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Subsidizing oil companies in usa - Essay Example

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Customer inserts his/her full name Date Subsidizing Oil Companies in the U.S.A The history of oil subsidies in the U.S can be traced back to early 1900s when the government started giving monetary incentives to back the fledging oil industry in the U.S (Franks and Nunnally)…
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Download file to see previous pages Perhaps, one of the greatest debates has concerned the viability of these oil subsidies. This issue presents a conflict of interest; whether the government should support the American taxpayers (the public) or the oil companies seems to be a matter of debate. The primary reason why these subsidies should be abolished is that the oil industry has not reached a state where it is making huge profits; therefore, it no longer remains the ‘infant’ industry it once used to be. According to one article, the effect of providing oil subsidies to the already rich nations such as U.S is that of making the richest countries even richer. Profits amounting to $80 billion were made cumulatively by three of the largest oil companies in the U.S in 2011 (Slack). Thus, because these oil companies have a huge turnover and are largely self-sufficient there seems little point in the continuance of oil subsidies. It is believed that the money allocated to these oil subsidies should be invested in institutions which lack funds, such as the provision of old-age homes, medical facilities etc. Also, the oil companies are already been given the incentive to increase output by the rising global oil prices; therefore, there remains little role that subsidies can play. This also means that the taxpayers are being effectively taxed ‘twice’ which means that they are paying a premium amount for getting the fuel and also having their taxes being used as subsidies for these companies (Cooper and Weisman). According to one estimate, one of the companies used as much as $225,000 per day to write off majority of the cost of a sunken oil rig during the Gulf oil spill (Koceiniewski). Considering the huge amounts, the subsidies are rejected on the grounds of being unfair to the American taxpayers as an exorbitant amount of their money is being used up in them. There seems to be a boom in the American oil industry lately. The output of domestic oil has reached its highest levels since the past few years. Since the past few years, the American oil industry has grown self-sufficient in that the domestic companies are producing more than the amount of oil imported by the U.S (Slack). Also, there have been political efforts to enhance oil production, for instance, by allotting land to oil companies for production. Furthermore, the most obvious reason why oil subsidies in the U.S should be discontinued is that it would free up money and resources for public use. These resources could instead be invested in ‘green’ and sustainable initiatives which would mean finding alternate sources of energy that is environmental friendly and efficient (Slack). These initiatives are both politically and environmentally viable as research indicates massive public support for investment in green initiatives. The public is in favor of giving tax incentives to companies who would produce electricity from wind, solar and water sources (Slack). Oil subsidies are merely fulfilling a short term need in the sense that there is little investment in the ‘future’. This short-termism is clearly inappropriate as it is the need of the hour to invest in finding alternate, renewable energy sources such as wind and solar power. This is linked to the argument that the discontinuance of oil subsidies would result in a greener environment as greenhouse emissions would be reduced due to lower resulting output. Thus, the idea of oil subsidization is self-contradictory in that it ...Download file to see next pagesRead More
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