$18 
 Crude
Low-Grade Markets 
 & Oil Subsidies

This message was posted to the forestry newsgroups and list servers January 30, 2000.

Developing Low-Grade Markets & Ending Oil Subsidies:
Finding Common Ground Between Foresters & Environmentalists

A recent meeting of the Massachusetts Association of Professional Foresters (MAPF) included a major discussion about markets for low-grade timber, wood and pulp.  The MAPF had invited all the state's "utilization specialists" to come and explain what they've done for us lately in improving these markets.  Of course the lack of markets for low-grade material is the perennial rationale from many loggers and sawmill owners, and some foresters, for their inability to practice good silviculture.

This rationale has always seemed more like an excuse than a reason to me because nearly all the consulting foresters I know manage to get rid of the low-grade material somehow.  Anyway, "the rationale" still has lots of life in some quarters, particularly among those that earn their livings off it.  Adherents of "the rationale" have criticized me and other consulting foresters saying things like "Oh yeah?  If you think you can market the stuff, prove it!"  Of course that's just what we do every time we get a sale contract signed.

But perhaps a better strategy with "the rationale" folks would be to argue that if they really want to improve markets for low-grade timber, wood and pulp, then they should get out and work for the elimination of oil subsidies--the real cause for less than optimal markets.  Rather than waste their time and taxpayers' money trying to dream up new utilization schemes which never seem to work anyway, if these folks (and the interests they represent) would attack the problem at its source, the markets would appear automatically. 

If you go to the first three web sites listed below, you'll learn that the oil subsidies in the US are in the range of $20 to $55 billion per year (averaging and rounding off).  The high end includes the military costs of "defending" Persian Gulf oil; the low end doesn't.  These costs are just for taxes, and don't include all the environmental costs/subsidies associated with oil production and consumption, which would come to another $40 billion to $250 billion per year (averaging and rounding off).  The fourth web site has higher estimates for all these costs and includes many more indirect costs.

If we got rid of  all these subsidies, the retail cost of fuel oil and gasoline would go up by a minimum of $.30 per gallon.  If you figure the high ends for all the costs cited by the first three web sites, the retail cost of oil and gas would go up by $1.50 per gallon.  Guess what happens when the costs of oil and gas go up?  Right, people scramble for substitutes, including biomass, which includes wood.  All of a sudden, there are markets for low-grade material.  All of a sudden, there's no excuse for not practicing good silviculture.  All of a sudden, the "utilization specialists" are out looking for real jobs.

Besides benefiting forests and forest landowners, the elimination of oil subsidies would benefit all forms of life on Planet Earth that are subject to the adverse effects of air pollution and climate change.  With climate change accelerating and increasing in severity, all of us would be well advised to take a closer look at the real, total costs of oil subsidies.  We should get over what little reservations we may have about higher costs for oil and gas, and not worry about the inflationary effects either.  The stakes are much too high for such petty concerns.

Furthermore, if foresters and environmentalists could work together towards ending oil subsidies, they would create a huge area of common ground that would go a long way towards overcoming the differences between them.  Foresters could thereby make progress in reclaiming their mantle as environmentalists, which has been taken from them in recent decades by heavy-handed industrial forestry.  Environmentalists could make progress in finding practical solutions to a major environmental problem. 

Oil Subsidies

Fueling Global Warming: Federal Subsidies to Oil in the United States
By Douglas Koplow and Aaron Martin, Industrial Economics, Inc

Subsidizing Big Oil
From the UCS report "Money Down the Pipeline: The Hidden Subsidies to the Oil Industry"
By Roland Hwang, Union of Concerned Scientists

Oil Slickers: How Petroleum Benefits at the Taxpayer's Expense
By Jenny B. Wahl, Insitute for Local Self-Reliance

The Real Price Of Gas
International Center for Technology Assessment

The Subsidy Scandal:
The European Clash Between Environmental Rhetoric and Public Spending