American fossil fuel subsidies can be traced to the rise of OPEC and the 1973 oil embargo. At the time, these subsidies raised fears that the United States was too dependent on foreign oil and needed to increase domestic energy production. But policies that might have made sense when Richard Nixon was president and oil was $3 a barrel are drastically outdated today. The Environmental Law Institute conducted a comprehensive report on the cost of these subsidies – a smorgasbord of tax and royalty relief measures – during fiscal years 2002-2008 and contrasted it with government support for renewable energy during the same time period:
Subsidies to fossil fuels—a mature, developed industry that has enjoyed government support for many years—totaled approximately $72 billion over the study period, representing a direct cost to taxpayers. Subsidies for renewable fuels, a relatively young and developing industry, totaled $29 billion over the same period… Most of the largest subsidies to fossil fuels were written into the U.S. Tax Code as permanent provisions. By comparison, many subsidies for renewables are time-limited initiatives implemented through energy bills, with expiration dates that limit their usefulness to the renewables industry.
