(Illustration by Formative)
The environmental case for America’s shift away from oil and gas is clear. Less obvious but perhaps more immediately tangible, however, are the economic benefits. Simply put, continued reliance on oil and gas is extraordinarily expensive, and the American people are footing the bill while wealthy corporations make billions. Resourcing groups to hold the industry squarely accountable for its activities will boost American prosperity by limiting damage to communities and the environment, protecting taxpayers and consumers, and paving the way for the clean energy technologies of the future.
America’s Money Pit
For more than 100 years, the federal government has provided massive subsidies to oil and gas. The 2022 budget proposal sent to Congress sought to reduce some of these subsidies, but following the recently passed “One Big Beautiful Bill Act,” federal subsidies have increased from more than $5 billion to more than $12 billion per year. Some analysts estimate the total is even higher, as much as $15 billion to almost $30 billion per year.
Such preferential treatment might have made sense more than a century ago, when the oil and gas industry was a fledgling upstart and a jobs creator. Today, tax subsidies only serve to prop up—and further entrench America’s reliance on—an industry that is struggling to compete. Not surprisingly, the fossil fuel industry has spent more than $1 billion over the last 20 years lobbying for tax credits. Around half of oil and gas production in the United States is estimated to be dependent on subsidies in order to be profitable. And while the industry used to be an engine of employment growth, that is not true anymore. In the first half of 2025, US oil and gas production jobs fell by 4,700. Looking ahead, some of the nation’s biggest oil corporations are to cut up to a quarter of their workforce, leaving thousands of hardworking people in the lurch.
Oil and gas corporations also receive significant explicit subsidies at the state level. Recent analysis from Alaska’s Department of Revenue concluded
that the Willow Project—one of the largest oil drilling projects ever proposed on public land—will net its operator, ConocoPhillips, more in state tax credits than it generates in state tax revenue. Even in places like Texas, where oil and gas is produced mostly on privately owned land, the industry receives massive handouts. In the Lone Star State, the tally for 2023 was at least $1.4 billion. And that is not to mention the many tax breaks from counties, towns, and other local jurisdictions.
Organizations focused on lifting up the values that unite all Americans—values deeply associated with our national public lands—are sorely needed at this moment in time.
Beyond these explicit subsidies, there are many other less obvious ways that the public pays to prop up the oil and gas industry. Take, for example, the industry’s stranglehold on national public lands, which cover hundreds of millions of acres across the country, particularly in western states. While we are all owners and the intended beneficiaries of any development on these vast and uniquely American landscapes, the current financial terms underpinning the public lands oil and gas program don’t fully reflect this reality. In fact, wealthy oil and gas corporations often lease public lands at below-market rates, giving taxpayers less than a fair rate of return. Additionally, even though the United States is actually producing a record amount of oil, Congress just lowered the royalty rate, the amount private companies pay the public for extracting oil and gas from public lands, to the same level it was in 1920. States like New Mexico and Wyoming, whose royalty rates for drilling on state lands are significantly higher than the current federal royalty rate, stand to lose billions in revenue because of this change. Developers can also sit on these leased public lands for years without drilling, hoping for market prices to rise. This waiting game discourages investment in those lands for other uses like renewable energy development, outdoor recreation, or hunting and fishing. Taken together, these policies translate to billions of dollars for private corporations drilling for oil and gas on national public lands.
Better enforcement, and in some cases, stronger rules, are also needed to ensure that the industry—not taxpayers—pays to clean-up when drilling is finished. There are approximately 3.5 million abandoned wells across the country—those that have been left behind without being cleaned-up—that can leak toxins that pollute the air, water, and land. Even according to oil and gas regulators, many of these are actually orphaned, meaning wells where the owner has gone bankrupt or cannot be identified. When this happens, taxpayers often end up footing the bill, and the cost to safely plug and prevent these wells from causing further harm to the environment and communities is enormous. In fact, in 2021, Congress created a $4.7 billion program to clean-up orphaned wells across the country. Yet even this amount is far short of the estimated $250 billion that is actually needed to clean-up all of America’s old wells. In Texas alone, the estimated cost to plug inactive wells—those that aren’t producing, haven’t been plugged, and have an active operator–is some $16 billion, and Texas statutes allow operators to delay plugging almost indefinitely. In other words, whether it’s at the national or state level, the policy framework has created an inherent subsidy for oil and gas corporations. This is a crisis, and immediate attention is required to protect taxpayers, landowners, and people who live near the old wells.
