A tax on the product is paid by the user of the product.
Requiring the government to buy at above market prices takes tax dollars from all to give to private companies.
Both are bad ideas, but only one is a subsidy.
Sir,
If you tax all of my competitors, but not me, you are subsidizing my business. And who pays for that? The consumer does.
Now if you are digging iron ore out of the ground and a foreign country dumps cheap iron ore on the market with the intent of destroying you and creating a monopoly, that puts everyone that depends on a free and unrestricted access to iron ore at risk.
It is vital to the national interest to retain certain vital capabilities, energy would be one of those.
Now, my proposal is not to guarantee a profit, but to guarantee a break-even point for a finite amount of time. We know its finite, because the Saudis can’t sustain their tactic for more than a few years. The American citizen would be spending slightly more for oil than now, in order to save a lot more on oil for decades into the future.
A tariff on foreign oil would have the same effect of setting a minimum floor for domestic oil, but it would in all likelihood be far more protective and costly to the consumer.
The only risk to the citizen in my plan would be that oil would stay below $40/barrel forever and they would get stuck paying $40/barrel for oil. That is a punishment that most Americans would be willing to risk if not wholeheartedly welcome. But the far more likely outcome would be oil popping back up above $40/barrel, at which tax payer expenditure would be zero and purchased assets could be sold at a profit to the tax payer.