The Hidden Subsidy

military_guarding_oil-Rare is the news coverage of an alternative energy source that doesn’t remind us that the cute little alternative isn’t seriously ready for prime time, because, after all, it requires subsidization to be affordable.

Which is why the two-inch blurb on page A5 of today’s Star Tribune was such a miniscule breath of fresh air. (I can’t find it on the Star Tribune’s online version, so here’s the longer NYT version.)

The itsy bitsy item reported that, according to the National Academy of Sciences, the health cost of coal and oil use is about $120 billion per year. Taxpayers pay a decent chunk of that cost. Taxpayers also pay the cost of military presence and wars necessary to get oil out of the Middle East, which the subsidy-hating CATO Institute estimated to be about $30 to $60 billion per year through the 1990s (pre-Iraq war, and many consider that war to be totally to partially about protecting oil supplies). Other estimates, that include the cost of the Strategic Oil Reserve and other government supports put the non-health cost at up to $158 billion per year.

Add the costs together and the hidden subsidy required to keep oil and gas viable in the marketplace is staggering. And it is quietly shelled out out year after year after year. If those costs were reflected in the market price of oil and coal, oil and coal wouldn’t look so affordable compared to alternative sources.

That’s critically important context for the energy debate, and it’s almost always missing from the news coverage. But thanks for the two inches on A5 fellas. It’s a start.

– Loveland