Question of the Day
How much do federal subsidies for petroleum production subsidize a gallon of gasoline?
Federal subsidies for petroleum production subsidize about 1 cent per gallon of gasoline. For comparison, the federal government subsidizes ethanol at a rate of about 47 cents per gallon and biodiesel at a rate of about $1.94 per gallon. Petroleum subsidies are mainly for environmental reasons and to give domestic and smaller producers an edge over foreign and larger producers. On net, petroleum is not subsidized but penalized because the federal government imposes an excise tax of 18 cents per gallon of gasoline, along with other tax and regulatory disincentives.