You are probably not fully aware of it, but energy production in all forms are subsidized throughout the world in some form or another. Of all forms of energy, fossil fuels are subsidized the most. These subsidies are in place to encourage economic growth and development. The subsidies themselves can come in many different forms, from tax incentives to research funding. In recent times, there have been talks about reforming energy subsidies, for fossil fuels in particular.
At a recent G20 summit in Pittsburg, President Obama has proposed that world leaders should take another look at energy subsidies, the argument being that subsidies for fossil fuel hide the true cost of fossil fuel and encourage behavior that makes climate change much worse. A phasing out of fossil fuel subsidies may be an answer to the question of climate change, how do we handle it? Reducing subsidies for fossil fuels would make other forms of energy production more competitive, and thus more prevalent. Depending on how such a reform is handled, you could end up with cheaper energy all around (For an interview with Steve Kretzmann which can provide more information, go here).
As far as this writer is concerned, federal subsidies hide the true cost of production of all products, making them artificially cheaper than they probably should by socializing the costs of production. When encouraging federal subsidies of anything, you have to ask yourself “is the benefit to society worth the burden you are placing on society?” In most cases, I would have to say “no.” However, in the case of renewable energy, I would say “yes.” I support any kind of energy subsidies reforms that encourage more renewable energy production.
I would have to agree that there needs to be some type of reform in energy subsidies, especially when referring to those going towards fossil fuels. The money could definitely be better used for research and production of renewable energies... However, how do you feel the US could actually go about this? Personally I just dont see how the citizens of this country would ever allow such a spike in fossil fuel prices. Yes, something has to be done to get us to move away from fossil fuels, but without a viable means to powering our country NOW, how can we?
ReplyDeleteMost of the legislated fossil-fuel subsidies in the United States are on the upstream side, and make it cheaper for oil and gas producers to produce. They still sell their final products at world-market prices, however. So the phasing out of those kinds of subsidies to fossil fuels (mainly tax breaks) would not have a large impact on prices, only over time on the percentage of oil and gas produced in the United States. Some people also attribute large amounts of military costs to the protection of petroleum supply lines. But, personally, I find it hard to believe that those "subsidies" will be up for elimination any time soon.
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