Skip to comments.Obama Can't Feel Your Pain at the Pump
Posted on 05/20/2011 7:51:28 AM PDT by Kaslin
The price at the pump has increased 28% in just the last four months, 116% since Barack Obama took office.
The reaction from the White House and the Democrats?
Punish the energy industry with $85.5 billion in new taxes a penalty that will further discourage domestic production and sure to be passed on to consumers driving prices even higher.
The President says that oil and gas should pay their "fair share." I did a little checking and found that the industry pays an average 41.1% of net income in taxes compared to 26.5% for all other S&P industrials. Only the most died-in-the-wool oil and gas haters can possibly think 15% more isn't enough.
Oil and gas also ponies up billions of dollars each year in royalties, rents, and leases. Back in 2008 when the last gas price spike occurred, the Bush Administration encouraged more domestic production by issuing new leases and permitting new wells.
Production went up, prices at the pump fell, and those royalty revenues more than doubled from the previous several years to $23.3 billion, according to the Office of Natural Resources Revenue (ONRR).
But, when the Obama Administration took over, one of the first actions by Interior Secretary Ken Salazar was to cancel many of those leases. Then after the Deep Horizon well explosion, Salazar put a moratorium in place in the gulf as well as many other restrictions and drilling bans throughout the nation and offshore.
In 2010, royalty, rent, and lease payments declined to just $8.6 billion from oil and gas companies; a decline of $14.7 billion from 2008.
In the gulf alone, the Administration's policies have led to a decline in production of 300,000 barrels per day, and the Energy Information Administration projects another 300,000 bpd decline this year. That means a 35% decline in production in the region that supplies about a third of all domestic supply. In February, 2011 of 126 drilling rigs in the Gulf of Mexico, only 25 were operating; half the total prior to Salazar's moratorium.
The oil and gas industry pumps $85 million into the U.S. Treasury every day in taxes and production fees. They also employee over 9 million people and invest about $300 billion each year in capital projects that benefit local communities and our struggling national economy.
Instead of limiting regulations and punishing taxes, the Administration should encourage and unleash the industry, just as Bush did. Instead of declining revenue to the U.S. Treasury, there would be more, and we might get a little relief at the pump, too.
Ronald Reagan reminded us that you get more of what gets incentivized, and less of what is penalized, and his economic policies proved it. So did the Kennedy and Bush tax cuts. But, Obama and the Democrats seem obsessed with defying history, as well as common-sense, by pillorying oil and gas with more taxes, regulations, and punishing rhetoric.
Capital is fungible- that is, it can move from one place to another quickly- and energy production is the prototypical global industry. Plenty of nations around the world are providing a far more welcoming business environment for energy production than the U.S. where the corporate tax rate is the highest in the world and more than 81,000 pages of federal regulations control every move.
While Obama's policies were busy choking off domestic production and driving up prices at the pump, his administration agreed to underwrite a $2 billion off-shore project in Brazil. In March he flew to Rio de Janeiro to announce the deal, and rubbed salt in the wound of U.S. energy workers when he told the Brazilians, "When you're ready to start selling, we want to be one of your best customers." That likely didn't set well with workers idled by the moratorium in the gulf.
The U.S. has also loaned $2.84 billion for upgrades to an oil refinery in Cartagena, Columbia. Because the permitting regulations are so excessively onerous and radical environmentalists keep proposed projects tied up in litigation, there has not been a new major refinery built in the U.S. in 35 years, so increasingly we are forced to not only import crude oil, but refined gasoline, as well.
By now, the White House must be tracking jobs "saved or created" in foreign nations, too.
The President likes to demonize the oil-and-gas industry for what he says are $4.3 billion of "tax giveaways". He's referring to various tax credits and deductions also available to every other business in America, like Microsoft, Coca-Cola, and Ford.
While he pours out his venom against what he calls the oil and gas companies "huge profits," he doesn't bother to point out that the energy industry's profit margin (5.7%) is nearly identical to manufacturing, aerospace and food, and only about one-third as much as the beverage industry (21.7%), pharmaceuticals (19.4%), and computers (17.3%).
For a President that seems obsessed with being "fair" his hypocrisy knows no bounds.
While Obama rails against the energy companies, he is strangely silent about companies like General Electric that reportedly paid no taxes at all in 2010; in fact GE scored a $3.2 billion tax benefit. But, then GE plays Obama's favored "green" energy game and applies a lot of grease to the Obama campaign machine, so "subsidies" and special favors for them are just fine.
GE's complete tax avoidance is because of "fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore," according to the New York Times. Obama even rewarded Jeff Immelt, the CEO of General Electric, by choosing him to lead his Council on Jobs and Competitiveness.
