Fact check: What are the arguments for and against oil and gas subsidies in the US?

1. Summary of the results

The analyses reveal a comprehensive debate around US oil and gas subsidies with substantial financial implications and environmental consequences.

Arguments Against Oil and Gas Subsidies:

• Scale and Cost: Oil and gas subsidies totaled $757 billion in 2022, with $3 billion in explicit subsidies and $754 billion in implicit subsidies ^[1]. The federal government's relationship with these subsidies shifted dramatically - while tax revenues exceeded subsidies by $1.1 billion in FY 2016, by FY 2022 subsidies exceeded revenue by $2.1 billion ^[1].
• Environmental Impact: Subsidies have massive climate implications, with analyses showing they could result in 8 billion tonnes of CO2 emissions, representing about 1% of the world's remaining carbon budget to keep warming under 2°C ^[2]. These subsidies push nearly half of yet-to-be-developed oil into profitability at $50 per barrel, potentially increasing US oil production by almost 20 billion barrels over the next few decades ^[2].
• Industry Maturity: The subsidies aid a mature and highly profitable industry while undermining policy goals of reducing greenhouse gas emissions ^[3]. International institutions including the G20 and the International Energy Agency have called for phasing out fossil fuel subsidies ^[3].

Arguments For Oil and Gas Subsidies:

• Economic Considerations: The analyses acknowledge potential economic impacts and energy price spikes as disadvantages of eliminating subsidies ^[4].
• Production Benefits: Two key tax incentives - the expensing of intangible drilling costs and percentage depletion provisions - increased the expected value of new oil and gas projects by billions of dollars in most years, and by over $20 billion in some high-price years ^[5]. These subsidies particularly benefited unconventional projects during shale booms in major formations including the Bakken, Appalachian, Haynesville, Eagle Ford, and Permian basin ^[5].

2. Missing context/alternative viewpoints

The analyses present several gaps in the complete picture of this debate:

• Industry Perspective: While the sources detail environmental and fiscal arguments against subsidies, they provide limited analysis of industry arguments for maintaining these supports beyond basic economic impacts ^[4].
• Energy Security Arguments: The analyses don't thoroughly explore national energy security justifications that the oil and gas industry typically advances for maintaining subsidies.
• Regional Economic Impact: Missing is detailed analysis of how subsidy elimination would affect specific regions heavily dependent on oil and gas production, particularly in states like Texas, North Dakota, and Pennsylvania.
• Transition Costs: The sources don't adequately address the potential costs and timeline for transitioning away from fossil fuel subsidies while maintaining energy stability.
• International Competitiveness: Limited discussion of how US subsidy elimination might affect American companies' competitiveness against subsidized international competitors.

3. Potential misinformation/bias in the original statement

The original question itself appears neutral and appropriately seeks both sides of the argument. However, the framing could benefit from acknowledging:

• Definitional Complexity: The question doesn't specify that "subsidies" encompass both explicit subsidies ($3 billion) and implicit subsidies ($754 billion), which creates vastly different scales of discussion ^[1].
• Policy Context: The question doesn't reference that the US has already identified 16 federal tax measures amounting to around $4 billion per year of fossil fuel producer subsidies ^[3], suggesting this is an active policy area rather than a theoretical debate.
• International Commitments: The framing omits that the US has existing G20 commitments regarding fossil fuel subsidy phase-outs ^[2], making this not just a domestic policy choice but an international obligation.

The analyses suggest this debate involves substantial financial interests, with fossil fuel companies benefiting from maintaining current subsidy structures while environmental groups and fiscal conservatives would benefit from their elimination.