system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: If the petroleum industry receives over $4 billion in annual government subsidies (on average), why is there a tax on fossil fuels? Wouldn't these cash flows 'cancel out?'

ELI5: If the petroleum industry receives over $4 billion in annual government subsidies (on average), why is there a tax on petroleum? Wouldn't these cash flows 'cancel out?' 

To my understanding, the subsidies decrease the cost of petroleum products, and taxes increase the cost. What's the point? Is this a vicious circle?
gpt
Most of the subsidies for the fossil fuels industry in the US comes in the form of tax breaks. Some economists would be upset at using the term subsidy to mean tax break, but common usage of the word includes them.

Petroleum companies get tax breaks for doing specific things that the government wants to incentivize (or avoid punishing). For example, they get a foreign tax credit which allows them to deduct taxes paid in foreign countries from their profits that are returned to the US. The government allows that because it wants US companies to do business abroad while bringing money back into the US. Companies either wouldn't do business abroad or would keep their earnings outside of the US if they got double taxed on them. It's also worth noting that this tax break is available to pretty much all US businesses, not just the petroleum industry.

There are also subsidies promoting domestic manufacturing, exploration for new wells, etc. 

There are a couple reasons you can't just trade these out for a tax on petroluem. First, the tax on gasoline is collected by both the stats and the federal government, which means the states also rely on the tax for money. However, the federal government is the one who gives the subsidies. So the people doing the taxing aren't always the same ones providing the subsidies. Additionally, people are the ones paying the tax and it's on gasoline. Petroleum companies are the ones getting the subsidies and it's on their businesses in general and drilling for oil; not just gasoline.

Second, if you remove the subsidies you lose your ability to influence the behavior of the subsidized industries. Without the subsidies companies could get the same savings without having to undertake specific tasks to claim the subsidy.