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Alaska battles over how lifeblood oil is taxed
AP via Fuel Fix ^ | April 1, 2011 | BECKY BOHRER

Posted on 04/01/2011 5:27:36 AM PDT by thackney

A high-stakes political battle is being waged in Alaska over whether to cut oil production taxes, an issue that could determine whether the trans-Alaska pipeline keeps pumping billions of dollars into the state’s coffers.

On one side are Gov. Sean Parnell, top House Republicans and the oil industry, who argue that the current tax structure is stifling investment and must be changed to boost oil production and avert a now-looming shutdown of the pipeline that carries at least 10 percent of the nation’s crude oil production, on average.

On the other side are House Democrats and leading senators, who say the Parnell administration hasn’t justified the need for tax cuts and credits that could cost up to $2 billion a year, and they question what — if anything — the state will get in return.

(Excerpt) Read more at fuelfix.com ...


TOPICS: News/Current Events; US: Alaska
KEYWORDS: energy; northslope; oil

1 posted on 04/01/2011 5:27:39 AM PDT by thackney
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{Alaska} House OKs massive oil tax profits cut
http://www.adn.com/2011/03/31/1786045/house-approves-massive-oil-tax.html

The Alaska House of Representatives voted Thursday night for a massive rollback of the oil profits tax that the lawmakers put in place four years ago.

The vote, after about three hours of debate wound down after 8:30 p.m., was 22 to 16.

Neal Foster of Nome was the only Democrat to vote in favor. Alan Austerman of Kodiak and Paul Seaton of Kodiak were the only Republicans to vote against. Sharon Cissna, D-Anchorage, and Mark Neuman, R-Wasilla, were excused.

The House vote was an attempt to torpedo one of the biggest legacies of Gov. Sarah Palin’s time as governor. Gov. Sean Parnell supported the oil tax when he was her lieutenant governor but is now leading the effort to weaken it, saying he's since become convinced that it hurts oil company investment.

“It requires us to believe, it requires a partnership with industry, it creates a balance in Alaska's oil tax,” said Eagle River Republican Rep. Anna Fairclough.

excerpted...

2 posted on 04/01/2011 5:29:36 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney

“Gov. Sean Parnell supported the oil tax when he was her lieutenant governor but is now leading the effort to weaken it, saying he’s since become convinced that it hurts oil company investment.’

Sounds like fodder for the MSM should they be unable to stop Palin from winning the nomination.


3 posted on 04/01/2011 5:31:36 AM PDT by EQAndyBuzz (HaveTs you terrorized a terrorist today?)
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To: thackney
It's hard to tell without first hand knowledge, but this sure looks like lobbyists are back in control of Alaskan politics.

Will this bill effect Alaska resident annual rebate?

4 posted on 04/01/2011 5:49:30 AM PDT by Rational Thought
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To: EQAndyBuzz

When oil prices are $100 a barrel, the total marginal government take in Alaska is 82 percent. In Alberta, it’s 55 percent. In the Gulf of Mexico, it’s 43 percent. Alaska is simply not competitive under ACES.

http://www.makealaskacompetitive.com/

5 posted on 04/01/2011 5:51:24 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: Rational Thought

Without this bill, there will be greater reduction of oil exploration and future oil and natural gas production.


6 posted on 04/01/2011 5:55:17 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: Rational Thought
I should have added, most of the Annual PFD check to Alaskan’s is due to investment of the fund dollars rather than direct cash flow from oil payments. Last time I researched it, it was like 20% of the total payment, IIRC.
7 posted on 04/01/2011 5:56:56 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney

Key words to always pick out in statements by Dems: Tax cuts DON’T COST ANYTHING!!

Ok, my rant is done.


8 posted on 04/01/2011 5:58:45 AM PDT by thatjoeguy (Wind is just air, but pushier.)
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To: thackney

What does Sarah say about this? I’d trust her more than anyone else up there.


9 posted on 04/01/2011 7:04:17 AM PDT by fred2008
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To: fred2008
In my opinion, while I was working in Alaska oil industry when she pushed the increased oil profit tax, it did great damage to the amount of work in the industry up there.

