The government began Oil subsidies back in 1916 to speed up depreciation of drilling costs which can be quite substantial. A second subsidy was the oil depletion allowance, that became law in 1926. The oil depletion allowance is the biggest incentive to invest in drilling for oil, natural gas and fracking and without this allowance, we would probably see a significant drop in our oil and gas supply. This subsidy is something the left has been trying to get rid of for decades. The cost and lead time to drill a gas or oil well is substantial very capital intensive and there is always the possibility of hitting a dry hole. It is necessary that we weigh the cost of the oil and gas depletion allowance against the value of being energy independent. Since Biden has been in office oil production has increased substantially but off a low created because of the Covid pandemic. He likes to take credit for things he had nothing to do with. Just like the 13 million jobs he takes credit for that were nothing more than employees returning to jobs who weren’t working because of the Covid Pandemic.
Let’s make one thing clear that presidents are not necessarily responsible for increases or decreases in the oil supply. The oil companies are the ones who make the decisions on how much to drill and how much to pump depending on economic conditions and the cost of drilling. Subsidies like the oil depletion allowance give oil companies a reason to pump more oil just as low-cost loans for drilling will give them the impetus to drill more wells.
When you think about it logically, we have high oil prices for any number of reasons but most of them have to do with political influences. The war in the Ukraine with Russia has caused us to stop buying Russian oil and has caused the price of a barrel of oil to rise but it also gave oil companies a reason to drill more and pump more as the price rises. Interest rates have spiked as the Federal Reserve keeps raising the fed funds rate to bring down inflation causing the cost to borrow money for drilling to spike higher. I’m not sure that anyone has any idea what life would be without oil or natural gas as so many products are made from them. Just take a look at this list: https://energyneresources.com/blog/list-of-products-made-from-petroleum
The government subsidizes so many industries that it would be difficult to count them all, as this is what is known as political PORK. Most recently we gave the Chip industry 53 billion to build plants in country mind you this is on top of over 200 billion in subsidies the government is subsidizing them with over the next 10 years. While I believe most subsidies are just a lot of pork generated by the lobbyist in Washington D.C. many in past history have served a purpose in helping fledging industries to get off the ground or struggling industries to survive. However just about all of these subsidies have been self-serving and politically motivated. We have only to look at how much is being wasted on this climate change farce or better yet the bail out of the banks with $850 billion of our tax dollars in 2008. They threatened the collapse our financial system because of bad business decisions in the mortgage market so the government subsidized them out of bankruptcy with our tax dollars. Now they are back in business and giving us the business with ever increasing interest rates on loans and credit cards. We have been subsidizing the electric car industry since 2009 which started to increase the sales of hybrid cars. While we have spent tens of billions subsidizing electric cars for over a decade because of affordability they are more beneficial to the wealthy because of high sticker prices. Does anyone really believe that we can subsidize our way to an all-electric vehicle country? We don’t have enough electricity in the grid to service the electric needs of an all-electric vehicle world. Heck California already has brown outs because of power shortages.
The government is on a tear to take any energy produced by hydrocarbons off of the grid but at what cost. They are subsidizing just about any source out there that relies on anything but oil or natural gas to produce energy. The problem is that we are decades away from having the ability to shift our entire grid to alternative energy like wind or solar as both are unreliable. Remember the sun doesn’t always shine especially at night and the wind doesn’t always blow as Texans found out when wind turbines froze. Our politicians will continue to squander our tax dollars just like Obama’s Solyndra or the latest Electric Bus company Proterra that just went belly up. We are over 32 trillion in debt yet the idiots in Washington continue to spend like drunken sailors.
I’m sure that many Americans wonder what would happen if the U.S. Electric Grid went down? Well, Homeland Security says a complete grid failure would result in 90% of the population in the country dying in a year without electricity. You say that it couldn’t happen? Well 11 years ago a huge solar flare narrowly missed our planet which scientists say could have shut down electricity on the entire planet. If that’s not enough to shock you, many electric companies buy their transformers from China and not long ago they took one apart and found a back door built into them so they could turn off our lights at will. We also have the added danger now of EMP’s that can be dropped from a plane or missile at high enough altitudes that if centered over someplace like Kansas could turn off the lights for the entire U.S. By the way if you’re counting on the government to save you forget it, the U.S. has no plan nationally to respond if the electric grid goes down.
In my opinion the government should not be subsidizing any industry or venture that is not economically viable. We shouldn’t be putting our tax dollars into industries that are on the road to failure. I will bet most Americans have no idea that our Transportation Secretary Grandholm held a sizeable amount of stock in Proterra until May of 2021 when she sold her shares for a net capital gains $1.6 million. Anyone who believes that government backing of all of these subsidies don’t benefit the politicians and bureaucrats voting for them is just plain ignorant. There are some industries that have such strong lobbies like the oil and gas industry that it is hard to get a vote to end them. The question is do we really want to end them? If we want them to continue satisfy our insatiable appetite for more energy it may serve the public better to continue these subsidies which since inception have totaled just 470 billion which is in my opinion a small price to pay to be energy independent. Without hydrocarbon energy this country would come to a complete halt. People forget that 60% of our electricity is generated by oil, natural gas, and coal. Renewables and nuclear only account for 40%
In 2022 solar energy accounted for only 2.8% and wind 9% while Hydro is still around 6%. So in total 17.8% of our energy was produced by renewables while 19% came from nuclear power, one of the cleanest forms of energy currently available. Everything is about making wise choices in life and currently we are seeing a lot of crazy people making nonsensical decisions that could take us back to the stone age. So the next time you read a newspaper or listen to a legacy media newscast, and they are pontificating about the huge benefits from renewable power sources think about how you would live if we didn’t have any electric power. Climate change is all about control as are most other government sponsored subsidies we are told are for our benefit. Please keep in mind my friends that old saying. “Were from the government and were here to help you” as nothing could be further from the truth.
“We Get the Government We Deserve”