This link has been bookmarked by 3 people . It was first bookmarked on 20 Feb 2008, by Tony Payne.
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02 May 08
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05 Apr 08
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20 Feb 08
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Subsidizing Big Oil
Drawn from the 1995 UCS report "Money Down the Pipeline: The Hidden Subsidies to the Oil Industry" -
- There is growing awareness in this country that the full cost of using oil for transportation is "subsidized" -- that is, gasoline prices paid by consumers do not reflect the full economic cost to society. The true cost is hidden by myriad direct and indirect public subsidies, which include
- reduced corporate income taxes for the oil industry
- lower than average sales taxes on gasoline
- government funding of programs that primarily benefit the oil industry and motorists
- "hidden" environmental costs caused by motor vehicles, namely air, water, and noise pollution
- reduced corporate income taxes for the oil industry
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Tax Benefits
Government directly subsidizes oil consumption through preferential treatment in tax codes. A multitude of federal corporate income tax credits and deductions results in an effective income tax rate of 11% for the oil industry, compared to the non-oil industry average of 18%.
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in 1989 preferential treatment yielded $1.8 billion to $4.6 billion in individual income tax benefits to the oil industry (Koplow, 1993).
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At the state and local levels, sales taxes for general revenues on petroleum products are lower than the average sales tax rates, and consequently, motorists underpay for general government services.
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Environmental Costs
Oil and motor vehicle use are responsible for enormous hidden environmental costs. Economists term these costs "externalities" because they are not included in the private costs of transportation.
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Nevertheless, these costs are real and they are borne by society at large. They include the economic costs of air, water, and noise pollution. Reducing the costs of externalities requires government attention.
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Transportation is responsible for most of the major air pollutants emitted in our urban areas,
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Pollution costs are borne by society in the form of increased health care costs and loss of wages due to illness and premature death (i.e., morbidity and mortality costs), reduced agricultural output, loss of visibility, and damage to buildings.
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Delucchi (1995) estimates the total cost in 1991 of environmental externalities to be $54 billion to $232 billion. Human mortality and morbidity due to air pollution accounts for over three-quarters of the total environmental cost and could be as high as $182 billion annually. For the Los Angeles area, Hall et al. (1992) estimates that the annual health-based cost from ozone and particulate exposure alone to be almost $10 billion.
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