Just read a bit about the massive subsidies the fossil fuels industry receives in the U.S and I was confused. Aren’t these companies one of the most profitable ones in the U.S?
In: Economics
There are two separate things here:
> If the fossil fuel industry is so stupidly rich
Industries aren’t rich, businesses/owners are. Energy is a huge collection of many different businesses doing many different things. Some make large amounts of money quickly, some have low margins and make barely enough to keep the lights on, and some are in between (pipeline operators, for instance, have a nice predictable cash flow, but don’t grow much).
Exxon-Mobil makes a ton of money, and when energy prices go up, they make more. Energy prices go down, their revenue can take a huge hit, and go negative quickly.
Industries are just parts of the economy, they don’t “have money” so to speak.
> why is it so heavily subsidized?
Is it? It would depend what you’re talking about here. Some people have subsidized fuel to keep their homes warm/cool. They get these subsidies because otherwise they wouldn’t be able to do so.
Most of the rest of the industry is simply *not* subsidized much, but it depends what you mean by “subsidy”. They get almost no direct “cash transfer” subsidies, where the government pays them money. But they may get “tax break” subsidies, where governments are trying to incentivize them to do one thing or another, or just to bring down energy costs in an area.
The big “subsidy” is really the fact that they have external effects on the world that they don’t pay for in that they have impacts on the environment or pollution, or things like that. Most of the headlines you read will claim the fossil fuel industry is getting trillions in subsidies, but really most of that number is referring to the impact that they’re having and trying to give it a number.
In my opinion, this confusion is deliberate.
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