It was part of the reason I left Alaska and returned to Texas to a more business friendly environment.

Many jobs were lost and projects canceled. Many of Free Republic don't want to acknowledge it, but the job loss and reduction of work, while other areas grew is documented.

10 posted on 04/01/2011 7:13:13 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney
From what I have heard all facts & figures are bogus, from both sides; kinda crazy. I have seen figures from govt sources that are completely opposite.

Under ACES, Ak has put away 15 billion over the last 3-4 years. My state legislator told me the tax figure was 62% and he was leaning on voting for it. The problem is there are no guarantees on development even with the tax reduction. Did the feds give oil any tax reduction? Of course not. They are setting tax policy for 10 years down the road. I believe most Alaskans think oil will be $150/barrel pretty quick and any tax reduction will cost Ak over 2 billion/ year in revenues.

Bottomline, the Senate isn't buying into the tax reduction and I heard from my Senator and read in the paper that this is the truth.

The oil is owned by the people & state of Alaska. I think most Alaskans believe somebody somewheres will want the oil still in the ground someday, maybe it will be when it is 200/barrel. Leave it sit until that day gets here.

In the Senate, even the Repubs ain't buying this new tax reduction. No offense, the oil is a resource that funds Ak govt; not a give away to be fuel govt corruption. Palin did the right thing, parnell is unelectable and will cause a dem to be our nx Ak governor. What a crook and a shame. He's a shill for big oil and nothing else and you will honestly find most Alaskans feel that way about the issue.

11 posted on 04/01/2011 7:22:47 AM PDT by Eska
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To: thackney

Interesting. Thanks for the insight as I am not up on the industry there.

Did you ever do anything with oil wells and Chlorine Dioxide?


12 posted on 04/01/2011 7:23:38 AM PDT by fred2008
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To: thackney
Senator Stedman is leading the fight against this bill. Stedman has the chairman and most of the Senate convinced that this is bad for Alaska. tk
13 posted on 04/01/2011 7:33:18 AM PDT by tongass kid
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To: fred2008

My side has been design and construction of the above ground facilities.

I really have not had experience with the drilling. My work takes place after drilling is completed and the oil needs to get processed and brought to market.


14 posted on 04/01/2011 7:41:12 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: Eska
I know there is lots of disagreement.

One of the sources of information for after ACES is the number of workers and dollars immediately after it was implemented.

Most major Alaska North Slope projects takes 4~5 years to put in place at the quickest pace. I'm talking about best case from the decision to spend money to time it is flowing oil. Some projects take even longer.

Most of that time is due to the weather. Most major projects require module fabrication to build in Anchorage or outside. Shipping of the large modules must be scheduled with the winter travel permits for heavy loads.

The reality is, regardless of who wants to believe it, projects that were substantially underway continued. If equipment was ordered and prefabrication begun it was finished with construction being completed the following year on the slope. So the following year there were quite a few hands working and big dollars spent as construction has most of a project cost.

But the engineering and planning for new projects and projects being considered was mostly shut down. That was the side I was on. I saw the immediate impact because I worked on the front end. The engineers and designers working new projects was drastically cut. At some places by 2/3 or more. And I keep in contact with a couple folks in that still. It has barely picked up with the rising oil price of the last year.

Until they get more competitive with other areas, Alaska is going to see little investment. ConocoPhillips, BP, Anadarko, ExxonMobil are working in Canada, Oil Shale, Brazil and other places. It is hard to justify $5 billion dollar project in Alaska that would have half the return the same money spent in the Eagle Ford Shale or offshore Brazil.

Personally, now that I work outside of Alaska, I probably benefit directly from their high taxes for the work load now in Texas. It is becoming a busy time again, especially considering the Natural Gas work from Shale. So I don't push this issue for my own gain. 5 years ago someone could make that argument for me but not today.

15 posted on 04/01/2011 7:55:14 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney

That’s a depressing graph for Alaskans. Oil is the life of this state.


16 posted on 04/01/2011 7:58:20 AM PDT by strongbow
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To: Eska
The oil is owned by the people & state of Alaska.

There's a name for that system.

