The International Monetary Fund recently published a report purportedly about global energy subsidies. It’s no surprise that it has drawn a bit of media attention, especially its claims that there are more than $5 trillion in annual energy subsidies, which many people assume (incorrectly, I’ll point out) go to large multinational oil companies.  Salon, to give one example, offered the following headline: “Big Oil’s astronomical handout.”

But after looking closely at the study, I am reminded of this famous scene from the film The Princess Bride.

I feel like Inigo Montoya every time the IMF brings up “subsidies.” I do not think it means what they think it means.

Indeed, most people think of a subsidy as a grant or gift of money from the government to a favored industry or company.

Sometimes subsidies are in the form of direct payments from public coffers. Sometimes they are specific carve-outs in the tax code. Or they are slightly arcane instruments such as loan guarantees.

The researchers behind the IMF report, however, seem to have invented their own definition of subsidies in order to make wild accusations to garner media attention.

For instance, the IMF report claims that the refusal so far by governments of advanced countries to levy certain taxes on carbon emissions and other facets of energy production and use amounts to a massive subsidy.

This designation completely eschews the conventional and generally agreed upon definition of a subsidy. It invents a new one in its place in which a failure to levy the particular taxes it thinks are warranted is – voila – a subsidy.

Problem is it’s not a subsidy by any accepted use of the term. It’s a policy preference – and in the case of a carbon tax, arguably a correct one.

Still, if a government chooses to take a different direction, that doesn’t make it a subsidy any more than it makes it a hat or a broach or a pterodactyl (as long as we’re making classic comedy movie references).

Yet another example of what the IMF report deems a subsidy comes from calculating what its researchers claim are all the other hidden costs of the use of fossil fuels, such as congestion or car crashes.

Of course, that’s a preposterous definition of a subsidy tied to energy. As Forbes’ Tim Worstall points out, “Even if the entire transport system ran on wishes and unicorn kisses we’d still have congestion, accidents and road damage.”

Elsewhere, the authors claim there are $492 billion in direct energy subsidies for things like oil, natural gas, and electricity. (Strangely, though, the report doesn’t look into subsidies for renewables).

In this case the IMF is a little closer to the truth, but only slightly. What they are discussing are indeed subsidies, though in most cases these are actually subsidies to the consumers of energy, not the producers.

Often these are direct subsidies from governments to consumers for the purchase of below-cost energy products – in Venezuela, for instance, gasoline is nearly free to the country’s citizens. These subsidies are worth looking into, but it’s important to keep in mind that these are not subsidies for the petroleum industry, as Salon and others suggest.

There are many more problems with the IMF report, as Forbes’ Worstall ably details here and here.

The bigger point is not just that the IMF gets its facts wrong, it’s that in doing so it distorts and inflames meaningful discussions about subsidies in places like Washington – and regardless of your party or ideology we can all agree our political dialogue is in sore need of more facts and fewer distortions. Too often we have seen some of our elected representatives – including the president of the United States – get simple facts wrong on key concepts about critical energy issues.

As is the case with many significant public-policy matters, a lot is at stake in this discussion – for our industry, for the economy, and for consumers.

The chances that we can get the public policy right if we don’t first get the terms right is, as Wallace Shawn’s Vizzini might say, “inconceivable.” And in this case, he’d actually be using the word correctly.