Government may waive near $7 bln in oil, gas royalties: report

yaaHoooo ^ | 2-14-06

[dirtboy]

If I enrolled in University right now I would put my money on Geology

Twenty years ago, you would not be able to find a job as a petroleum Geology graduate.

[MeanWestTexan]

Thanks. I just couldn't bother replying to him.

[MeanWestTexan]

Well, most of the taxes go to the state where the land is, as opposed to the federal gov. (Yes, there is fed income tax.)

Severance, property, etc. taxes are state or local gov. taxes.

[Smartaleck]

"I can't believe the number of people who fall for the liberal talking points, even here. <--- This would be you"

Asking questions so as to better understand the issues is not the same as accepting either side. Not easy for some to comprehend without jumping to pre-mature conclusions as you have aptly illustrated.

Further, there are assertions, such as crappy land without any documentation or references to back up such assertions.

Just as I wouldn't take a liberal's view on faith, I don't take the word of someone on FR either.

Go back and look at the NEWS story. While Reuters may not have presented an unbiased report, they do quote from a report from Aministration officials. You saying the WH has a liberal view?

[Smartaleck]

"Bush "opposed additional incentives for oil companies with the price of oil where it is," said Scott McClellan, the White House spokesman"

But while Markey and other Democrats blamed the Bush administration, White House officials retorted that ***the incentives stemmed largely from specific decisions that the Clinton administration made in 1998 and 1999.**** At the time, the government was seeking to increase domestic oil and gas production when prices were comparatively low

http://www.iht.com/articles/2006/02/15/business/oil.php

Seems your opinions are a bit ignorant. Remain so if you wish and endorse the Clinton's policies.

[MeanWestTexan]

As much as it pains me to agree with Clinton, he was correct to cut royalty rates back in the days of super-cheap oil.

OPEC was dumping oil for the express purpose of harming the US domestic oil infrastructure --- making it so unprofitable to domestically produce that it would collapse, knowing that it takes 10 years or more to rebuild the infra-structure ---- at which time OPEC was free to jack up the price far above what it would have been, if we had domestic production.

[tx_eggman]

Mean. .. This will be my last stab at replying as well ... those that don't want to get it won't.

NotSoSmart wrote:

Seems your opinions are a bit ignorant. Remain so if you wish and endorse the Clinton's policies.

I already knew it was a Clinton policy, ... and a good one at that. I've been paying attention to what's going on around me - probably longer than you've been alive. So, yeah, I endorse it. I'm not so stupid that I have to reject everything the stain did while he was in office just because it was him doing it.

As your own post states:

At the time, the government was seeking to increase domestic oil and gas production when prices were comparatively low. This was the right thing to do.

Shell Oil is benefiting from those Clinton era royalty reductions for the field that is being produced off it's MARS platform. This platform was deployed at a cost of $1.5 Billion dollars .. there is part of the risk they assumed.

It is located in 2900 feet of water in the middle of the Gulf of Mexico .. another risk they assumed .. with the following results after Katrina battered it wifor 4 hours with 175 MPH winds:

Before:

After:

It's been down since August and is not expected back up until the 2nd half of this year .. lost production for over a year from a platform which can produce 15% of the total US Gulf of Mexico output. Platform and refinery repairs from Katrina are estimated at $350 - $400 million dollars.

The risks were undertaken, in part, because of the incentives offered ... but now that the "bad old oil companies" are making a 9% - 10% profit on their risks, let us, by all means, change the rules.

Now, go to your room. After you've been quiet for 30 minutes you can go outside and play.

[MeanWestTexan]

"You saying the WH has a liberal view?"

The WH, like all politicitians, takes the populist view when they don't have to actually do anything.

Here, the WH could, and probably should, defend a correct policy of the Clinton administration, but politically it is unwise to do so.

Because of years of liberal indoctrination, it is popular for the moronic sheep people to mindlesslessly attack "big oil." Witness O'Reily's moronic populists rants.

