Thursday, July 23, 2015

The facade of a free market in fossil fuels

In school, we are led to believe that America has a free market where people can apply their talents and skills to earn a good living, perhaps even become independently wealthy as a result. While it is true that people can prosper from their efforts, it would seem that the subsidies provided by government aren't really discussed.

For example, despite the taxes we pay in order to inhibit the use of fossil fuels, the fossil industry received an estimated $4.9 trillion subsidy worldwide in 2013, according to a recent IMF report. Subsidies for fossil fuels are projected to grow to $5.3 trillion in 2015. This very large sum is expected to exceed the total cost of health care, worldwide.

To put it differently, for the cost of all of the fossil fuel subsidies alone, we could provide universal free health care for everyone on the planet. But we don't do that because that would be "socialism".

What is also unstated is that these subsidies contribute to enormous profits captured by the fossil fuel industries. Those profits can be used in turn to influence public policy in a way that neutralizes the influence of all others when it comes to the regulation and taxation of fossil fuels.

This is not a free market in action, as any economist will tell you. Worse, the subsidies flow to those at the top of the chain, not the bottom. The subsidies support inflated compensation for fossil fuel executives and do not trickle down.

The environmental and health damage from fossil fuels is almost beyond comprehension. Spills from oil and coal ash, and damage to the water supply from fracking impose enormous costs on ordinary citizens, yet the fossil fuel industry is rarely held to full account. At most, they get a slap on the wrist. No one goes to jail (unless except for China - then execution might be in the wings).

So when conservative American politicians work tirelessly to gut Medicare, or to repeal Obamacare, while at the same time, writing a blank check for fossil fuels, I'm not amused. I see the hypocrisy of our so-called leaders when they encounter a conflict of interest. It's time to use full cost accounting when calculating the costs of the fuels we choose to help run our daily lives.

For a market to be free, there must be transparency and accountability. The current political environment provides very little transparency or accountability when it comes to fossil fuels. Full cost accounting is just a start, but at least then we can start to bring all of the costs of our energy choices into view in any debate on the subject.

Perhaps then, we will see that investments in solar, wind and nuclear power are far less expensive and taxing on the environment compared to fossil fuels. Perhaps then, we can see what it will take to avert total decimation of the world's resources and leave a habitable planet for the next generation.
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