The American consumer also pays indirectly to support oil and gas corporations through higher energy costs. For example, consumers are paying the price for the industry’s decision to maximize profits by exporting gas for higher prices abroad. Just this June, the Energy Information Administration said that “higher natural gas prices in 2025 and 2026 are the result of strong export growth that persistently outpaces US natural gas production.” This government agency reiterated this expectation in September, concluding that domestic gas prices will likely increase by 50 percent over the next year, due to “relatively flat natural gas production amid an increase in US liquefied natural gas exports.” Consumers’ energy bills are also expected to increase because the Trump administration is forcing utilities to keep open aging and expensive coal and gas plants that were slated for retirement, likely adding $3 billion per year to our nation’s electricity bills. The administration is simultaneously attempting to crush renewables, which are usually the cheapest source of new electricity.
That’s still not the end of costly preferences given to the industry. For example, gas and electricity ratepayers in Texas will spend the next 30 years paying down almost $7 billion plus interest in “extraordinary costs” charged by power plants and pipeline companies during 2021’s Winter Storm Uri. Gas infrastructure froze because Texas’s oil and gas regulator ignored federal recommendations to weatherize the state’s supply chain. Consumers face numerous other real costs of dealing with the effects of climate change: higher home insurance, rising public health costs, crop damage, productivity losses due to extreme heat—the list goes on and on.
Bringing About Change
It’s hard to overstate how much the oil and gas industry is holding back America’s potential for true prosperity. International calls to end subsidies for oil and gas are growing louder, but our national politics are stuck, not only prolonging direct and indirect subsidies but piling on new ones. Funders can help move the needle by investing in the many groups that are working on all angles of this problem, partnering with people of differing political persuasions at all levels of government who share a common-sense position that the oil and gas industry should have to compete on a level playing field and not be able to rig the system for their own profit at the public’s expense.
People across the political spectrum care immensely about maintaining access to public lands and ensuring there are places to hunt, fish, camp, and simply enjoy, as demonstrated by the recent failed attempt to sell off public lands in western states. Many of those same people support ending subsidies for oil and gas companies doing business on public lands. Organizations focused on lifting up the values that unite all Americans—values deeply associated with our national public lands—are sorely needed at this moment in time.
Other groups are working to inject local values into economic development decisions. In Texas, for example, Commission Shift is showing Texans they deserve better oversight from the state oil and gas agency, and that speaking out can lead to policy changes that reduce emissions and protect groundwater. The South Texas Environmental Justice Network has successfully pushed back against gas export buildout in Brownsville, not only by harnessing economic arguments, but also by reconnecting local residents to native habitats of wildlife and plants, and advocating with the Carrizo Comecrudo Nation of Texas to protect sacred lands and sites.
Finally, there are organizations like Public Citizen working to protect consumers from high electricity bills by challenging Trump’s abuse of emergency powers that force ratepayers to overpay for old and inefficient fossil fuel power plants, intervening at the Federal Energy Regulatory Commission to challenge market rules that expose households to unnecessary price increases, and opposing LNG export applications at the US Department of Energy because of their impact on raising prices for American families.
The economic accountability work of all of these groups complements the efforts of climate organizations focused on developing and promoting clean technologies. Investing in economic values-setting at the community and federal levels that focuses on people—especially exposing how Americans’ pocketbooks are shrinking while oil and gas industry subsidies grow—and the places they love could be a significant antidote to the climate crisis.
The Funder Collaborative on Oil and Gas partners with the Commission Shift, Public Citizen, the Western Energy Project, and other groups that work to protect economic vitality by pushing back against the oil and gas industry in communities across the United States. To learn more or work with us, contact Sarah Brennan at [email protected].
Read more stories by Jessica Maher, Virginia Palacios & Tyson Slocum.