How Big Oil gets bigger: over $620 Billion spent on subsidies for fossil fuel in 2011

by Jon LeSage   2013-03-08

Source: AutoblogGreen

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We’re being duped by Big Oil. The worse part is that governments around the world are working tirelessly to make sure the game is rigged in their favor. That's what Lester Brown, president of the Earth Policy Institute, is saying, and he has the numbers to back the statement up.

Estimates from the Global Subsidies Initiative and International Energy Agency say more than $620 billion was spent by governments to subsidize fossil fuel energy in 2011. About $100 million of that went into production and about $523 billion was used to subsidize consumption. Higher world oil prices drove those numbers up 20 percent over the previous year.

Looking into the consumption front, $285 billion went to oil, $104 billion to natural gas, $3 billion to coal and the remaining $131 was basically evenly divided among these three energy sources for electricity consumption. One major side effect of governments spending these subsidies has been cutting the prices people paid for fossil energy by about 25 percent. That has encouraged consumption and waste, and hindered efforts to stabilize the climate.

The countries spending the most on fossil fuel subsidies have a few recurring themes. These are generally developing, unstable nations where oil plays a big role in their economies, and their traffic congestion and air quality can be atrocious. They're exporting a lot of oil to first-world countries like the US, and their economies depend heavily on fossil fuels. Middle Eastern countries topped the list on a per person basis spending basis, and also ranked high on the world's top carbon emitters per capita. Quality of life can be a serious problem in these markets, and their governments are subsidizing the problem.

One of the ironies is the much smaller level of subsidy support that governments spend on clean, renewable energy. In 2011, about 14 percent of the amount spent on global fossil subsidies – about $88 billion – was almost equally divided and paid to solar, wind, biomass electricity and biofuels (ethanol and biodiesel).

“Clearly, the deck is stacked against renewables,” Brown wrote. Upstart renewable energy companies need government investment to invent new markets, while Big Oil has been highly profitable. In 2012, the Big Five oil companies – Royal Dutch Shell, ExxonMobil, BP, Chevron and ConocoPhillips – collectively took in $137 billion in profits.

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