Immelt was a curious choice for a post supposedly to address "U.S. job growth" because GE not only concentrated profits offshore, their jobs have gone there, too. Over the last decade, GE's overseas workforce increased to 154,000 even through the recent global recession. However, their domestic labor force declined by 16%. So, Obama put an American jobs slasher, Immelt, in charge of job creation. Understand?
If Obama were really concerned about addressing the price of gas, job creation, or getting our economy back on its feet, instead of attacking U.S. companies with more taxes, regulations, and his white-hot rhetoric, he'd give them some relief and breathing room. He could really champion reducing the corporate tax rate, as he has intimated he might support.
He could remove Lisa Jackson at the EPA who has turned a "regulatory firehose" on the energy industry and U.S. business according to the Wall Street Journal. In just two years, Jackson has proposed or finalized 29 major regulations and 172 policy rules. A new Secretary of Interior that would actually issue drilling permits, offer new leases, and bring an end to what Steve Forbes called the "most anti-oil and gas record in American history" would be helpful, too.
But, Obama is more focused on campaigning for re-election than doing something really helpful for Americans struggling though the recession and the impact of his failed policies. He has no real intention of doing something right for America; he's just looking for enough votes to keep his job. He'll continue to employ Saul Alinsky's "Rules for Radicals" strategy creating divisions, inciting class warfare, and tearing down the great American free-market economy.
Such is the truth of the Hope-and-Change fraud that was perpetrated on America in 2008.
The problem I have with this statistic is it is only for income tax. Oil companies typically pay other taxes that all add up to be 2 to 3 times larger than the profit they get to keep.
Compare this with how the media responded back when George H.W.B. appeared to be surprised by the milk scanning at that checkout?
Neither does the Clintons, The Bushes or the Carters.
Not true...Ozero feels our pain, he remembers pumping gas.
| Obama's record: The worst recovery in the last 50 years!
Countdown until Obama leaves Office: 610 days as of May 20, 2011.
Hope and Change.... Tragic.
I guess they're too stupid to understand who'll end up bearing the cost of these additional taxes.
This will not end well.
I honestly don’t know when the American people’s threshold will be exceeded and they throw this SOB out of the Oval Office. 2013 is too far way off.
Oil Drilling Moratorium Costing Government Billions
The Obama administrations moratorium on offshore drilling is depriving governments of billions of dollars in royalties, lease bids, and taxes and the lost revenue will grow significantly if no new drilling leases in the Gulf of Mexico are sold this year.
In the wake of the April 20, 2010 explosion of the Deepwater Horizon rig, the administration issued the moratorium on May 6. It suspended work on 33 wells in various stages of construction, halted new lease sales, and suspended permitting for leases already offered.
As a result, the U.S. Energy Information Administration projects a decline of 240,000 barrels a day in oil production in the Gulf this year. That represents billions of dollars in potential revenue that could help close the federal deficit, according to Rob Bluey, director of the Center for Media and Public Policy at the Heritage Foundation.
The moratorium was lifted on Oct. 12, but since then oil companies have complained of a permitorium a deliberate slowing of the permitting process.
This year could be the first since 1965 in which the federal government did not sell leases in the Gulf.
Oil companies pay the federal government an 18.75 percent royalty on the oil produced. In 2008, the offshore industry paid $8.3 billion in royalties, and another $9.4 billion for bids on new leases. Last year those bids brought in just $979 million.
In 2009, royalties, lease bids and rent payments totaled more than $6 billion, according to the forecasting firm IHS Global Insight.
Federal, state and local taxes related to the offshore oil and gas operations in the Gulf totaled $13 billion, Bluey notes. That $19 billion pot of money could go a long way toward deficit reduction.
In addition, opening areas now closed to exploration and production, including the Arctic National Wildlife Refuge and the eastern Gulf of Mexico, would bring in an estimated $150 billion by 2025.
At a time when voters are calling on the federal government to balance its budget, revenue from oil companies would be one way of helping out [and] the oil produced would reduce the price of gas at the pump, Bluey concludes.
The Obama administration should immediately begin to issue new permits for the Gulf of Mexico and explore other untapped domestic resources.
The 47% figure for those who don't pay federal income tax is 47% of workers. 65% of the civilian workforce over 16 pays no federal income tax. The 35% left is screwed.
Obama causes Pain at the Pump.
“I did a little checking and found that the industry pays an average 41.1% of net income in taxes”
Uhhhhh......You and I, as customers, are paying these taxes.
When Dems Obama say they want to tax the “evil Oil Companies remember it is you they are taxing.....consumers always are the ones that eventualy pay taxes....
If there was a way to figure up the amount of that price that went to some sort of tax, including the income tax of employees, it would be amazing.
Dear leader will be hearing about such things next year, whether he wants to or not. Unlike all the other things he’s screwed up, gas prices are one thing that can’t be hidden.