Oil gets lion’s share of federal incentives — report

Source: Hannah Northey, E&E News reporter • Posted: Friday, May 12, 2017

U.S. petroleum producers have enjoyed more federal financial incentives since World War II than any other energy sector, according to a study released today by the nuclear industry in hopes of swaying a debate on government energy subsidies.

Oil companies have received more than $400 billion in federal concessions since 1950, including a depletion allowance and tax deductions, various forms of regulatory relief, and government-backed research and development for leasing, research and development, the Management Information Services Inc.’s report says.

The Virginia-based research and consulting firm, led by economist Roger Bezdek, prepared the report for the Nuclear Energy Institute that hopes it will carry some weight in the ongoing debate over federal support for energy.

The firm has also done work for entities like the Department of Energy, the American Coalition for Clean Coal Electricity and Ceres, a nonprofit focused on sustainability.

In the period studied, the natural gas industry received $140 billion in federal incentives through 2016, hydroelectric received $105 billion, and renewables — wind, solar and biomass — received $158 billion, including $84 billion in tax credits and other incentives, according to the report.

Debates over which industry is receiving the most support, in what forms and whether it should continue are growing louder under the Trump administration.

Energy Secretary Rick Perry recently ordered a study to look at ways subsidies and policies are affecting the closure of baseload nuclear and coal power plants, a move that some groups see as leading to a reform of the wind industry’s production tax credits (PTCs).

When asked about the report, American Petroleum Institute spokesman Michael Tadeo said the oil industry didn’t get “subsidies,” although the Management Information Services’ calculation of benefits for the oil sector was $7.5 billion, “primarily through subsidies for construction and operating costs of oil tankers.”

NEI seized on the findings to highlight state actions targeted at propping up at-risk nuclear power plants.

John Kotek, NEI’s vice president for policy development and public affairs, said state programs in New York and Illinois to support struggling reactors amount to a “course correction” for clean, baseload power.

“If you’re going to deny equal treatment to nuclear energy,” Kotek said, “the largest source of emission-free generation in America, then that’s an argument for eliminating all energy subsidies.”

NEI in a release noted the government has spent more on researching coal than nuclear power during the past 30 years, as well as more funding for natural gas even though the nuclear sector’s air emissions are lower.

Nuclear utilities in recent years have been granted billions of dollars in federal loan guarantees and are currently pushing for legislative text to extend PTCs for new reactors in the South.