Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on April 25, 2011 at 12:35

A worthy discussion topic, essay.  However I am unsure that this source and this article are a proper basis for a Main Page discussion.  When I go to the The Daily Caller website and see Ron Paul is announcing his run for the presidency, I tend to think this discussion belongs in the Political Group.  I think you are onto a worthy topic if you can moderate in such a way as to keep the replies on topic and guard against the usual slide into partisan blah-blah-blah.  Good luck, I'll be tuned in.

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Permalink Reply by essay on April 25, 2011 at 13:27

That's what I'm hoping to do, I want to take the information from the federal government presented at face value and compare it to any other information that might be out there right now, and if any of the information is not reliable, or outright misleading, discover why.  This is one of the issues that is wide out in the open now with talk of officially investigating O&G related entities regarding prices, and I fear American companies are going to be the most obvious targets at hand.  As far as tangential importance to shale related issues, It's not on a par with the Libya or Japan situations, much less the Gulf spill last year, and is admittedly an obvious political tactic even if many of it's proponents might truly think otherwise.  I'm honestly interested in learning why one would have this impression in the first place.

 

And speaking of which, I would also guess that any information given on the other side of the argument will be at least as politically motivated as the Caller article, if not more so, and we must all endeavor to dig down through the noise on both sides and at least attempt to consider just the facts of the matter, which have massive implications for every man, woman, and child in this country both now and in the future.

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Permalink Reply by P.G. on April 26, 2011 at 5:16

Gasoline prices have already driven this issue into a political one like it or not. When folks are having to whip out hundred dollar bills to fill up their vehicle at the convenient store, they feel like they are being taken advantage of..or been let down by their leaders...especially when seeing the arguments of drilling or not drilling by politicians as prices keep going up..and seeing the oil companies making record profits is a thumb in the eye..

Isolating the discussion (out of sight, out of mind) isn't going to make the argument or the feeling of  betrayal go away..

What really reeks of politics is knowing that there is an alternative, and it's not being discussed or promoted as it should be..

When there are  obvious answers to high energy prices but we don't see anyone in authority  asking the questions, it's not hard to become suspicious that there's more to this issue going on than just economics...

For the sake of promoting Natural Gas, it needs to become a mainstream argument..

If enough voters demand it, the official will have no choice but to act regardless of who's dollars are lobbying them..

 

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Permalink Reply by Max on April 26, 2011 at 6:08

essay,

 

There is one thing about numbers; 2 + 2 doesn't always equal 4.  Some folks can add them together and prove that they equal 18, while others can make them turn into a negative 7.  I found many links supporting databases that gave merit to what numbers any identity would want to provide as evidence.  One link:

http://www.businessweek.com/interactive_reports/corporate_taxes.html

 

In this link, Chesapeake had a five year average of 48%, but in 2010 they paid 0.03%, a spread that could be used in quite different ways, depending on the information you want to promote.

 

Subsidies to the energy industries actual reduces the cost of energy for all Americans over time.  Politicians use all subsidies to promote leaning one way or the other.  It's up to the people to educate themselves about these issues.

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Permalink Reply by P.G. on April 26, 2011 at 8:00

Folks should realize businesses don't pay taxes, they collect them....

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Permalink Reply by P.G. on May 2, 2011 at 2:49

And from where does the funding come to give those subsidies?

 

What do you mean "Where does the funding come from?

Does the government actually write  checks for subsidies to the oil companies?

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Permalink Reply by essay on May 2, 2011 at 9:32

they're trying to kill the depletion allowance, calling it a subsidy doesn't make it one, it's an accrual accounting method just like depreciation.  as far as i'm aware, the o&g industry does not get any more "breaks" than any other manufacturing sector in the u.s.

 

repeating the same lie over and over and over will never make it true.

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Permalink Reply by Spring Branch,mineral owner on May 2, 2011 at 11:03

Sesport, if you owned rental property, would you call depreciation on your rental house a subsidy?  if you want to see what a subsidy looks like take a look at ethanol.  100 % of the money I earn is mine to begin with.  When the government decides I'm not paying enough in taxes, they say I'm getting too big a subsidy.  It is all just a word game.

