Just wear a sweater.
Posted on 09/23/2009 10:49:02 AM PDT by larry hagedon
This came over the AP, and was picked up by a New Zealand site. I have not yet located other sources.
Obama wants to end all Federal subsidies for petroleum. Most people do not realize that Petroleum has been massively subsidized for the past 50 years.
This will not affect state, county, city or township gasoline, heating oil and diesel fuel subsidies.
Will they simultaneously cut the massive extraordinary taxes on oil? (See Gas Tax)
Don’t be silly.
Agreed
What subsidies are you talking about? There has been a depletion allowance for oil producers, which if I recall correctly, exempts about 15% of their oil production from federal taxes. The depletion allowance is an unjustifiable tax break for oil that gives it a cost advantage over other energy sources and it wouldn’t bother me if congress ended the depletion allowance. But other than that, I can’t think of any “massive subisdies” for oil. So what else are you talking about?
so he doesn’t support oil, coal, or natural gas. doesn’t support nuclear and won’t help solar or wind.
what’s left?
All subsidies should end...Obozo is right with this one....
Soilent Green
Slave labor.
Wood burners???
Caves.
BTW, how’s everyone at DNC headquarters today? Just wondering....I’m hoping you’re all OK and feeling lucid today.
To what, and what amount have the alleged Subsidies been? Anyone??
Cut Sugar subisdies too!
The administration wants to end the current year expensing of "intangible drilling costs" and instead depreciate those costs over a number of years, which means the tax write-off occurs later and is thus less valuable to oil producers. The current year write-off of IDC's is not really a subsidy because it's always a judgment call in accounting whether an expense related to capital goods should be expensed or depreciated. You can go either way on those costs and it's incorrect to call current-year write-offs a subsidy. Drug companies get to write off all their R&D expenses in the current year, so why shouldn't oil drillers write off drilling site preparation costs (an IDC) in the current year?
Personal Methane Reclamation.
....................... The depletion allowance is an unjustifiable tax break for oil that gives it a cost advantage over other energy sources..................
The depletion allowance allows the companies to write off, tax free, the huge lease cost that the oil companies had to pay the US government for the company to explore for oil.
In many cases the depletion allowance benefit is applicable decades after the oil company paid - cash - for the ability to look for oil.
Please do not fall for this nonsense. The oil and natural gas industries are one of the most heavily regulated and taxed industries. These industries are not subsidized. They pay massive taxes at every stage of production and are subject to almost endless regulation and litigation. Sure, one can point to a few tax breaks but these breaks are more than offset by taxes and regulations.
Lefties insist that the gulf wars were a subsidy to oil. This absurd statement does not warrant rebuttal.
This man is a threat to the Republic. It cannot be said more plainly.
I’m not sure what you’re saying there. Lease costs should be depreciated completely over their lifetime just like any other capital investment. There’s nothing usual about that. The depletion allowance is a separate tax break, as far as I know.
Tax and regulate a business until it is no longer a viable business model and reduce them to begging for subsidies or ‘targeted’ tax breaks.
Raises revenue and puts them under the governments heel, both coming and going.
It’s also a myth that oil companies make “windfall profits.” Their after-tax profit margins are well below the margins of many software, drug, and medical device companies. Oil companies get attacked by the left largely because they are located mainly in conservative states in the South and Southwest.
That makes a lot of sense. Subsidize petrolium and then tax the hell out of it. Giving out money with one hand and taking it back with the other.
.....................Lease costs should be depreciated completely over their lifetime just like any other capital investment........................
My understanding is that the successful lease purchase is capitalized, and the write off is not normal depreciation, but a depletion allowance, that is amortized in relation to the amount pumped to the total estimated reserves leased.
A series of dry wells enable tax deductible writeoff of the entire lease cost.
That sounds right, and it sounds like standard accounting for a capital asset such as a leased asset. They may use the term “depletion allowance” in oil accounting for this kind of amortization of a lease.
