Study ignores true cost of fossil fuels to taxpayers

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This week, the EIA released a study requested by three Members of Congress -- Congressman Jason Chaffetz (R-Utah), Congresswoman Marsha Blackburn (R-Tenn.), and Congressman Roscoe Bartlett (R-Md.).  These legislators requested in November 2010 that the federal Energy Information Administration (EIA) produce a report comparing government subsidies for fossil fuels to those for renewable energy sources using extreme and highly biased methods.


The conditions of the members’ demands on the report are worth examining, because they mirror the desperate arguments being made by the oil, gas and coal industries to change the subject in a debate where the facts aren’t on their side. In their letter to then-EIA Director Newell, the members’ instructions effectively required the EIA to:


1. Ignore the substantial indirect taxpayer subsidies, such as oil and gas drillers being able to cheaply buy government land, federal insurance on the fleet of nuclear reactors in case of catastrophe, highways and bridges that subsidize the cost of car ownership, or the cost to taxpayers of cleaning up oil and gas spills or mitigating the impacts of mountaintop mining removal. 

2. Overlook the fact that fossil fuel industries have accumulated their current production base over 100 years. When comparing the current year’s subsidy to the current years energy output of each sector, it didn’t take into account the trillions of cumulative direct and indirect dollars fossil industries have received over decades. 

3. Not factor in the environmental, health, and economic costs that come from the extraction and use of fossil fuels. The Congressmen requested that the report allow only “financial benefit with an identifiable federal budget impact”, i.e. exclude environmental benefits, security benefits, or the long-term price stability that renewables offer over fossil fuels. Conversely, the cost of fossil fuel pollution and price fluctuations are left unaccounted for.

Last week, the EIA made an extraordinary move to hold the report due to “quality assurance” concerns, providing a brief and rare moment of good sense in Washington.


Political pressure eventually forced the release of the report, but the EIA did describe a number of the limitations and concerns about the methodology in the final draft. It remains to be seen if these conclusions and the caveats of the reports will be reflected in any use of it by the recipients or the fossil fuel lobby organizations as they continue to try and score political points.  


Other facts continue to be overlooked as well, including that more renewable electricity generation capacity was installed in America last year than either coal or natural gas. The EIA forecasts that this will be the case for at least the next 5 years.


Also, the economic insurance of free and domestic sources of energy is not fully valued when compared to the rising costs of fuels and electricity.  An example is the answer to what the impact on oil prices would have been had the US not spent the last decade developing an ethanol industry capable of delivering 860,000 barrels per day.  


It is time Washington wakes up to the energy realities we face. We need serious and honest debate about the true cost to light our homes, move our people and goods, and power our industry in the years and decades to come.


Given the admitted limits to its existing methodology, it is vital that the EIA quickly produce a comprehensive, updated report about all of the direct and indirect costs and benefits of our energy options, so that we can make smart choices about where our limited tax dollars are best invested in America’s energy and economic future.

Travis Bradford is founder, director and president of the Prometheus Institute.