be mothballed is also a strawman argument. IF not then you are telling me that the ONLY reason they exist is to protect oil ships.
The need to show the flag in Gulf waters. Yes a large discussion, but not one that says that the US taxpayer should pay for the oil company protection without fees. That the US consumer should pay for the subsidy for new drilling like we just did and are.
Quid Clarius Astris
Ubi Bene ibi patria
Not enough, apparently. Just last year, a UAE oil tanker was seized by pirates off Somalia. This list details multiple assaults on tankers and other bulk carrier ships in May 2006 alone, and this is a first-person accounting of time spent on a large oil tanker which notes "Even the really big tankers (such as ours) were not exempt."
So, contrary to your belief, piracy is a problem for commercial shipping.
No, but they would tie up the crew and leave the oil tanker to drift, risking a large oil spill and endangering other ships (including tankers) using the shipping lane.
Every other industry that uses ships. It's not like combatting piracy only helps ships that happen to be carrying oil.
National militaries have been used for defending commerce against piracy since at least the Roman Empire. If you believe that is no longer a reasonable function for a country's navy to perform, the onus is on you to make that argument, and to suggest an alternative.
Or, at the very least, educate yourself a little bit before you start ranting.
That you believe something does not make it true.