New York spends billions of dollars on programs to spur economic activities. Yet the spending is hard to track because there is no standard definition of economic-development spending. Generally, when policymakers are discussing “economic-development activities” they could be discussing policies about workforce development and training programs, place-based revitalization strategies, direct business assistance and tax breaks, arts and culture funding, sports facilities, and infrastructure projects.
New York’s programs have long been controversial and in recent years the source of scandal. The most notable among them was the so-called “Buffalo Billion” scandal. Essentially, large donors to the then-governor’s re-election effort received big benefits through the “Buffalo Billion” and other upstate economic development plans. As a result of federal prosecutions, the former governor’s top aide and the state’s hi-tech economic development czar were convicted (although a recent US Supreme Court decision reversed those convictions).
Despite the controversies and scandals, New York’s business incentives are supposed to stimulate economic activity for efforts that otherwise would not get started. One such package of incentives was under fire last week: New York’s tax benefits for the oil industry. That’s right, the oil industry.
Currently, New York’s tax code offers benefits for the production, transmission, distribution, transportation or storage of fossil fuels. It is estimated that these tax benefits total around $1.5 billion each year.
At the same time, the use of fossil fuels is causing enormous damage as the climate gets worse. The climate crisis costs New Yorkers, including tens of billions of dollars in damages and hundreds of lives lost. A 2022 federal report found New York State experienced 51 billion-dollar disaster events due to the climate crisis from 2000 to 2021—costing the State between $50 to $100 billion dollars, and up to $20 billion in 2021 alone. A total of 594 deaths have been linked to severe weather in New York between 1996 and 2024.
Climate change resiliency measures are uniquely necessary—and expensive—in New York. A review of Governor Hochul’s climate-related public announcements documented that she had pledged over $2 billion in 2023 to cover damages and projects to boost the resilience of New York’s infrastructure damaged by climate change-driven extreme weather. This spending is entirely funded by New York taxpayers.
A study by New York State Comptroller revealed that over a ten-year span, more than half of New York localities' municipal spending outside of New York City was or will be linked to climate change. New York City may need to spend around $100 billion to upgrade its sewer systems to withstand intensified storms. And those costs are on top of the$52 billion that the U.S. Army Corps of Engineers has estimated it will cost to protect New York Harbor from rising sea levels and storms. Estimates suggest that Long Island alone could incur up to $100 billion in climate-related costs. These financial burdens are projected to escalate, potentially reaching $10 billion annually for New Yorkers by the middle of the century.
The industry has known for decades that the burning of fossil fuels will lead to the planet heating up. Instead of taking responsibility for their business practices, they engaged in a campaign of aggressive climate denial. Decades of opposition to environmental protection legislation and international treaties have resulted in a climate crisis that only dramatic action can help to mitigate.
As New York State—and the world—struggles with the ravages of climate change, the oil industry is raking in enormous profits. In an analysis released last week, the total amount of profits over the past four and a half calendar years for Big Oil is over $1 trillion.
The question is obvious: Why is New York offering tax incentives to those same companies?
Some of the tax benefits are really ones that ultimately benefit consumers, like providing heating assistance to low-income New Yorkers. Yet some do not.
A bill has been introduced that eliminates tax provisions that benefit the fossil fuel industry, while minimizing the impact on the public. This bill repeals the most egregious fossil fuel subsidies and saves the state approximately $350 million annually, or roughly one-fourth of the total benefits to the industry.
Why should New York taxpayers grant tax benefits to an enormously profitable industry—and one that has contributed mightily to the climate crisis? The industry knew of the dangers, deceived the public, and they are making staggering profits. And the state is facing fiscal difficulties. Why allow benefits to this undeserving wildly profitable industry?
In a year where the state budget is likely to be buffeted by changes enacted by the Congress—like eliminating health coverage benefits for some lower-income New Yorkers—Governor Hochul and lawmakers will be looking to make every penny count.
Eliminating wasteful tax benefits for the oil industry seems like a good place to start. We’ll see what the governor does early next year.
Blair Horner is senior policy advisor with the New York Public Interest Research Group.
The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.
