Oil Subsidies – A Thing of the Past?
Sumayal Shrestha on March 5th, 2009Yesterday, Treasury Secretary Timothy Geithner told Congress that oil companies should not receive massive governmental subsidies because they contribute significantly to global warming.
“We don’t believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don’t think that’s good economic policy and we think changing those incentives is good for the country,”
This is welcome news both from an environmental and ethical perspective. Last year, Exxon Mobil Corp. set the record for highest profits by a US based company of $45.2 Billion — and for the record, Exxon broke its own record.
Taking away a few billion dollars from these companies in government subsidies seems only fair, because it is clear that a vast majority don’t need the money. Moreover, the financial implications of global warming are huge.
What happens to the already beleaguered insurance industry when sea levels rise causing thousands to make claims on their flooded homes? What happens to the health care industry as more under-insured people need emergency hospital visits on the next code orange or red day? The financial impact of global warming will be big, and removing financial incentives to already profitable businesses that are directly adding to global warming is a great first step.
What this move by the Administration may signify is the willingness to level the economic playing field for renewable energy. There are plenty of well deserved tax breaks for clean energy in the recently passed stimulus package. If at the end of the day the oil companies get a little less and clean energy companies get a little more, taxpayers are no worse off and the climate is all the happier.
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