17 posted on 04/01/2011 8:00:55 AM PDT by triumphant values (Never criticize that to your right.)
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To: thackney
I was in the Drilling end of the operation. The old parts of the field have been drastically depleted and volume has dropped to seriously low levels.

The need for new field development is critical NOW, not later. Production has fallen off over 40% and dropping daily.

ACES was a complete failure and waste of time, when there was already a resource sharing program in place since 1976 which paid all of Alaskan Income taxes and an annual dividend of over $1,000 for every resident. It also paid over 75% of all of Alaska's operating costs.

Palin’s additional tax did exactly as you have pointed out. It stopped new investment and exploration and has reached the point where it will break the industry.

Having 12 to 15 Billion dollar surplus in the state treasury today is nothing to brag about. It merely indicates that the industry has been over taxed and unreasonably punished in order to take advantage of a Populist belief that “corruption” has been defeated and exposed. And the result is a glut of money overtaxed and stored in the State Treasury and out of the Oil Companies reach to use for new drilling and exploration.

Reality is much different than that. It has resulted in many families who have had to leave Alaska and less jobs or opportunity for the future of the state. These are good, hard working people who contributed to the good of the state, not corrupt and evil “Big Oil” cronies like the Populists here love to label them with.

When any Government over taxes and claims victory by bragging about the “surplus” their “smart” leadership has created, it merely shows that they have a belief that Government has a right to confiscate wealth and redistribute it to who they see fit.

This is one of the MAIN reasons that I will not support Sarah Palin.

18 posted on 04/01/2011 8:10:32 AM PDT by PSYCHO-FREEP (Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
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To: fred2008
What does Sarah say about this? I’d trust her more than anyone else up there.

__________________________________

>Why? It was Palin who called for and pushed this obscene tax on profits through.

19 posted on 04/01/2011 8:31:23 AM PDT by wtc911 ("How you gonna get down that hill?")
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To: triumphant values
Yes, it's called an owner state; was set up that way by our constitution unlike every other state. You all can pay all the state taxes you like. In Alaska, the oil wealth in the ground funds everything. You will find that most Alaskans prefer no state taxes, and the our oil in the ground paying for govt costs.

We have watched the oil industry come back every year crying for tax reductions. It has caused massive state govt corruption with many of our Repubs being sent off to the big house. Palin straightened everything out, and said ACES didn't need changing. I trust her word way over big oil and now see the oil industry attempting to buy off the Senate too. They won't go as cheap though. Half the REpubs up here are against the tax reduction. They know what will occur. The state will spend the 14 billion they have in the bank from ACES, they will call for state taxes, Repubs will go to jail like before for corruption, and finally the people will vote in a dem governor in disgust. You wait and see. My own corrupt Repubs are responsible for this too. Big Oil will buy the dems just as quick too. I sure hope the Senate has more sense.

20 posted on 04/01/2011 8:54:57 AM PDT by Eska
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To: Eska
Yes, it's called an owner state

That's a nice sounding euphemism. I always knew the main problem with Soviets was they had a bad PR agency that didn't give nice sounding names to things.

21 posted on 04/01/2011 8:58:49 AM PDT by triumphant values (Never criticize that to your right.)
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To: thackney

bfl


22 posted on 04/01/2011 9:06:01 AM PDT by Smokin' Joe (How often God must weep at humans' folly. Stand fast. God knows what He is doing.)
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To: thackney
If you look at what the state will give up, 2 billion/year and what the state will gain; it's a big loser. Hard to imagine, but most average Repubs up here are against this tax reduction too. They have watched the corruption over the last 20 years and it disgusts them to no end. I'd rather pay state taxes and leave the oil in the ground actually; rather than see another Dem gov elected; kinda how it works up here.

People that work in the oil industry want the tax reduction, I don't blame them either. I want to see AK gets it's value out of our oil so as to benefit the state and to my kid's kids.

Once they have spent the 14 billion, then calls for state taxes will begin and the repubs will be held accountable for their actions. Now the fun begins, oil industry will try buying off Senate over the nx 2 years like they have bought off the legislature.