Hence, the WH can simultaneously attack Clinton AND do the right, but unpopular, thing, by saying "Well, Clinton made the deal, it was bad, but we're stuck with it."

Politics as usual, in other words.

[jw777]

Whatever you do, just make sure you don't drill on ANWR or off the CA coast. We wouldn't want to become more independant or anything.

[Chgogal]

What risk does the government take in developing the fields? If you didn't have the producers who would get the oil/natural gas to the market? Not the government. How does the government spend the money (royalties) better than the producer?

[Smartaleck]

Nice pictures. Here's some more data.

Shell's full-year earnings rose 37 percent to $25.3 billion while sales rose 12 percent to $379.0 billion. The earnings were the largest ever for a British or Dutch company, but are likely to be passed by Britain's BP PLC next week.

Quarter
Net ***profit*** was $4.37 billion, down from $4.57 billion, while sales fell to $92.8 billion from $95.1 billion.(Due to Katrina Rita)

http://news.yahoo.com/s/ap/20060202/ap_on_bi_ge/earns_netherlands_shell

Paying attention doesn't equate to understanding. ;-)

[Non-Sequitur]

Lower costs keep the prices down.

Not working very well, is it?

[Non-Sequitur]

Maybe somebody will explain how having to pay a royalty to anybody, much less the gubmt, can possibly constitute an "incentive" to explore for oil?

So the oil companies should be free to explore and drill anywhere they want, regardless of ownership? So they can have an "incentive" to explore? Sixty dollars a barrel isn't incentive enough? Why shouldn't the oil companies pay royalties to the owner of the property that they're drilling on, even if the owner is the federal government? And given that the oil companies aren't exactly hurting right now I can't see where waiving the royalties is justified.

[OldFriend]

You've got to be kidding.

One of the problems with the costs of gasoline is that each state has it's own 'environmental' regulations. Meaning that if there is a shortage or outage in one area the gasoline from another state cannot be substituted.

The other issue is that many states have used taxes on gasoline as a source of revenue that is purported to be used on transportation needs, but is thrown into the general fund.

[Non-Sequitur]

And yet with all that the oil companies seem to be doing alright for themselves. Profits up. Demand for their product high. Stock prices soaring. So why do they need a bailout from the government in the form of waiving royalties?

[OldFriend]

I don't consider 9% profit to be excess.

Without further exploration we find ourselves back in the business of buying from the arabs.

Everything that allows us to buy less from OPEC is better for America.

[tx_eggman]

Shell's full-year earnings rose 37 percent to $25.3 billion while sales rose 12 percent to $379.0 billion.

Einstein, that makes for a 6.75% profit margin on $379 billion in sales ... Microsoft's margin was over 30% ... Merck's was over 25%.

Their total profits were big because they are, after all, BIG Oil. Given that they're projecting $19 billion in capital investments in '06 to keep the oil flowing ... they have to be big.

Paying attention doesn't equate to understanding. ;-)

They tell me ignorance is bliss .. you must be one happy camper.

[MeanWestTexan]

"What risk does the government take in developing the fields?"

Well, it is government property. Same risk any mineral owner takes.

"If you didn't have the producers who would get the oil/natural gas to the market? Not the government."

PEMEX and other nationalized companies notwithstanding, exactly my point.

"How does the government spend the money (royalties) better than the producer?"

I don't understand this question. The government owns the oil and gas. It's in the ground. A private company gets it and splits the revenue with the owner, who just happens to be the people of the United States, in this instance. That's the way it works with private land. What, should the taxpayer give money away for no reason, just because it is government land? I don't think so.

The government does with the cattle, too. I ranch, in part, on some federal land in New Mexico. Should I not have to pay rent because the landowner is the government? Of course not.

[Smartaleck]

I should have known -

"Never argue with an idiot, he'll bring you down to his level - then beat you with experience."

[Non-Sequitur]

I don't consider 9% profit to be excess.

But why, when they are that profitable, do they need a government subsidy in the form of a royalty waiver?