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The Oil Glut Is About To Get Even Worse

The Oil Glut Is About To Get Even Worse

With OPEC+ countries flooding the…

Fossil Fuel Industry Receives $1.3 Trillion in Subsidies Each Year

Fossil Fuel Industry Receives $1.3 Trillion in Subsidies Each Year

The International Monetary Fund has released a recent study titled ‘Energy Subsidy Reform: Lessons and Implications’ which calculates that in 2011 the world offered the fossil fuel industry subsidies amounting to $1.3 trillion, or 8% of the total global government revenues.

The largest subsidiser in the world by far was the United States, gifting $502 billion to the fossil fuel industry, China was second at $279 billion, and Russia was third, offering $116 billion.

According to CleanTechnica, the IMF has estimated that in order for the US to correct the situation, it will need to setup a new system of fees, levies, and taxes that will cost more than $500 billion a year.

Related article: Oilprice.com Intelligence Report: The IMF vs. Energy Subsidies

The largest contributor to the subsidies is the failure to properly price carbon pollution, costing a little over $1 trillion.  This failure to effectively include the pollution costs into the consumer price of the fossil fuels, via the use of a carbon tax, or a cap-and-trade system, has led to the world’s economic giants becoming the largest subsidy payers.

Pre-tax subsidies, included in the tax code, and mostly offered by oil producing countries in the Middle East and North Africa, add an extra $480 billion to total. And then VAT exemptions offered by many other countries contribute another several hundred billion dollars.

By. Joao Peixe of Oilprice.com



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