Saturday
Jul062013
by 
Bishop Hill
Bishop Hill No fossil fuel subsidies
Jul 6, 2013 From time to time this blog has discussed the retwardian* allegation that the UK heavily subsidises fossil fuels. It's therefore for good to see somebody else examining this allegation and concluding that it's nonsense
No significant subsidies for fossil fuels in the UK. NO SUBSIDIES. Anyone who says otherwise is pulling wool over your eyes.<>*Adj. Pertaining to Bob Ward. You can guess the rest.
Reader Comments (58)
Fossil fuels are what helped pay to keep the UK running during the de-industrialisation of the 1980s. They support the subsidies. They don't receive them.
Is it really so long ago that people have forgotten, or is it just an entire generation who neither learned it in school, nor from the media?
is "ret_ward" a homage to Mrs Simpson's last husband, or a non-PC joke (remove the "w")?
In support of the Bish; you would have to be seriously retwarded to claim fossil fuels are subsidised after reading that very clear explanation on the dashboard.
The other data source the AGWs like to claim is IEA. When one goes into the data, it is obvious that the subsidies are almost all in third world countries or in the middle East, where the dictators keep the locals happy. They don't show any subsidies for OECD.
http://www.iea.org/subsidy/index.html
The big lie again and relying on people not to check if one sounds authoritive.
Oh dear.
I read it as 'retardian'
How unfortunate. Tsk, tsk. Silly me. (innocent face)
Subsidies?
Oil & Gas positively contribute towards our Exchequer via the Licence Fees paid for their exploration & development.
[Snip. OTT]
You know, you read some old bull poop in the media these days and most of it straight from the rear of the bull, in this case out of the mouth of Jeremy Grantham's serpentine-tongued lickspittle - Bob Ward.
Most of Bob's sound bite statements, amount to - if not all of .............it - rhymes with another imho more appropriate word.
That old canard raises its tired old head again - "fossil fuels subsidy". This is classic misdirection from the alarmist spinmeisters, as usual with most of Bob's alarmist poppycock it does not bear the most modest scrutiny.
"Fossil fuel subsidy" rates alongside all the other 'chicken little' utterings...... "6 metre sea level rises", "warmest decade ever", "fossil fuel emissions cause runaway warming", "Arctic sea ice loss at tipping point", "polar bears have had it", "barbecue summer","man made CO2 causes catastrophic storm Sandy", "wind energy and renewables are the future", "Ed Davey is an intelligent politician"?!
"the DECC has the best interests of the nation at heart" - that one's my very own.
O/T - I can't resist.....and finally Tony Bliar: "I can't stand politicians who wear God on their sleeves". (Sunday Telegraph, 7 April 1996.)
Ironic, huh?
Old story and the reference to Bob Ward is weak and cheap. You can do better than this, back to lurk mode for me.
Tim Worstall has been pointing this out for years.
It may be an old story, but it doesn't hurt to revive attention to it, when most of those around you are ignoring it.
Basic science tells you that the idea of subsidising fossil fuel is impossible at this stage.
You can only subsidise something by using something cheaper and at the moment such a source does not exist.
In reality, of course, fossil fuel subsidises everything else.
redc
. . . Old story and the reference to Bob Ward is weak and cheap.
Reluctantly, I have to agree. [Previous comment now snipped. BH}
My suggestion FWIW is to edit the header ASAP and snip a few comments while you're about it. (You're welcome to include this one.)
I recently received notification of budget changes to "Rates of Corporation Tax" from HMRC.
Main table contains these lines:
Now I may be reading this incorrectly, but isn't this saying that oil profits are taxed at a higher rate than everything else, and they did not get the reduction in rate that other corporations got this year?
I have trouble reading this post without thinking it's all some kind of ret-wardian nightmare.
As for being an old story, well yes it is an old story, but while the greens continue to be dishonest about the true contribution of the fossil fuel industry to government coffers, the story has to be told over and over again. When the greens start being honest about this contribution, we can stop talking about it.
Never gonna happen though.
It is also worth noting that a move to renewables would create a hole in the government coffers that would have to be filled in some other way - more burdens on the taxpayer from renewable energy. That's not trivial and needs to be addressed.
If fossil fuel 'subsidies' in the UK amount to a lower rate of VAT then the least damaging way to reduce that 'subsidy' is by reducing VAT on other things.
redc
"Old story and the reference to Bob Ward is weak and cheap"
Are you suggesting that Bob Ward actually deserves anything else?
