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Oil Subsidies 101!

November 17, 2014


It has been said that the “oil industry is the most heavily subsidized industry in the U.S. This is a rather grandiose statement, which sounds good but requires some validation. So in an attempt to dill down on the subject, no pun intended, this discussion takes a brief look at the tax codes in hopes of shedding some light on this claim.

To develop a common understanding of subsidies, a good rational is given by Gary Becker (University Professor Department of Economics and Sociology and Professor Graduate School of Business, The University of Chicago) and Richard Posner (Judge, United States Seventh Circuit Court of Appeals and Senior Lecturer, University of Chicago Law School). They state “a subsidy is defensible on economic grounds if it encourages the production of benefits that would be under-produced from an overall social-welfare standpoint were it not for subsidy.

For example, they indicate “That is the argument…

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