quote:

---

This report by the International Center for Technology Assessment (CTA) identifies and quantifies the many external costs of using motor vehicles and the internal combustion engine that are not reflected in the retail price Americans pay for gasoline. These are costs that consumers pay indirectly by way of increased taxes, insurance costs, and retail prices in other sectors.

The report divides the external costs of gasoline usage into five primary areas: (1) Tax Subsidization of the Oil Industry; (2) Government Program Subsidies; (3) Protection Costs Involved in Oil Shipment and Motor Vehicle Services; (4) Environmental, Health, and Social Costs of Gasoline Usage; and (5) Other Important Externalities of Motor Vehicle Use. Together, these external costs total $558.7 billion to $1.69 trillion per year, which, when added to the retail price of gasoline, result in a per gallon price of $5.60 to $15.14.

TAX SUBSIDIES - $9.1 to $17.8 billion.

The federal government provides the oil industry with numerous tax breaks designed to ensure that domestic companies can compete with international producers and that gasoline remains cheap for American consumers. Federal tax breaks that directly benefit oil companies include: the Percentage Depletion Allowance (a subsidy of $784 million to $1 billion per year), the Nonconventional Fuel Production Credit ($769 to $900 million), immediate expensing of exploration and development costs ($200 to $255 million), the Enhanced Oil Recovery Credit ($26.3 to $100 million), foreign tax credits ($1.11 to $3.4 billion), foreign income deferrals ($183 to $318 million), and accelerated depreciation allowances ($1.0 to $4.5 billion).

---

quote:

---

Studies of energy subsidies have varied widely in purpose, scope, definition, and methods of estimation (see Appendix A). For instance, because the U.S. Government raises and spends vast sums of money on transportation infrastructure projects, studies that view transportation spending as an energy subsidy tend to have larger estimates of subsidies than those that do not. Similarly, because the Government spends large sums of money on defense, studies that view military spending--whether directed toward the Persian Gulf or elsewhere--as energy subsidies also tend to produce considerably larger estimates than those that do not.

There are other ways in which the scope of energy subsidies can be broadened. For instance, one study completed in the mid-1980s concluded that subsidies to the U.S. electricity industry amounted to $80 billion per year because of the U.S. regulatory practice of pricing electricity at average rather than marginal cost. (6) Another study estimated subsidies to U.S. motor gasoline producers alone at $84 billion per year, based on the inclusion of such costs as defense-related expenditures and energy-related health care costs. (7)

---

quote:

---

A subsidy amount of $4 billion or $5 billion is, in general, too small to have a significant effect on the overall level of energy prices and consumption in the United States;

---