I suppose that in the political world where, for instance, "cut" means "reduced increase", it's not unreasonabl to expect that a slight reduction in a confiscatory tax could be called a subsidy by those with the "correct" agenda.
and the peak oil nonsense site The Oil Drum is shuttering.
Near Toronto I paid 1.19 CAD/L for regular gasoline this week.
AA.COM says your best price is 134 ppl for petrol. Seems subsidized petrol is much more expensive than gasoline (2.11/1.19 CAD). Glad we use the cheaper gas!
Wrong fossil fuel for the story maybe, but still...
That fossil fuel works too JCToronto - just think of the massive subsidy for red diesel!!!
So most of the failures to tax are actually related to consumers, and not big business.
Sometimes the old stories are too classic to be forgotten. When a certain party is prone to serial beclownment as is Bob Ward, perhaps mild ridicule is the only proper and deserved response. It is also gratifying to see redc knows enough to "lurk-off" without being told.
In the UK, oil and gas products and the oil companies are subject in total to 4 main types of tax:
Corporation Tax at 30% and ring fenced to prevent say exploration losses elsewhere in the world reducing UK tax liability (hello google, starbucks, Vodafone etc...)
Petroleum Revenue Tax (PRT) is still payable (at 50%) for all fields commissioned prior to March 1993
Supplementary Charge at 32%
And just so there can be no doubt how much the taxes are, the following is from HMRC:
"Profits from fields which received development consent before 16 March 1993 are subject to PRT, RFCT and Supplementary Charge. Profits from fields which received development consent on or after 16 March 1993 are subject to RFCT and Supplementary Charge.
The current marginal rates of tax are:
•Corporation Tax and Supplementary Charge - 62 per cent
• PRT, Corporation Tax and Supplementary Charge - 81 per cent"
Ie eyewateringly high. Hello Google, Vodafone, Amazon - what do you contribute to the UK economy?
see http://www.hmrc.gov.uk/oilandgas/guide/intro.htm
In addition, on a litre of fuel at the pump the taxes and duty are:
Duty 57.95 p per litre
VAT 22.15 p/litre (note VAT is charged on the duty too!)
The oil itself is about 48 - 52 p per litre (diesel being slightly more expensive)
The retailer margin and the delivery is about 5p per litre
See http://www.petrolprices.com/the-price-of-fuel.html#j-1-3
thinking scientist
When you say the cost of the oil is 48 - 52p per litre I assume that is after the possible 81% tax on the oil companies?
Oh dear :(
And the coalition has spent 3 years with no apparent idea about how they could get the economy growing? Reaches for pistol and puts in mouth
The retward himself demonstrating retwardian dissimulation in all its full retwardiferous glory
http://www.lse.ac.uk/GranthamInstitute/Media/Commentary/2012/november/government-financial-support-fossil-fuel-companies.aspx
May I draw your attention to the recent OECD report onbudgetary support for fossil fuels.
http://www.keepeek.com/Digital-Asset-Management/oecd/environment/inventory-of-estimated-budgetary-support-and-tax-expenditures-for-fossil-fuels-2013_9789264187610-en
The OECD report calculates that government policies provided £4.3 billion of support for fossil fuels in 2011 - a £510 million increase on the year before. It calculates the figure based on estimates of how much financial benefit fossil fuels get from a whole range of government energy policies.
Natural gas got the most support through tax breaks and contributions for infrastructure development, getting £3.6 billion. It also got the largest increase in support, with £532 million more in 2011. That increase was offset by a £31 million reduction in government support for coal power, while support for petroleum increased by £10 million in 2011.
Entropic Man points to the source of the retwardian logic discussed in the first place.
Entropic Man - did you even read the link the good bishop included in the post? That is the *exact* report that is demolished in the linked article.
"The [UK] government revenue from Fuel Duty in 2009 was £25.894 billion, with a further £3.884 billion being raised from the VAT on the duty contributing some 4% to the total UK tax revenues.[1] The Fuel Price Escalator, which was introduced in 1993 was abandoned after the disruptive fuel tax protests of 2000."
http://en.wikipedia.org/wiki/Hydrocarbon_oil_duty
EM - how does your OECD report relate to the OECD report that the head post is based on?
Brilliant argument proving there is a silent 'W' in 'retwardian'.
