Tuesday, March 14, 2017

Subsidizing Energy Companies is One of Worst Possible State Investments - Science

The handouts to Big Oil piss off everyone in the country except the richies and the handouts don't even work.

Energy subsidies, which have mostly supported fossil fuels and nuclear power over the previous half century, have historically kept energy prices artificially low, compared to market rates.  But they come at a high cost to governments and taxpayers.  The Indian government, for example, spends as much as it does on fuel subsidies for kerosene and liquid propane, used to light rural houses, as it does on education.  India subsidises fossil energy consumption by $21 billion every year, which works out at $16 per person. Given that 500 million of its people live on less than $2 per day, this is a surprisingly large amount.  (Science Daily:  New research urges a rethink on global energy subsidies)

That such subsidies do almost nothing for the poor should not be a surprise.

Such costs aren't benefiting the poorest households, meant to the key beneficiaries of the subsidies, because they have less money to spend on fuel and electricity in the first place.  Of the tens of billions spent on fossil fuel subsidies in India in 2010, for example, less than $2 billion benefited the poorest 20% of the population.  Instead, the subsidies benefitted wealthier households, which consume around 20 times more energy services than their poorer counterparts.  They also tend to benefit energy companies and equipment suppliers.

- SD

You know all of the above already and the research is confirmation of the fact only the rich benefit from it.

A review of 22 case studies of subsidy reform by the IMF found that only 12 didn't cause major economic or social disruption.  Subsidy reforms should aim to ensure that the poorest in society don't lose out from the removal of the subsidies.  Adjustment packages targeting those likely to be hit hardest can help.  The paper also calls for more research on the political economy dimensions to subsidy reform.

- SD

Washington's brazen support for Big Oil apparently won't go without difficulty but, based on the research, it's clear that support is nothing more than outright theft from the people.  Conservatives go on relentlessly about a free market but their behavior doesn't support a word of it.

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