But I think there’s also a separate tax break called the “oil depletion allowance”. I pulled this definition from a financial website. This sounds more narrow of a definition than other stuff I’ve read on this subject:
OIL DEPLETION ALLOWANCE — An allowable (by congress) percentage of tax-free income that an investor in an oil and gas limited partnership can receive from the gross revenues generated by the sale of gas and oil from a producing property.
Actually you’re correct that it isn’t standard lease accounting. The basic concept is the same, but amortizing the lease based on the amount of oil produced each year is a special accounting method for the oil industry.
Sweaters and shoe leather.
In other words, he wants to increase taxes on heating our homes and getting to work. I guess since he’s from Hawaii he doesn’t understand that.
***Obama wants to end all Federal subsidies for petroleum***
Does this mean that Mexico and Brazil will not get US tax money for exploration?
“This will not affect state, county, city or township gasoline, heating oil and diesel fuel subsidies.”
It will depend on the form of the “subsidy”.
If a state, county, city or township is giving a “subsidy” to fossil fuel enterprises, sure they can keep them set at their current rates, if they choose.
But that is a minority of the type of “fossil fuel subsidies” involving state, county, city and township governments.
It will increase the tax-payers cost for “subsidies” for state, county, city or township governments when they have to pay higher prices for the fossil fuel products that have been subsidized to them and/or that they are subsidizing for their constituents, for fossil fuel products whose new prices will reflect the loss of their federal “subsidies”.
Who, with a rational mind, calls a "reduction of greenhouse gas emissions" at the rate of 00.25 percent a year (a mere ten percent over a total of forty years) a "significant down payment"?
No one. So, in spite of the rhetorical language that Obama used, the factual information amounts to a minuscule so-called "down payment".
And is it worth it??
"In the US alone, the federal government gave US$72 billion in subsidies to the fossil fuel industry between 2002 and 2008, according to a study by the Environmental Law Institute."
Yes true. Is it significant? $72 billion over six years amounts to $12 billion a year - TO THE ENTIRE FOSSIL FUEL INDUSTRY.
Yet Exxon-Mobile alone payed $116.2 billion in taxes in 2008 alone - all by itself.
As usual, Obama is pandering to the ignorant and offering a smokescreen of snake oil that will never deliver a significant reduction in "green gas emissions" or greater energy security.
It will also affect state pension plans, such as CalPERS and others which have multi-billion dollar investments in companies like Exxon-Mobil, Conoco-Phillips, etc. This will lead to higher state and local taxes to offset the loss of pension fund equity.
How about GM or the banks or ACORN or milk price supports or farm subsidies or ..... substitute your favorite here.
Who gets to decide which businesses are subsidized and which are not? I would agree with you if all subsidies were repealed but who decides? This is one of those areas that government is better staying out of just like it would have been better to stay out of GM.
This is nothing more than pandering to his lunatic "big oil is evil" constituency and the greens.
“It will also affect state pension plans, such as CalPERS and others which have multi-billion dollar investments in companies like Exxon-Mobil, Conoco-Phillips, etc. This will lead to higher state and local taxes to offset the loss of pension fund equity.”
Also true.
There is a post-response from a few weeks ago that I still need to respond to. It was posted from someone in France who was complaining about all the profits that go to the “shareholders” - in the form of dividends and equity value - when instead lower-prices should be going to the consumer - the person from France was explaining. I wanted to ask them where their pension/retirement plan money was invested, and if shareholders were not compensated and prices simply lowered, from where would the company build new capital to keep improving its business? I think that poster called it “shareholder greed”.
If all a company gets back from its prices is simply today’s costs, its continuing-to-age-capital (plant and equipment) eventually kill the business, when they die, for lack of profit to invest in tomorrow. Rewarding investors and being able to borrow - having profits (retained earnings above expenses), means you are running a business and not a dead-end operation.
I have no idea, Miltie.
My point Muli, is that the fossil fuel industry is subsidized even greater than alternative energies.
That is my point, no more no less.
I have no answers for you beyond what the article said.
***Obama wants to end all Federal subsidies for petroleum***
“Does this mean that Mexico and Brazil will not get US tax money for exploration?”