I've used bold to highlight a number of words in the quotation. Words that are extremely similar to vague words when climastrologists assess massively massaged results based on model^2 (models using other model output as input); please note, these words do not mean what you think they mean.
e.g., 'calculates' means that the numbers do not add, subtract or divide under international accounting or physics rules; ergo assumptions,
-- 'policies' means more assumptions based on vague wordings,
-- 'estimates', oh yeah, more fudge please,
-- 'whole range of government energy policies', unable to explicitly identify policy, page and paragraph; ergo more assumptions please do not check these so we'll just assume them.
Not withstanding that the words 'provides' and 'support' are complete fabrications. Charging an outlandish tax and/or fees and then allowing deductions or perhaps avoidance of paying the same fee twice is not fossil fuel support under anyone's regime.
Identify explicitly where fossil fuels received direct financial aid or direct support; and no, handshakes, kissed babies and such are not support. Financial or other support must be definitively identified in an accounting report with sourced debit and credit columns. Signed and cashed checks or bank wire transfers would be acceptable.
@entropic
Unlike you to have missed the point by such a huge margin and put both feet in your mouth.
The 'report' you draw our attention to is the one that is totally debunked in the subject of this thread.
Perhaps you are overwhelmed with excitement at the prospect of meeting some of us in person at The Kings Arms, Oxford, tomorrow at 6:30? All welcome.
Not banned yet: your close to £30 billion are just for the sale of the petrol and diesel - they do not include the corporate contributions, nor do ithey inlcude tax on gas (and indirectly electricity, where fuelled by coal, oil or gas).
The oil industry is one of the biggest on the planet and it is incomprehensible how anyone can think itis subsidised. The suggestion that it is is simply laughable. It is one of the most successful, self-financed and self-risking businesses that supplies the most essential ingredient for a high standard of living, extending life expectancy etc etc: energy.
Pharos (Jul 6, 2013 at 10:26 PM)
It is truly bizarre logic: a “tax-break” (i.e. a condition set to reduce your tax bill) and other forms of tax reduction are now seen as a subsidy.
Let us use this logic to show how wealthy I am: I have £1,000 in my bank. Every day, I check it and, every day, find that no-one has stolen it! Therefore, my income is £1,000 per day. Why am I not a millionaire?
If this is really the thinking at the LSE, then now I know why the government cannot, and can never, get us out of the mess we are in. Tax is legalised theft; the only way to get this country moving forwards is to lower the level of theft, and let the people spend their money in more the productive ways that people tend to do with their own money.
How anyone, least of all the London School of Economics, can label a tax break as a subsidy is beyond me.
So if I am "only" paying 20% tax, not 40% tax, am I receiving a subsidy?
Tax receipts from oil and gas production in 2012-13 (incl. CT, PRT etc) were £6.53 billion. On top of the fuel duty and VAT, that totals just under £37 Billion. The previous year the CT/PRT etc tax take was £11.25 billion
Excellent historical document here: http://www.hmrc.gov.uk/statistics/prt/og-stats.pdf
Thanks TS - I did see that HMRC report.
How about you EM - any news on the provenance of your OECD report?
Government take on oil and gas in the UK is around 62%. This government take is modest in comparison to some Middle East countries where it can be 99% (UAE) - 90% (Libya). Meanwhile in Spain it is only 40% because they have modest prospectivity and wish to encourage drilling. Is there another industry in the UK where the government takes almost 2/3 of revenue?
But it seems Bob Ward is right: the UK does subsidise fossil fuels. See Autonomous Mind's final paragraph here.
Robin Guenier: I'm not sure that is correct. The fuel for the diesel generator has not been subsidized, and that's the issue in the "fossil fuels are subsidized" argument. The STOR system is set up to replace a combined fleet of nuclear, gas turbines (reasonaby efficient, especially in combined cycle), and coal plants (inefficient, but very reliable) to provide base load with intermittent generation supplemented by high cost diesel generation. I am also not sure that this is a 'subsidy' to the diesel operator - 30GBP/kW-Yr as a capacity charge is not all that high: a simple cycle combustion turbine would be 90-120USD/kW-Yr, although I have no idea whether the operating charge is out of line.
A very expensive policy decision does not necessarily mean that the operator who provides the service is making an extraordinary profit (although they well might be).
dcarno: perhaps you're right. But eight times the industrial rate sounds very like a subsidy to me.
Meanwhile, biofuels cause increase in CO2 emissions:
http://www.trust.org/item/20130703091935-47h65
You'd need a heart of stone not to laugh.
Good thing CO2's beneficial-to-harmless rather than harmful.
In the UK if you buy a gallon of petrol and packet of crisps from your local garage , its the crisps that provide the most profit to the garage despite the big difference in cost , thanks to the massive tax on the petrol. So much for subsides.
