Ted Cruz Has a Thoughtful Conversation With An Iowa Ethanol Farmer

Breitbart ^ | 2/1/16 | John Hayward

[don-o]

Fans of Sen. Ted Cruz (R-TX) 97% are buzzing about his encounter with an angry farmer worried that the Senator's stance against ethanol would ruin his livelihood.

It might be a bit of a stretch to say that Cruz completely won the man over, or converted him into a supporter - much is made of the gentleman's wish that Cruz find the votes he needs among Iowa farmers, but that might have just been polite best wishes, or even a dash of cynical humor.

Still, Cruz acquitted himself well during the encounter, spending some five minutes in patient, thoughtful conversation with someone who came to give him hell. Cruz made informed arguments, demonstrated a clear mastery of his subject, turned a hostile encounter cordial, and kept the political balloon juice to a minimum. He is a politician, mind you, but most of them can't get through a conversation of this length without dissolving into a mass of vague promises and bumper-sticker slogans.

Isn't this what voters always say they want - a serious discussion of the issues, and a politician standing on principle when he knows his refusal to deliver an easy pander is costing him votes?

[G Larry]

There’s no point!

The reduced gas mileage means we get the same amount of pollutants per mile and the ethanol COSTS MORE TO PRODUCE.

[IYAS9YAS]

Exxon paid $31 billion in Fed Corporate taxes.

Is that all taxes, or just income tax? The federal excise taxes on fuel is 24.4 cents/gallon on diesel, and 18.4 cents/gallon on gas. States add their rates to that, bringing just excise taxes (per gallon, not anything on income taxes here). I dare say no oil company makes more than a few pennies profit per gallon on any fuel type.

[OkiMusashi]

http://247wallst.com/special-report/2014/01/08/companies-paying-the-most-taxes/

I’m not sure. It said “Corporate Income Taxes”. I don’t know what was included. I grabbed the number from that link (2012 tax year, probably).

[JohnBovenmyer]

Of course Cruz didn’t answer that......typical.

You need to clean your ear Trumpets. Come TrumpCare they'll be the only 'hearing aids' allowed. Cruz said he was taking away all the subsidies, from all kinds of energy, everywhere.

[OkiMusashi]

lol, yeah, they keep saying that, but evidence is really tough to find.

We usually here this stuff when oil is up and we are the only game in town (tax target-wise).... But, hey, it’s election time and the time for lots of “Crazy Talk”.

[JohnBovenmyer]

Ethanol is ruining engines at 15%, so we certainly don’t need 25% & 30% blends!

Under Ted's plan those who want less ethanol (0% blend!) will be able to get as much as the market allows. Those who want more more can have as much as they want. How the market decides remains to be seen. Like you, I suspect those enamored of high blends will be severely disappointed by a fair playing field. But it will be fair.

[the_doc]

What Obama says are "subsidies" is the ability to expense the cost of a well in the year of drilling, instead of depreciating it over the 30 year life of a well. This is good business, for many reasons, notably it encourages wells to be drilled and the flush production from a well happens during that first year, but is actually pretty standard across most industries.

Let me be sure I understand: You are saying that the "depreciation allowance" (always handled in every business as a cost item at tax time) for new fixed assets in oil production equipment would be taken all at once--and, I assume, only once (rather than "costed" on the books a little bit every year for, say, 30 years).

If I understand your post, I think this is an outstanding stimulus idea inasmuch as we should want more aggressive exploration for energy independence. The proposed new rule would encourage faster spending in our vitally important oil industry without really subsidizing the industry at all.

(All my life, dishonest liberals have always complained that the oil industry gets zillions of "subsidies." Some of the biggest complaints have centered on the so-called "oil depletion allowance"--which allowance is not a subsidy at all, but a set of necessary depreciation rules for the timber, mining, and oil industries.

Heck, all businesses get to charge depreciation as an expense. The "depletion allowance" merely recognizes that a company's timber or mineral reserves are properly treated as capital being drained away over time.)

[the_doc]

Do you have any figure for Net Return on Investment or Profit Margin in the oil industry? I doubt that these are huge numbers even if the total volume of business is huge.

[the_doc]

I think the 'subsidies for oil companies' meme comes from equipment depreciation, which is not unique to the oil business, but seems to have taken hold as a knock on oil companies.

See also the last two paragraphs of my #67.

[G Larry]

There’s no point!

The reduced gas mileage means we get the same amount of pollutants per mile and the ethanol COSTS MORE TO PRODUCE.

[the_doc]

The left always has some 'better idea' which ends up ruining other people's lives so they can feel better about themselves.

Very well said.

(BTW, my "big" point was centered on the idea that our Federal government was formed by our Constitution as a covenant of sovereign states. The Federal government has long overstepped its authority by favoring some states/groups at the forcible expense of others--with no genuine benefits to the Union. This is political rape, not a covenant.)

[OkiMusashi]

Nothing handy.

Honestly. I really do live in my own little world.

Others, here, will be able to help you better than I.

[Ditto]

Are you going to lie to everyone’s face and say they do?

I just asked you the question. Do you know that they don't pay taxes? You are the guy who claims that.

[JohnBovenmyer]

I’m an Iowan who agrees with you. As a doctor and one time Chem major all the science I’ve seen agrees with you. But politically, ethanol’s supporters aren’t looking at the whole scientific picture and keep arguing. Give them an inarguably even playing field and let the market beat sense into them instead making them mad at us by deciding it politically. Iowa will still grow a lot of corn, because there will always be a market for it and we grow it better than anyone else. But they won’t get as much for it without the government subsidies and mandates.

[TheThirdRuffian]

” Let me be sure I understand: You are saying that the “depreciation allowance” (always handled in every business as a cost item at tax time) for new fixed assets in oil production equipment would be taken all at once—and, I assume, only once (rather than “costed” on the books a little bit every year for, say, 30 years). . . All my life, dishonest liberals have always complained that the oil industry gets zillions of “subsidies.””

More or less correct. This is actually the rule now, but it is the drilling expense of drilling and completing the hole, not necessarily ALL the equipment (so, not necessarily the pumpjack, pipe, tanks, etc). But drilling the hole is, by far, the larger ticket item.

It is called “Intangible Drilling Costs” or IDCs.

So, yes, it’s not a “subsidy,” it’s more realistic depreciation, since most of the oil is recovered in the first year of a typical well.

Obama wants a well to be considered a real estate fixture and depreciated over the life of the well.

“Depletion” is something completely different (although it is also a deduction), and is the same with any resources that is used up over time, be it oil or a caliche field.

And, yes, this is a normal, logical, thing to do, except that O&G is one area the government and democrats don’t dominate politically, so it has been a target since the 1960s. Pure political bullshit.