Many things in the world today deserve our attention and concern.
Interestingly, we often focus on seemingly simple issues while completely ignoring others that are a bit more complex.
For example, the carbon tax has stirred protests nationwide, with many people complaining because it seems to take money right out of their pockets.
People endlessly argue over its pros and cons.
Still, amid this loud discourse and growing political divide, the insidious issue of fossil fuel subsidies slips by largely unnoticed.
Fossil Fuel Subsidies – Why Should We Care?
A subsidy is defined as a “financial contribution by a government or any public body that confers a benefit.”
A subsidy can take many forms, including tax deductions or credits, grants, direct funding, or reduced royalties.
Unlike the carbon tax, which is based on the somewhat Robin Hood-esque idea of taxing large corporations and returning rebates to the average consumer, fossil fuel subsidies operate in the opposite way.
In subsidies, the government takes money from the average taxpayer and hands it directly to oil and gas companies.
Do these companies need the subsidies?
Hmm? You decide.
Many of us get sticker shock every time we fill our gas tanks.
In 2022, oil and gas companies made record profits of $269.9 billion, so oil and gas executives got rich while the rest of us were poorer.
For example, Suncor paid chief executive officer Rich Kruger $36.8 million in 2023, his first year at the company, and he only started in April of that year!
His Suncor sign-on package also included a grant of restricted stock valued at $23.11 million! We don’t think old Rich (appropriate name, eh?) is worrying much about his grocery or rent bills.
According to Environmental Defence, Canadian oil and gas received at least $18.6 billion in federal subsidies. They further stated that this is a minimum estimate and spending is likely higher because: “Due to a lack of transparency and public reporting, tracking subsidies provided to the oil and gas sector by the Government of Canada and its agencies remains a difficult task. Federal tax deductions are not disclosed. There is no comprehensive inventory of direct spending by the government.”
We don’t have numbers for 2023, but in 2018, Alberta spent $2 billion on oil and gas subsidies.
The industry says these subsidies create jobs and increase the flow of wealth.
You know, the old theory of “trickle-down economics,” which suggests that benefits given to corporations will eventually drip down to the rest of us.
We’re not sure about you, but we haven’t seen any money trickle down into our wallets as the oil and gas companies make record profits.
For a fun demonstration of how trickle-down economics works, watch the video below.
The Sky is the Limit?
It’s increasingly apparent that the fossil fuel subsidies have gotten completely out of hand.
Right now, Canada spends more to subsidize oil and gas extraction than Australia, Germany, Japan, Mexico, and the United States.
A new report by Environmental Defence says that over the last four years, the federal government has provided $65 billion to support the oil and gas industry.
“Taxpayer handouts to Canada’s wealthiest companies means that less money is available for the types of investments that could actually help people across the country who are deciding between food and energy bills,” says Environmental Defence’s Julia Levin, the author of the report.
And that’s just the federal government’s subsidies to oil and gas.
The Alberta Government Hands Out Even More
Another recent study reported that British Columbia, Alberta, and Saskatchewan give more than $2.5 billion in royalty reductions and tax exemptions to the fossil fuel industry every year.
All these subsidies cost Canadian taxpayers at least $6.03 billion, or roughly $214 per taxpayer every year.
And there’s absolutely no rebate going back to taxpayers on those tax dollars.
“I think Canadians should be angry,” said Levin.
The government commitment to end fossil fuel subsidies in 2009 (under Prime Minister Stephen Harper). “And yet we’re in a situation where they’re continuing to give nearly $20 billion a year.”
If all these subsidies had been reallocated, Environmental Defence calculated that the Canadian government could have funded every major solar and wind project nationwide 12 times over.
But in Alberta our government is penalizing renewables while subsidizing oil and gas development.
Or imagine if the money were reallocated to our healthcare, education, or social services systems!
“We’re not pumping money where it should be going,” said Temitope Onifade, the author of a Canadian Climate Law Initiative report on fossil fuel subsidies.
“Subsidies take that money from all of us.”
Up in Arms About the Wrong Thing!
Many Canadians have been persuaded to protest against carbon taxes.
They believe these taxes increase consumer costs, even though most people receive more in rebates than they pay in taxes.
Meanwhile, the enormous costs Canadians are actually giving in handouts to oil and gas companies don’t get a fraction of the coverage or public outrage.
The United Nations Development Programme, the International Energy Agency and the International Monetary Fund are among numerous international groups calling for an end to fossil fuel subsidies.
These organizations work to phase out these subsidies because they distort markets and slow the process of weaning ourselves off fossil fuels.
It’s an issue that crosses the political divide, with both free-market conservatives and libertarians speaking up against these so-called fossil fuel welfare payments.
Essentially, it’s high time we take a close look at what these subsidies truly cost society.
While carbon taxes grab headlines and stir tempers across the nation, we’re ignoring issues that have just as much, if not more, impact on our pockets—and our futures.
As Canadians, perhaps it’s time to fine-tune our outrage and direct it towards a more equitable energy policy, and maybe—just maybe—rewrite the ending to this costly saga.
