Fossilized Finances: State and Federal Oil and Gas Subsidies in the Permian Basin

The Permian is by far the largest oil producing basin in the United States and the second largest for natural gas. Firms in the region have been highly profitable, yet have continued to benefit from a wide array of government subsidies. Some of the subsidies have been in place for decades, though new ones continue to be introduced as well. All of the subsidies work against the need to decarbonize our economy and erode the competitive positioning of lower-carbon substitutes.

This white paper offers a qualitative inventory of the federal and state (Texas and New Mexico) subsidies that currently support Permian oil and gas. Some top-level findings and recommendations are also presented. The pervasiveness of these subsidies through all stages of the oil and gas supply chain—from exploration to extraction to refinement to transport to site closure—is striking and should serve as a call to federal and state policymakers to immediately end these outdated giveaways. We also catalog the many approaches by which government policies subsidize the industry, noting important gaps in transparency that make assessing both the scale and the impact of those subsidies much more difficult.