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Permalink Reply by Spring Branch,mineral owner on May 3, 2011 at 2:54

Some, yes, but not all.  Depreciation is taken against ordinary income which is fully taxed at ordinary tax rates.  When you depreciate your rental property, you are reducing basis, such that if you sell the property, you will pay taxes on the depreciation taken .....BUT at long term capital gain rates, rather that ordinary income tax rates.......darn it.......the govt. giving me another subsidy!

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Permalink Reply by P.G. on May 3, 2011 at 3:03

What if you donated that property to the church?  Would that mean the government is subsidizing religion?

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Permalink Reply by Max on May 3, 2011 at 8:56

No, it just means that you're a good person.

 

Unless...... the house is falling down and you've received a notice from the city to demolish the house.

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Permalink Reply by essay on May 3, 2011 at 22:45

cato institute guys, eh.  that's funny in it's own right.  same authors, 5 years ago: Exxon's Earnings: No Apology Necessary  http://www.cato.org/pub_display.php?pub_id=6250

 

anyway, since you're just linking and running without discussing the material, i will take up your slack.  i must admit, the cherrypicked quote was choice, well done.  never mind that it is completely without context and of no significance whatsoever on it's own, other than it's snide presentation.

 

first, one should note that the only real advantage of the weak dollar for the american people turns out to be growth in manufacturing for export, something that has been much touted here recently as a driver of job creation, i.e., actually making things people want to buy.  i know it's a shocking concept, americans exporting things besides ill-will and misery.

 

42% of the so-called "lost revenue" (even the term itself is debatable) comes from the overall manufacturing credit from '05.  trying to shame politicians into singling out o&g is laughable, and quite simply won't happen in this environment.  i wish whoever wants to take responsibility for trying to kill part or all of it good luck.

 

the other two big "lost revenue opportunities" pointed out in that piece are even admitted by the authors to be much more important to smaller independent operators than they are the "big oil" crowd, which i thought was supposed to be the main target.  withdrawing support from a sector that gainfully employs so many americans is not consistent with growing jobs by any stretch of the imagination.  it's amazing that we waste so much money trying to force research on pie-in-the-sky nonsense that won't be ready for decades no matter how much money we throw at it, yet we want to pull the plug on programs that might actually help here and now.

 

and just to reinforce how important the small producers are... the following information is a little outdated but still recent enough to be relevant, imo.  from http://www.pttc.org/tech_centers/producers/sp_wp.pdf

 

""...In the 1990s states in the midcontinent reported that as much as 80% to 90% of the oil was produced by companies with fewer than 20 employees. During the past decade, mergers and poor economics have caused many small to medium sized producers to depart the industry. However, in 2009 it was still estimated that small producers accounted for 85% of the natural gas produced in the lower 48 states and 60% of the oil production.  Statistics from the Independent Petroleum Association of America (IPAA) in 2007 indicated that from the 1980s to 1995 petroleum production by independents increased from 45% to over 60%.  In 2007 IPAA reported that independent producers develop 90% of oil and gas wells in the U. S. producing 68% of the oil and 82% of the natural gas.""

 

the article goes on to talk a little political semantics and outlines likely outcomes of a "more neutral tax code" scenario, which seems entirely too focused on the production argument and altogether cavalier about messing around with the businesses people have built faithfully following the rules of the game, not to mention the jobs they provide their neighbors.  one outcome that i agree would be a certainty is that of increased merger and acquisition activity, which is by definition a job-destroying proposition.

 

and lastly, the authors observe that "...about 41% of the net income earned by the oil and gas industry is already paid out in federal taxes compared to 26.5% for the rest of the businesses in the S&P 500."  ...before concluding that the best answer would be sweeping reform of the tax code and energy subsidy structure, the extent of which i would heartily endorse when and if any given party is ever in control of enough of the government to do so.

 

thanks for the material.

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