Robin Guenier: But eight times the industrial rate sounds very like a subsidy to me.
I think we are talking past each other a bit. There is no question that reliance on the STOR program to fulfill baseload requirements (required due to the foolhardy substitution of reliable resources with intermittent resources) is a horrible deal for the electricity consumer; that does not mean that the provider of the STOR resources (or their suppliers) are being 'subsidized.'
As a poor analogy, imagine that you own a large office building or shopping mall, and you have a contract with me to polish the floors. I do that by bringing in a crew at night, moving all the furniture out of the way, and using a huge industrial floor-polisher. That was the National Grid in ~1995. A few years later, you (or your governing body) decides to go with a "green" floor polishing program, and you hire a 'green' crew. They come in and polish the floors whenever they like (or their small-scale equipment is available). If your tenants cannot tolerate moving the furniture during the day, the floor doesn't get polished, or only the open spaces are addressed. Also, because the 'green' polishing compounds are less effective, the floor doesn't look as good as it did before (but that's an aside...).
This doesn't seem to keep your tenants happy (especially since in commercial leasing, they are ultimately paying for the polishing), so you approach me again, and ask me to bring in a crew - on demand, when the 'green' guys don't get the work done. If the 'green' guys perform well enough, my crew stays home. Also, you don't want to do enough work for it to be worthwhile to bring out the big industrial polisher - instead, I will be doing a lot of hand-work which incurrs higher labour costs and needs more cleaning chemicals, so my unit rate (cost/square foot) is much higher. By analogy, I am the reliable fossil-fueled generation being asked to bid into STOR.
Just who is being subsidized here? Not me - I am quoting based on the costs of providing the services you asked for. My suppliers (the fossil fuel producers) aren't being 'subsidized' (by this arrangement) - they are quoting me for the larger cleaning chemical (ie, fossil fuel) volume, but presumably it's at their normal price (absent any market-changing impact of all this nonsense). The only real subsidy is to the 'green' operator, who is being allowed to sell a (truly crappy) product that doesn't satisfy the ultimate customer, and at least in the electricity market, is being paid well over the true value of a good product, let alone the intermittent product he has available.
Cheers,
Dean
FYI. Just attended a conference in Boston where one of the lead speakers was from Oxford Economics talking about the world economy. He was more bullish on the US than Europe. One of the primary reasons was that the US production of fossil fuels has been and will continue to rise to the point where the US may become energy independent whereas Europe will be experiencing a widening trade gap for energy. In particular, the economist felt that was bullish for US manufacturing.
He had a definite British accent. Interesting within the context of the current CO2 debates.
For international comparison, normal unleaded petrol in metro Melbourne ranges from about $1.40 to $1.55 per litre. Add 16 c a litre if, like me, you have a high performance supercharged engine that demands 98 octane. Sometimes it now takes $100 or more to fill a tank.
To cap it off, the 0530 news this morning foreshadowed an imminent milk price rise of 54%, taking a 2 litre bottle from about $2.50 to nearly $4.
At home, we have no real off-peak option for electricity. We are in an apartment unable to get a subsidy for rooftop solar, so we get slugged 30.5 cents per kw hr retail, domestic.
On top of this we get to pay for a desalination plant, never used in anger. It was announced late in 2012 that he average Melbourne household can expect their water bill to jump by a massive $290 next financial year to pay for the problem-plagued desalination plant. From $840 a year to $1130 in 2013.
I think that voter dissatisfaction is starting to be shown. Green is not good, it is the colour of money being taken away.
Geoff:
Here in Vancouver, Canada, regular unleaded is posted at ~$1.50/litre (about $1.57 AUD - current exchange rate is ~1.05AUD:1.00CAD), and the recent range has been from $1.40 to $1.50. The highest octane I have seen is 94 (Chevron), and that commands about a 10-15¢ premium. Vancouver has the highest gas prices in Canada (attributable either to lack of refining capacity or rapacious oil companies, depending on your political leanings): prices elsewhere are lower by 15-20¢.
Geoff: WOW - I read but didn't really take in your electricity price! We are at ~7¢ for the first 1350 KWhrs in a billing period (2 months), and 11¢ for the balance.
Wonderful information, thanks a lot for sharing kind of information.
Regards, Air Duct Cleaning Services in Dubai
01 –
Superb information from this article and I have to tell you, your blog giving the best and awesome information. And I would like to thanks for this information that I had been looking. Regards Floor Polishing Company in Dubai