I remember when the state govt spent 10 million trying to throw the "spend the PFD for good causes" referendum in late 90's. The people voted 87% against it. This tax reduction is on the same order and will in the end blow up in the REpubs faces. Then the Oil Industry will throw money to buy off the dems; how it works up here.

Pay attention to what Palin has to say. She's the only one's perspective that I would trust. If she says the tax reduction is a good thing for Alaska and it's people, you'll never hear a bad word from me about it. I doubt she will say that though. Boy we need her back as governor up here, Parnell is a crook like all the rest we have had over the years.

23 posted on 04/01/2011 9:12:22 AM PDT by Eska
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To: Eska
If you look at what the state will give up, 2 billion/year and what the state will gain; it's a big loser.

Next year versus the next 20 years, I believe they will benefit most from getting a tax structure more in line with other areas.

It may not be the most popular opinion in Alaska today. If they don't change it; I suspect a decade from now it will be.

Kind of like what Whittier went through with their cruise ship head tax. Sure they were far closer to Anchorage than Seward. But it's a pretty bus or train ride and that is where the tourist went for a decade.

24 posted on 04/01/2011 9:18:40 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: Eska
Pay attention to what Palin has to say.

I think you will never hear her say good or bad about ACES again. I would like to be wrong about that, but I doubt it will happen.

Regardless of her opinion today, it would draw a spotlight to the profit tax increase she proposed and was put in place while she was in office.

That is a contradictory stance with the opinion of most the base who support her today. Of course that is only my opinion and there are many that will disagree me.

25 posted on 04/01/2011 9:24:55 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney
That is a contradictory stance with the opinion of most the base who support her today. Of course that is only my opinion and there are many that will disagree me.

You can bet during the primaries, her opponents will bring it up.

26 posted on 04/01/2011 9:28:16 AM PDT by dfwgator
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To: dfwgator
Her best response is not to give an opinion, but simply respond that Alaska needs to decide what is best for Alaska in today's market. Which is true. And which will be argued over by those inside and outside Alaska ad nauseum.

I think she could only be hurt by either being for or against it today. If for it, she can be shown to support a rather high tax in today's market. If against it, it was her proposal in the first place.

I think she will never address again. And regardless of her opinion today, I would like to be wrong that she won't respond.

27 posted on 04/01/2011 9:32:51 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: dfwgator
Her best response is not to give an opinion, but simply respond that Alaska needs to decide what is best for Alaska in today's market. Which is true. And which will be argued over by those inside and outside Alaska ad nauseum.

I think she could only be hurt by either being for or against it today. If for it, she can be shown to support a rather high tax in today's market. If against it, it was her proposal in the first place.

I think she will never address again. And regardless of her opinion today, I would like to be wrong that she won't respond.

28 posted on 04/01/2011 9:32:51 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney

The late great Pissant called Palin; “McCain in a skirt”.

Her record and actions do indicate that overlook. Her popularity is also slipping fast in Alaska as well as other Western States;

http://publicpolicypolling.blogspot.com/2010/12/for-palin-theres-no-place-like-homein.html


29 posted on 04/01/2011 9:36:30 AM PDT by PSYCHO-FREEP (Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
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To: PSYCHO-FREEP
She still has a lot of support.

I don't mean to trash her. She has plenty of good qualities in her leadership. I disagree with what she did on this topic. I am likely quite biased on this topic as well.

30 posted on 04/01/2011 9:39:03 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney

Production has been declining for more than a decade. Drilling new wells has been declining in recent years, even as the world price of crude has been rising and with tax incentives for drilling and production in Alaska’s oil tax laws.

The immediate tax issue should be one of a course correction.

Get rid of “tax incentives” and “tax credits” for oil production. The world oil price is incentive enough. But, also encourage as much production as possible, and thereby as much revenue from production as possible, by lowering the oil taxes as well.

It might be time for Alaska to consider getting out of the oil business.

It could have all it’s royalty rights, now and into the future, sold in a giant “public offering”. At this time with oil prices so high there would be no lack of takers. Then it can convert the proceeds of the sale to a huge endowment fund and secure a steady annual revenue stream out of that fund, instead of depending on the ups and downs of world oil prices; and considering that’s its oil resources may be on the declining edge of supply.