The article didnt say, but I seriously doubt it. I know Obama recently pledged 2 billion dollars to a George Soros connected company for drilling in Brazil, seems like I saw an Obama pledge for Mexican drilling too.
sr4402 wrote;
To what, and what amount have the alleged Subsidies been? Anyone??
I am trusting that the AP story is accurate. If it is a hoax, then I have been fooled.
I have no info other than the article.
I have researched these subsidies off and on for years. The one thing I have learned is that subsidies are often well hidden and intentionally so. Your congressman does not want you to know about his giveaways to any business, industry or interest group.
“My point Muli, is that the fossil fuel industry is subsidized even greater than alternative energies.”
There are different forms of subsidies given to fossil fuel sources and “alternative” fuels.
I know nothing that quantifies those subsidies to show the subsidies to fossil fuels are, in total including all subsidies, greater in any sense than alternative fuels - in a context that shows revenue, taxes and the sum of all subsidies for each energy source.
In terms of per-gallon subsidies, for the number of gallons produced and sold, and the revenue received therefrom, ethanol receives the largest % of return from subsidies than any fuel source right now - not fossil fuels.
Comparing mere $$ sums of a subsidy, with no context to production, revenues and taxes paid tells you nothing about how “large” is, comparatively, any subsidy.
Its no different than complaining about the $$ amount of Exxon profits (earnings after taxes and expenses, which amounted to a rate of between 7 and 10 cents on each dollar of revenue) while Google’s profits run consistently three to four times that. Yet, what does it cost to install or lease a server-farm versus drilling rigs, refineries, ships, pipelines, etc???
The only true test of possible “greed” in profits is as a percentage of revenue (not the aggregate amount), and within and across industries. On a per-dollar of revenue retained after taxes and expenses, I imagine advertising - the image industry - is the most greedy and profitable industry on earth, and probably the least deserving in terms of true value delivered to the consumer (who thinks, in error, someone else paid for the advertising).
Oh, (no offense) but it’s “Wuli”, as in “The Dancing Wuli Masters” - a book on quantum physics for non-physicists.
OK Larry, then tell me, other than the oil depletion allowance, what massive subsidies are you talking about? If you’re so well-informed, then you can answer that question.
Larry, I’m not trying to start a fight with you, but just be aware that a liberal (probably) organization like the Environmental Law Institute is going to say that some items in the tax code are “tax breaks” and “subsides”, while oil companies do not consider the same items to be “tax breaks” and “subsidies.” There are a lot of judgment calls about what is a “tax break” and what isn’t. For example, the administration is trying to eliminate the current year write-off for Intangible Drilling Costs, which include things like site preparation costs for drilling sites. It’s a judgment call whether that kind of cost should be written off in the current year or capitalized and depreciated over a longer timeframe.
So there’s no clear definition of subsidies for oil producers and even if you use the definition of subsidies from the ELA, you get these kind of numbers from the article:
“In the US the biggest fossil fuel subsidies are tax breaks, the foreign tax credit and the credit for production of nonconventional fuels that add up to US$29.4 billion over six years, according to the Environmental Law Institute report.”
That’s not a massive subsidy in any way. Exxon-Mobil alone sells over $200 billion in oil products every year and all the other oil companies combined sell probably at least that much. So you’re talking about over $2 trillion in oil product sales in six year, which means even a high estimate like $29.4 billion isn’t much more than 1% of total sales. Even if true, that number isn’t a massive subsidy.
The massive subsidies in America are the huge unjustified budgets for federal bureaucracies like the Education Department, which costs over $20 billion every year and produces almost nothing of any value. I have no doubt that all the useful work in the federal Dept. of Education could be done by 2,000 people with good computer systems at a cost of less than $1 billion. The rest of the activity in that department is a bunch of wasted time and expense that is not improving the education system and may well be degrading the quality of education in America. But I’m sure you know about costly federal bureaucracies, so I’m just posting this for everyone else...in all sincerity I’ll bet you know a lot about useless federal spending.
Well, that shouldn't be too hard, since there aren't any.
Anything less than a 100% tax rate is a subsidy to this clown.
You’ve been fooled.
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