Another Green Energy Lobby Talking Point Debunked

by William Yeatman on November 22, 2011

in Blog

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Environmentalists, green energy lobbyists, and their political benefactors rely on a number of bogus talking points in order to justify generous taxpayer subsidies to the renewable energy industry, without which it wouldn’t exist. At a Congressional hearing last week, for example, Energy Secretary Steven Chu testified that green energy subsidies are necessary so that the U.S. can win a renewable energy trade war with China. (I dispute this contention in a previous post). Yesterday, the Institute for Energy Research’s Robert Bradley debunked another such rationalization—recently, renewable energy enthusiasts have taken to arguing that “that government subsidies over many decades allowed the oil and gas industry to cement its perch atop the energy chain. The implication is that wind and solar may need the same long-lived subsidization to achieve commercial viability too.” This is the thesis of a much-hyped analysis published last month by DBL Investors, titled “What Would Jefferson Do? The Historical Role of Federal Subsidies in Shaping America’s Energy Future.” The paper received gobs of attention from the media, despite the fact that it was written by a venture capital firm that invests in green energy, and which, therefore, directly benefits from taxpayer handouts to the industry.

In any case, Bradley exposes the poor historical analysis that buttresses this latest justification for throwing ever-more taxpayer money at green energy boondoggles. From his post,

The commercial oil industry dates to 1859, the year of the Drake well in Pennsylvania. The U.S.petroleum industry matured in the next decades and then shifted to the southwest with the discovery of the Spindletop gusher in Beaumont,Texas in 1901.

Meanwhile, a commercial petroleum industry developed abroad, a development that would lead to increasing oil imports to the U.S.and price “demoralization” for domestic producers by the late 1920s. From this period through the 1960s, the “problem” was too much oil, not too little.

Does this sound like an infant industry? Hardly! It was an industry that was ‘too good for itself’ in some ways, and certainly not one threatened by a cheaper energy source as, say, electricity was to manufactured (coal) gas in this era.

So when did government oil and gas subsidies begin in the U.S.?

Corporate taxation began in 1909, and the depletion tax writeoff began in 1913. The intangible drilling and development cost deduction began in 1917. So the classic subsidies cited by renewable apologists began a half-century after the industry was born. Direct government subsidies, such as checks written on the U.S. Treasury, were virtually nonexistent in the history of the petroleum industry.

Read the whole thing here.

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