New Report Exposes Billions Per Year in Additional Fossil Fuel Subsidies

Billions of dollars in unaccounted-for subsidies are allowing the fossil fuel industry to escape paying corporate income taxes.
Press Release
July 23, 2013
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Unaccounted-for fossil fuel subsidies amounted to roughly $4 million a year.
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A new report released today by Oil Change International and Earth Track exposes a largely unaccounted-for subsidy to the fossil fuel industry, valued at roughly $4 billion per year and growing. New analysis quantifies the value of tax avoidance by the fossil fuel industry through a corporate structure called “Master Limited Partnerships (MLPs).” Though eliminated for most U.S. industries more than a quarter-century ago, special rules protected eligibility for fossil fuels, and have allowed a growing range of oil and gas activities to escape corporate income taxes entirely. 

The report, entitled “Too Big to Ignore: Subsidies to Fossil Fuel Master Limited Partnerships,” finds that the oil, gas, and coal sectors have increasingly dominated the MLP universe, now comprising well over three-quarters of the total. Existing estimates of the taxpayer costs associated with fossil fuel MLPs are deceptively low, reducing the pressure to end this tax break once and for all.

MLPs, such as those created by Enbridge, Sunoco, and TransCanada, not only enable firms to escape corporate income taxes on profits, but also to delay most tax payments on distributions to partners by many years. As Forbes magazine has said, MLPs are an “income and a tax shelter rolled into one investment.”

The MLP structure, according to the new report, cost the U.S. treasury as much as $13 billion in lost tax revenue between 2009 and 2012, a figure six times larger than previous estimates. Fossil fuel interests continue to convert to MLPs at an alarming rate through asset spin-offs, mergers, and by seeking expanded eligibility granted not only by Congress, but also through rather secretive IRS rulings.

“Not only does the U.S. oil boom imperil our communities and climate, but the increasing use of Master Limited Partnerships allows the industry to pay even less of its share of the taxes needed to support those same communities,” said David Turnbull, Campaigns Director of Oil Change International. “The fossil fuel industry is busy destroying our air, water, land, and climate, all the while finding new ways to avoid taxes.” 

“Tax subsidies to fossil fuels through Master Limited Partnerships go against both the fiscal and environmental interests of our country, yet are repeatedly overlooked in most federal oversight reports on subsidies,” said Doug Koplow of Earth Track, the report’s author. “Though recent efforts have looked to expand Master Limited Partnership subsidies to some renewable energy resources, the evidence suggests that the fossil fuel sector will continue to capture the vast majority of the MLP subsidies even with an expansion. In the context of the climate crisis we face, the continuation of this subsidy to fossil fuels is inappropriate regardless of any potential benefits to new industries.”

View the full report.

This press release is presented without editing for your information. MOTHER EARTH NEWS does not recommend, approve or endorse the products and/or services offered. You should use your own judgment and evaluate products and services carefully before deciding to purchase.


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kevin.haendiges
7/27/2013 12:33:44 PM

The bad old fossil fuel companies collectively pay more than $4B in taxe every day, more than offsetting the paltry subsidy, while simultaneously providing products that make life as we know it possible. Is the author of this piece of questionable "journalism" willing to post how much the so called "green industry" gets in subsidies annually, all without providing any realistic alternative energy in trade? I thought not.









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