Oil & Gas elephant spooked by EV mouse — for good reason

Photo of EV charging station
Electric Vehicle charging station. Image: City of Hoboken NJ

The oil and gas industry is losing market share to clean energy technologies such as wind and solar. But it’s the electric vehicle (EV) that poses the most pressing threat to the industry. Here’s why:

The car-owning public reacts negatively to high gas prices. Politicians of all strips are sensitive to that fact. Even politicians who recognize the environmental need to reduce fossil fuel production are reluctant to take actions that could drive up prices at the pump. Taxing the carbon in fossil fuel emissions rather than taxing the carbon content of fossil fuels as they are produced is an example of this reluctance — it distances the politician from the effect. And even that feeble political action is further weakened by the failure to set the carbon price high enough to cause meaningful reduction in fossil fuel use. A switch from gasoline to electric powered cars will remove the political fear of pump prices and leave the oil and gas industry vulnerable to direct carbon pricing.

Many of the country’s newer natural gas powered electricity generating plants might last for another thirty years or more. This means that the complete replacement of fossil fuel power with cheaper renewables could take decades. The situation with electric vehicles is different. The average life expectancy of a car is 10 years or less. As EV prices drop and public acceptance increases, a shift to EVs could result in a complete replacement of the existing fleet of vehicles within a period of 10 to 15 years. Motor gasoline accounts for about 24% of total fossil fuel energy currently used in the U.S., a big chunk of the fossil fuel industry’s market. The shift would, at the same time, create new opportunities for wind and solar powered electricity generation.

Oil and gas industry executives are well aware of the threat posed by EVs. It explains the industry’s hatred of the EV incentive program. The program, introduced in 2015 under the Obama administration, offers a tax credit of $2,500 to $7,500 per new EV purchased for use in the U.S. Initial funding for the program was capped at about $2-billion. The oil and gas industry, concerned that Congress may decide to extend funding for the program, has ramped up its propaganda machine to try and prevent that from happening. As usual, when it comes to spreading disinformation about climate science and clean technologies, the industry calls on its mercenary propaganda troops to do the lying for them (see Apr.21 post — How the Oil and Gas Industry gets others to fight for its life). The propaganda effort described below shows the lengths the industry will go to fight what is a relatively small program.

A coalition of 34 fossil-fuel-funded, free market advocacy groups (see image below) delivered a letter May 9 to Congress (addressed to Senators Grassley and Wyden, and Representative Brady and Neal) urging members to protect “all American families by opposing an expansion of the electric vehicle tax credit.” The coalition is led by the American Energy Alliance (AEA), a not-for-profit organization that, according to its website, “engages in grassroots public policy advocacy and debate concerning energy and environmental policies.” The AEA, according to Desmogblog, is run by a former lobbyist for Koch Industries. The letter claims that the EV subsidy is unpopular, overwhelmingly benefits the rich, and amounts to a wealth transfer to California at the expense of all other states. It also claims that electric cars are not cleaner than cars powered by internal combustion engines.

Image of 34 fossil fuel funded, free market advocacy groups logos
Coalition of fossil fuel funded, free market advocacy groups organized to oppose expansion of the federal EV subsidy program. Image: eenews

As mentioned above, the U.S. EV subsidy is relatively small. Since its start in 2015, the program has handed out a total of about $20-billion in the form of income tax credits. By comparison, the U.S. fossil fuel industry receives about $27-billion annually in direct federal subsidies. The industry letter to Congress says nothing about that. The following bar chart shows the amount of annual subsidies each of the G7 nations currently hand out to support their fossil fuel addictions. It’s time they sought treatment.

Bar chart showing how G7 countries subsidize fossil fuel industry
Image: Natural Resources Defense Council (NRDC)

Note that the bar chart above shows only the direct subsidies to the fossil fuel industry. The industry also receives a massive indirect subsidy due to the fact that it does not pay the cost of damages — global warming, climate destabilization, etc. — caused by the burning of its products.

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