In other words - convert as much of its “rights” as it can - while prices are high - into secured diversified assets now, as declining production brings continuing declining revenue.


31 posted on 04/01/2011 9:39:12 AM PDT by Wuli
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To: thackney
I think you will never hear her say good or bad about ACES again.

NYT, There You Go Again - Sarah Palin

32 posted on 04/01/2011 9:51:44 AM PDT by Doe Eyes
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To: thackney
Do you know who owns what in Ak as to mineral rights? I'm referring to state owned versus federal owned properties. Doesn't the Feds own almost 70% of the land in AK and I'd guess they own the rights to those minerals. Or did they cede the mineral rights to the state and only keep surface rights. If the feds still own their oil then how does the state tax apply to that oil? Do you have any knowledge of the situation? thanks.
33 posted on 04/01/2011 10:03:39 AM PDT by deport
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To: Doe Eyes

Thank you. I’m glad to be wrong about her not responding.

I don’t agree with her on this topic, but I don’t agree with anyone on everything.


34 posted on 04/01/2011 10:03:53 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney
You have always maintained a high level of integrity on this forum and I respect that.

I also agree, that Palin has good qualities, but she has taken many wrong turns and has done things that are not at all in line with Conservative thinking. I won't go into detail, we know what some of those are from being here as long as we have.

I have moved into the Williston Basin myself and found a good home, so I was not hurt too badly with what Palin did in Alaska. I was about ready to move out of the State anyway. One can only live in the Dark and feast-or-famine kind of world for just so long. Resident Alaskans who have been there their entire life would disagree, but they are the usual kind who live in Villages or subsist in the remote regions with fishing, guiding/hunting or tourism.

35 posted on 04/01/2011 10:06:43 AM PDT by PSYCHO-FREEP (Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
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To: deport

The feds own the mineral rights to the federal lands.

The natives own the mineral rights to the native lands.

The state owns the mineral rights to the state and privately held lands.

Federal Government owns about 60% of Alaska. Natives own almost 12%.

http://dnr.alaska.gov/mlw/factsht/land_own.pdf


36 posted on 04/01/2011 10:09:44 AM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: thackney

That I how I understand it myself.

The Oil Companies not only pay a royalty to those 3 entities, they also pay the State and the residents of the state, through the Permanent Fund.

Alaska is one of the few states obligates the Oil Companies to so many outside taxes, fees and charges for producing their Oil. It is extremely difficult for them to make a profit, regardless of the price. Many have indeed pulled out for Canada, North Dakota, Nebraska, etc,.

They are still stuck with all that invested equipment and infrastructure and must remain, but they do so with just operating at a minimum, to reduce their losses.

It’s a sad thing to see an otherwise formerly healthy industry get choked to death, even with $106 Oil.


37 posted on 04/01/2011 10:18:20 AM PDT by PSYCHO-FREEP (Patriotic by Proxy! (Cause I'm a nutcase and it's someone Else's' fault!....))
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To: triumphant values

You see, in Alaska; the state & it’s people own the mineral wealth underground over entire state; not land owner like in North Dakota.


38 posted on 04/01/2011 11:00:00 AM PDT by Eska
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To: deport

I forgot to add that although there are some taxes paid to the state will getting oil from federal land, not all state taxes apply and certainly not the royalties.

But very little Alaska oil is from federal today. A bit offshore is all I think.

ANWR is not open and NPRA has been delayed for permits for years even though leases were sold many years ago. More of those so called idle leases I suppose.


39 posted on 04/01/2011 2:52:43 PM PDT by thackney (life is fragile, handle with prayer (biblein90days.org))
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To: Eska
You see, in Alaska; the state & it’s people own the mineral wealth underground over entire state; not land owner like in North Dakota.

Great. You know what? We should put that system in place for the entire United States. The state can own all the profitable assets and then no one will ever have to pay taxes again.

It's brilliant. Why didn't humans ever come up with this system and implement it before somewhere?

Oh, wait.

40 posted on 04/01/2011 3:43:21 PM PDT by triumphant values (Never criticize that to your right.)
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