Debunking the fossil-fuel subsidy myth
By
Brian Potts
|
October 16th, 2025
Note that this article on an important topic was first published in 2016. We republish it in response to an inquiry from one of our social media correspondents:
Ask any economist and they’ll tell you that subsidies are an inefficient use of government resources. If a government wants to incentivize innovation and new technologies, its funds can be put to much better uses, like research and development. And once a subsidy is in place, it’s virtually impossible to repeal: the subsidized industry grows to rely on it, gets stronger financially, and gains political clout.
In the energy industry, there are lots of subsidies. But none are more attacked by environmental groups and the press than the government’s handouts to the fossil-fuel industry.
These attacks, however, are overblown and misinformed.
The federal government subsidizes the fossil-fuel industry to the tune of about $3 to $5 billion dollars per year (the exact amount depends on whose numbers you believe). This might sound like a lot. But the subsidies the federal government is simultaneously forcing the fossil-fuel industry to pay to its competitors, mainly biofuel producers, hugely dwarf the aid that the industry receives.
https://www.cfact.org/2025/10/16/debunking-the-fossil-fuel-subsidy-myth/?utm_source=rss&utm_medium=rss&utm_campaign=debunking-the-fossil-fuel-subsidy-myth&utm_source=rss&utm_medium=rss&utm_campaign=debunking-the-fossil-fuel-subsidy-myth
