Fossil Fuel Industry Receives $35 Billion Each Year in Government Handouts, New Report Finds

$4 billion added by Trump’s One Big Beautiful Bill Act

A new report from Oil Change International reveals the staggering scope of federal government subsidies for fossil fuel production. While working families struggle with the rising cost of housing, groceries, and utilities, the report finds that the federal government currently hands the fossil fuel industry an estimated $34.8 billion annually, further enriching Big Oil and Gas CEOs, shareholders, and investors. 

The new report, “Paying for Climate Chaos: U.S. Federal Subsidies to Fossil Fuel Production,” calculates subsidies to fossil fuel production across the federal government, finding billions in annual giveaways via tax breaks, cheap access to drilling on public lands, regulatory loopholes, direct spending to clean up the industry’s mess, and more. The report also contains the most comprehensive list to date of the new fossil fuel subsidies added this year by Congress, which total over $4 billion. This brings fossil fuel production subsidies to more than double what the U.S. government was giving the industry in 2017, when Oil Change International last studied the matter. 

This figure is a conservative estimate and likely much higher, due to a lack of accessible, reliable data. It excludes tens of billions of annual state, county, and municipal subsidies for fossil fuel production as well as federal support in the form of international public finance, military expenditures to protect fossil fuel supply or markets, or environmental and health costs of fossil fuel pollution. 

The report shows that fossil fuel companies, which spend millions every year to rig our political system in their favor, receive a 30,000% return on investment as subsidies.The federal dollars claimed by the industry come at the expense of funding for essential programs for working families. In July, Trump and Republicans’ One Big Beautiful Bill Act (OBBBA), widely acknowledged as the most regressive and anti-environmental piece of legislation in many decades, added massive new subsidies for fossil fuels, which, in part, were paid for by devastating cuts to SNAP, Medicaid, and clean energy programs.

Many subsidies identified are projected to soar over the next decade and beyond, including several provisions in Trump’s Big Awful Bill. If federal leaders fail to act, fossil fuel production subsidies could skyrocket to hundreds of billions of dollars per year. This is due to the recent introduction of new subsidies for carbon capture, utilization, and storage and hydrogen, which increase fossil fuel production. The overwhelming majority of captured carbon, for example, is used to extract otherwise unreachable oil deposits, a process known as “enhanced oil recovery.” 

The report includes recommendations for reducing and eventually eliminating fossil fuel subsidies as quickly as possible (for full recommendations, click here):

• Congress should repeal the billions of dollars per year in fossil fuel subsidies, including for carbon capture and fossil hydrogen. 
• A future administration should end subsidies across federal agencies, including the U.S. Department of Energy, U.S. Army Corps of Engineers, Bureau of Land Management, Bureau of Ocean Energy Management, and more. 
• Federal agencies and Congress should ensure transparency in fossil fuel tax breaks and subsidies reporting. 
• Politicians should push to end fossil fuel expansion, fund a just transition, and support a clean, renewable energy economy. 

Collin Rees, Oil Change International United States Campaign Manager and report author, said: 

“We’re paying $35 billion per year to prop up a polluting, expensive energy system instead of investing our public money into clean, affordable renewable energy. Congress must stand up to Big Oil and Gas, eliminate fossil fuel subsidies, and redirect those billions toward the things our communities actually need: healthcare, housing, and clean, affordable, renewable energy. 

“It’s time to stop paying polluters to wreck our planet. The Trump administration’s fossil-fueled corruption and attacks on working people provide an opportunity for a new agenda grounded in a bold vision to end the fossil fuel era. We must invest in a renewable energy future that values the dignity and well-being of all — not just a handful of fossil fuel executives and shareholders.” 

John Beard Jr., Founder and Executive Director of Port Arthur Community Action Network, said: 

“Port Arthur is the belly of the beast when it comes to fossil fuel expansion. My community is exposed to toxins from liquefied natural gas plants, oil refineries, and petrochemical facilities. These industries take their profits and leave us with toxic waste that harms our air, water, and bodies, leading to high rates of cancer, respiratory illnesses, and other maladies. Port Arthur is also being hit hard by the climate crisis the fossil fuel industry causes. Since 2005, we’ve been hit with five major hurricanes. 

“It’s infuriating to know that we are paying for the harm to our own communities. Our government is using the money we pay in taxes to increase the profits of the very industries that have made Port Arthur into a sacrifice zone and claimed the lives of our loved ones. Congress must end these subsidies and put money into programs that help people survive.”