Low-Grade Markets, Oil Subsidies

Karl Davies karl at daviesand.com
Sat Jan 29 19:40:13 EST 2000

I missed the last Massachusetts Association of Professional Foresters
(MAPF) meeting, but I hear there was a lot of discussion about markets
for low-grade timber, wood and pulp. Apparently 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 excuse from loggers and
sawmill owners, and some foresters, for their inability to practice good

This rationale has always seemed more like an excuse than a reason to me
because most foresters I know manage to get rid of the low-grade
material somehow.  Anyway, I hear the old rationale still has lots of
life in some quarters, particularly those that earn their livings off
it. <G>  Adherents of "the rationale" have criticized me and other
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 day that we're
out in the woods marking.

But now I'm thinking a better strategy with these guys 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 guys (and the
interests they represent) would attack the problem at its source, the
markets would appear automatically.

If you go to the web sites listed below, you'll learn that the annual
oil subsidy in the US is 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

If we got rid of  all these subsidies, the retail cost of oil and gas
would go up by a minimum of $.30 per gallon.  If you figure the high
ends for all the costs, 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. <G>

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 ill 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 peccadillos 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.


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

Subsidizing Big Oil
Drawn 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 European clash between environmental rhetoric and public spending

Karl Davies, Practicing Forester

Northeastern Forestry Reformation List Server

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