Avoiding War and Helping Farmers, Industry and the Environment
By Andy Kerr
Column #9 - Go to next column
Length: 742 words
Printed: 21 November, 1996 Wallowa County Chieftain
Americans pay some of lowest gasoline prices anywhere. However, the pump price fails to reflect all the costs of gasoline, from harm to the environment, tax-subsidized corporate welfare for the oil companies, to the American money and blood spent to keep oil supplies open.
Most industrialized nations heavily tax petroleum because government spends lots of money keeping the oil flowing and cleaning up the messes caused by oil. But not in the USA where income and property taxpayers pay through the nose since the tax on gasoline doesn't come close to covering the costs.
The Institute for Local Self Reliance has issued "Oil Slickers: How Petroleum Benefits at the Taxpayer's Expense" (www.ilsr.com or $10 from 1313 5th St. SE, Suite 306 Minneapolis, MN 55414), a compelling analysis of the hidden costs of oil.
Economists call them "externalities." They are costs that are reflected in the price of product. For example, all the damages caused by cigarettes aren't paid for by the tax on a pack of cigarettes.
ISLR estimates that the additional costs in tax subsidies, military protection, and environmental and human health costs are between $42 and $350 billion annually. (The range is so wide because it depends on what and how you count.) For perspective, the federal government's deficit this year is less than $200 billion.
First is the $3.3 to $10.9 billion of tax breaks to the oil companies. They have convinced Congress to grant them a whole list of tax subsidies from the oil depletion allowance to accelerated depreciation and a bunch of other breaks given to no other industry. The statutory rate of taxation for American business is 35% before deductions. The oil companies pay about 11%. Most other industries are much closer to 35%. Taxes that the oil companies don't pay means that other taxpayers—or our grandchildren in the form of debt—do pay.
It's not just federal taxes that are being tapped to meet our petroleum addiction, but also local property taxes. ISLR estimated that if the transportation taxes paid its full freight in Minneapolis, rather than some of the burden being paid by property taxes, gasoline would cost another 18¢/gallon.
Second, taxpayers spend $26.6 to $70.7 billion to pay for military protection in the Middle East and elsewhere. This figure is in dollars, not in American blood (and health) that was lost in Oil War I (you may remember it as the Gulf War) or could be lost in the upcoming Oil War II. One Defense Department official recently told Congress that the last war in 1991 might keep things quiet for 10 years.
Third, and the hardest to quantify precisely—but likely the most expensive of all—is the estimated $25.5 to $267 billion annual costs in the form of environmental and health costs associated with pollution, including global warming.
Leaking oil pollutes the water and our bodies; burning oil causes air pollution which causes cancer and other diseases, all of which cost people their health and taxpayers their money. Let's not forget a by-product of oil burning: global warming. If it keeps up, we'll be growing corn above the Arctic Circle, and hurricanes, flooding and temperatures will continue to become more extreme.
ILSR's very conservative estimate is that if gasoline were paying it's own way that it would cost at least another 32¢/gallon and possibly as much as $1.34 more. If gasoline users had to pay the true costs, we'd be driving more efficient vehicles, Amtrak wouldn't be cutting service and clean-burning bio-based fuels from crops would be a reality.
The present system isn't working. More war over oil is likely. If Americans consumed ethanol rather than gasoline, the air would be cleaner, spills would be easy to clean up, people would be healthier, and we could reduce military spending—the huge part of the federal budget that no one talks about cutting. American farmers and industry would happily and profitably grow the crops and make the bio-based fuels.
Farms and industries could be revitalized along with people's health. Tax burdens could be relieved or spent educating our young and taking care of our old, rather than failing to educate old Saddam Hussein.
Isn't that what national security is really all about?