05.03.23
Washington, D.C.—U.S. Senator Sheldon Whitehouse (D-RI), Chairman of the U.S. Senate Budget Committee, delivered the following opening statement at today’shearingentitled,“Who Pays the Price: The Real Cost of Fossil Fuels.”
ChairmanWhitehouse’s remarks, as prepared fordelivery:
Ranking Member Grassley, colleagues,welcome toour seventhCommittee hearing on the economic and budgetaryperils of dependence on fossil fuels.We have heardtestimony from non-partisan, knowledgeable industry leadersabout the threatclimate change poses toentire sectorsof our economy: healthcare, insurance, coastal economies, wildfire areas, the carbon bubble leavingfossil fuel assets stranded.
So,what are we, the federal government, doing to protect against these threats? Actually, we are subsidizing the danger.
As we’ll hear today, the United Statessubsidizesthe fossil fuel industry with taxpayer dollars. It’snot justthe US: according to the International Energy Agency, fossil fuel handouts hit a globalhighof $1 trillion in 2022– the same year Big Oil pulled in a record $4 trillion of income.
In the United States, by some estimates taxpayers payabout$20 billion dollars every year tothefossil fuelindustry. What do we get for that? Economists generally agree:not much. To quote conservative economist Gib Metcalf: these subsidies offer “little if any benefit in the form of oil patch jobs, lower prices at the pump, or increased energy security for the country.” The cash subsidy is both big and wrong.
But the really big subsidy is the license to pollute for free. The IMF calls thisglobalfree pass an“implicit”fossil fuel subsidy. Economists call itan“unpriced externality.” Behind these benign-sounding phrases is a lot of harm.
Start with harmful effects of local air pollution. Researchers from Harvard foundpollutants from oil and gascombustionwere responsiblefor 8.7 million premature deaths annually –the increased mortality ratesfrom heatand air pollutionwe heard about at last week’s hearing.
Then,growing costsfromintensifying disasters: wildfires, floods, droughts, whichaccording to OMBcould cost thefederal budget $2 trillion annuallyandreduce US GDP 3 to 10percentby the end of the century.
You tally upthe harms,and the IMF estimates it at a $5.4 trillion annual subsidyworldwide. In the United States,it’s$646 billion–every single year.
Worse,thisisalmost certainlyundercountingthe true costs. The London School of Economics reports that studies oftenunderestimatethe harm of climate dangersbyfailing to account for how hazards can cascade across ecological and economicsystems. Thesecascades can cause irreparabledamagetohumanwell-being, toecosystems, and to the US economy. These are the systemic risks we’ve heardabout from previous witnesses.
And as we will hear from one of our witnesses today, the very act of extracting these dirty fuels has terrible consequences for human health– especiallyforchildren.From higher rates ofbirth defects to childhood leukemia, there’s ample evidence that communities around oil and gas extraction sites pay an especially high price.
It's textbook economics that the price of a good should reflect its true cost. The fossil fuel industry violates this rule of market economies. It does so by spendingbillions of dollars on disinformation, false doubts,climate obstruction, and political dark money. And why not, to protect one of the most lucrative subsidies in human history? This, ladies and gentlemen, is why we can’t have nice things like clean air, safe coral reefs, secure coast lines, and affordable clean energy.
Over in the House, MAGA extremistsaredoublingdown on polluter handouts to their big donors, with theirDefault on America Act that putsthe American taxpayer on the hook for climate disaster.
Itis not about debts or deficits. It’s dirty work foran industry that controlsone ofthemain political partiesin this country. Oil and gas extraction represents only about 5 percent of GDP. Farming, manufacturing, food and beverage, insurance, finance, restaurants, retail, housing, healthcare – all represent a larger share of GDP. Clean energy now accounts for more employment than the fossil fuel industry. Butfor political influence, to protect those massive subsidies, nothing compares to fossil fuel.
It is a fundamental principle of democracy that everyone should get an equal say. But heretherich and the powerful hoard all the benefits for themselves and leaveeveryone else– often the most vulnerable Americans–to pay the price.
