The Mudcat Café TM
Thread #34710   Message #474726
Posted By: UB Ed
01-Jun-01 - 04:40 PM
Thread Name: BS: Gas Prices II
Subject: RE: BS: Gas Prices II
Carol, I was responding to Bart's comments about government subsidies for coal and other energy producers. Such subsidies effectively mask the true cost to produce a resource from the ultimate consumer. The consumer winds up paying for it, but through another forum (taxes).

As a overly simplified example, suppose I pay 5 cents for coal-fired electricity to the utility and 2 cents of my annual federal taxes goes to utilities as a subsidy. The actual cost to me is 7 cents, but I really only know about the 5 cents. Pretend that I may be happy with the current situation (paying 5 cents) but would wish to do something diffrently for 7 cents. In this situation (1) I don't evenknow where my money is going and (2) my perception of the cost of coal-fired electricity is that it is low enough that it is not worth my while to seek an alternative source. Thus my behavior is not influenced to change.

That's my problem with subsidies.