Civil engineer and transportation expert David Levinson starts with the premise that the oil industry receives $20 billion in subsidies from the United States each year, and concludes that this subsidy has minimal impact on urban transit. When, a few years ago, gasoline prices were double what they are today, transit ridership was only about 0.1 percent greater than it is today. Assuming ridership would have kept up with population growth, a “100% increase the price of fuel gets you a 5% increase in ridership,” says Levinson.
But back up a minute. Who says the oil industry gets $20 billion in annual subsidies? As the anti-petroleum group, Oil Change International admits, most of that “subsidy” is a tax deduction for oil exploration. As Forbes points out, this is the kind of subsidy that is “also available to any U.S. manufacturer such as Apple or Microsoft.” As the pro-petroleum OilPrice.com says, “The suggestion that depletion or depreciation deductions on income from investments that might not otherwise exist amount to a subsidy is a remarkable interpretation of the rules of accounting and the English language.”
Some countries, such as Iran and Saudi Arabia, actually give their residents direct subsidies to use oil. The United States does so only to help low-income people buy fuel oil to heat their homes. Otherwise, the “subsidies” people complain about are really just tax deductions for ordinary business expenses.
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