that might motivate them into doing what they have in the past to bring prices down to affordable levels.
from The Union of Concerned Scientists:
"Government directly subsidizes oil consumption through preferential treatment in tax codes. A multitude of federal corporate income tax credits and deductions results in an effective income tax rate of 11 percent for the oil industry, compared to the non-oil industry average of 18 percent. If the oil industry paid the industrywide average tax rate (including oil) of 17 percent, they would have paid an additional $2.0 billion in 1991. Our results are consistent with a recent report by the Alliance to Save Energy that estimated the benefits of individual federal corporate income tax provisions. Their results showed that in 1989 preferential treatment yielded $1.8 billion to $4.6 billion in individual income tax benefits to the oil industry (Koplow, 1993).
At the state and local levels, sales taxes for general revenues on petroleum products are lower than the average sales tax rates, and consequently, motorists underpay for general government services. (Sales taxes are charges on petroleum products above user fees that are used for general revenues.) Another recent study, by the Alliance to Save Energy, found that state and local governments taxed gasoline at about half the rate as other goods -- approximately 3 percent versus 6 percent (Loper, 1994) -- resulting in an estimated $2.7 billion revenue loss from gasoline sales alone in 1991. When home, industry, and office petroleum products are included, the total state and local revenue loss sums to $4.1 billion.
Net Government Expenditures
Federal, state, and local governments provide a variety of oil- and transportation-related infrastructures and services. Some of these expenditures are financed through earmarked user fees, such as dedicated highway fuel taxes and vehicle registration fees. What we refer to as "net government expenditures" (i.e., government expenditures not financed through user fees) are either direct subsidies or indirect subsidies. Direct subsidies include government-funded energy research and development. Indirect subsidies include the Strategic Petroleum Reserve, military expenditures related to the Persian Gulf, and police and fire protection related to highway use. Although "user fees" in the form of gas taxes, registration fees, and tolls pay for a portion of the infrastructure services, large government outlays remain that must be covered by general revenues. Delucchi and Murphy (1995) estimated the net government expenditures at the federal, state, and local levels to be from $25 billion to $45 billion in 1991. (Delucchi's <1995> estimates were only for transportation and ignored the portion of expenditures that subsidized oil not used for motor vehicle fuels. Total oil industry and motor vehicle subsidies would consequently be larger.)
Based on a recent report by the Alliance to Save Energy (Koplow, 1993), we estimated that the total expenditures by federal agencies alone amounted to between $1.4 billion and $2.0 billion in 1990. (Unlike Delucchi <1995>, Koplow <1993> i) does not include state and local government outlays directly benefiting the oil industry; ii) does not include government expenditures on non-oil motor vehicle infrastructure and services; and iii) includes federal expenditures for infrastructure and services related to the shipping of oil. The first two factors far outweigh the third. Consequently, the direct federal outlays are an order of magnitude smaller than the total net government expenditures.) The five largest agency outlays were the Army Corps of Engineers Civil Program, the US Coast Guard, the Maritime Administration, the Strategic Petroleum Reserve, and the Department of Energy. The first three outlays total about $1 billion annually and benefit the oil industry through infrastructure and services related to the shipping of oil. The Strategic Petroleum Reserve's existence is a direct result of our overdependence on imported oil and is intended to reduce the impacts of a severe supply disruption. It costs $320 to $400 million annually to maintain. Finally, the Department of Energy spends over $100 million annually on developing and improving oil production techniques.
http://go.ucsusa.org/publications/report.cfm?publicationID=149