Global Economy Bursting?

[Terrel L. Shields]

In truth, I have heard many industry leaders (including Duke Energy) say Cap and Trade would not be so bad because it would provide certainty, however you need a regional market.

They are in a position to profit handsomely from carbon credits just like Enron did in 2000. California remembers the results I am sure. It is great when there is a surplus of energy....not so hot when it gets "short".

Again, what subsidy does oil get that all corporations don't?

All corporations qualify for tax deferrment of their foreign companies

All manufacturing companies get special breaks for buying new equipment. Can you ban the oil companies from taking that break without taking it away from GE, Ford, GM, too?

All companies and even individuals can take a deduction for expenses. Don't you expense your mileage or car costs? Don't you expense your software and computer?
Agri and most manufacturers qualify for expensing buildings and equipment on an accelerated basis if they choose. And Carter gave a 10% tax credit to farmers years ago...so they all bought new pickups....I had a cousin buy 4 pickups, get the tax credit then resold them all within a year, made a nice tidy profit on the deal. Momma drove one. Junior drove one...They've never offered the Oil Biz such a tax credit...all these are are simple deductions.

Intangible Drilling Costs is only a deduction of the expensing of the drilling of a well. without it, the companies will cut back because it is something that the big oil companies can only do over 5 years anyway but the SMALL oil companies (think Yates) who rely upon INVESTORS will have to cut back because the INVESTORS cannot expense out the costs so they end up paying TAXES on their investment at 35% or so and thus, will only spend 65%...and frankly, they may not spend that if they can find a better investment.
Finally, the depletion allowance impacts every mineral owner and every company that owns a pumping well. FURTHER, it is similar to tax breaks for forestry companies. It is merely recognizing that the oil is being DEPLETED. It's a depreciation allowance for that fact. I take a depletion allowance against a small royalty check i get - woopie...the one and only deduction I can take. I get whacked 7% SEVERANCE TAX. I have to pay AD VALOREM TAX. I HAVE TO PAY STATE INCOME TAX. I HAVE TO PAY FEDERAL INCOME TAX...and against the federal tax alone I get to take a lousy 5% deduction or so??? So after the oil is gone what do I have left? All this and you think it is going to solve the energy crisis???

 

[nm505]

Some say oil subsidies are not needed (Bush, oil companies, etc.)

They are in a position to profit handsomely from carbon credits just like Enron did in 2000. California remembers the results I am sure. It is great when there is a surplus of energy....not so hot when it gets "short".

Again, what subsidy does oil get that all corporations don't?

All corporations qualify for tax deferrment of their foreign companies

All manufacturing companies get special breaks for buying new equipment. Can you ban the oil companies from taking that break without taking it away from GE, Ford, GM, too?

All companies and even individuals can take a deduction for expenses. Don't you expense your mileage or car costs? Don't you expense your software and computer?
Agri and most manufacturers qualify for expensing buildings and equipment on an accelerated basis if they choose. And Carter gave a 10% tax credit to farmers years ago...so they all bought new pickups....I had a cousin buy 4 pickups, get the tax credit then resold them all within a year, made a nice tidy profit on the deal. Momma drove one. Junior drove one...They've never offered the Oil Biz such a tax credit...all these are are simple deductions.

Intangible Drilling Costs is only a deduction of the expensing of the drilling of a well. without it, the companies will cut back because it is something that the big oil companies can only do over 5 years anyway but the SMALL oil companies (think Yates) who rely upon INVESTORS will have to cut back because the INVESTORS cannot expense out the costs so they end up paying TAXES on their investment at 35% or so and thus, will only spend 65%...and frankly, they may not spend that if they can find a better investment.
Finally, the depletion allowance impacts every mineral owner and every company that owns a pumping well. FURTHER, it is similar to tax breaks for forestry companies. It is merely recognizing that the oil is being DEPLETED. It's a depreciation allowance for that fact. I take a depletion allowance against a small royalty check i get - woopie...the one and only deduction I can take. I get whacked 7% SEVERANCE TAX. I have to pay AD VALOREM TAX. I HAVE TO PAY STATE INCOME TAX. I HAVE TO PAY FEDERAL INCOME TAX...and against the federal tax alone I get to take a lousy 5% deduction or so??? So after the oil is gone what do I have left? All this and you think it is going to solve the energy crisis???

You might be surprised at who would be willing to give up these subsidies (Bush, Oil Executives, and some Congressmen). And yes, I got a subsidy (tax incentive) to buy my solar. It was meant to be an incentive to get me to buy PV as a nascent industry and in fact, prices have come down by 50%...mostly due to China. So I paid more even with the subsidy but helped to prove there was a market so prices could come down.

http://www.msnbc.msn.com/id/21134540/vp/46848389#46900059 (Sorry, this link seems to go the amazing video I was watching on the fabrication of a small robotic bee) Have tried to change it but it doesn't seem to be happening).

Most of these clips address "exploration incentives" over $45/barrel, however it is still insane to give any incentives at all to an industry that is so very profitable. Trying to eliminate the incentives is not new, it is decades old.. but just never seems to get done.

I love Clue, the game. "It was Big Oil with the wallet in the cloak room". If you want to know why many of us think this is just flat out dumb, (regardless of Congress voting against repeal over and over year after year), then watch the video. http://www.msnbc.msn.com/id/21134540/vp/46848389#46900059 (I will try to link it here since the above link is still going to the robot which is very cool, but off topic)

As a member of the oil industry, you might have trouble getting it. I not only have heard 30 commercials about how wonderful big oil is in the last day alone (why are they working so hard to prove their point?) BUT, a local spokesman for oil/gas/coal who is very sexy and articulate got 3 hours on our local largest radio station to make her case why renewables are just not cost competitive and climate change is bunk AND oil/gas/coal is so WONDERFUL!!! This blitz is doing the opposite...it increases suspicion as to why so much time and money is being spent on their case.

And yes, I get five oil checks per month and am willing to give up my puny depreciation deductions that NARO says goes to an average 85 year old woman. BUNK. We would much rather have the big oil tax deductions money flowing into the economy.

 

[Restrain]

Actually, the ROI to "big oil" is far below that of Google, Apple, the Wall Street firms, health care corporations, etc, all of which have been contributing big-time to Dems, to keep their breaks. But you do not see that reported in the news, do you? And when you consider the capital investments that the oil companies have to lay out vs the costs of the firms I just mentioned, the risk factors to the oil companies are far higher. So you have higher costs and lower returns. And you want to penalize oil companies by denying them the same tax breaks of other companies? If we keep this up, they will move to Switzerland or other overseas corporate-friendly countries, and prices will double again!

 

[Randolph Kinney]

The future of energy exploration and development will continue to move out of the U.S. and those jobs go overseas. Refineries in the U.S. will continue to shrink capacities.

Some of the most promising new oil fields are in deep water off the coast of Brazil. Experts say they could yield as much oil as the North Sea. There have been significant strikes off the coast of French Guiana, north of Brazil, and off Ghana in West Africa. Russia is increasing production in its Arctic regions, while Canada is steadily producing more oil from its abundant tar sands.

Over the next 25 years oil demand will increase from 88 million barrels a day to 99 million, mainly to fill Asian gas tanks. $2.7 trillion of investment in exploration and production will be required to provide the additional oil. That amount of investment will require higher oil prices.

The obvious impact in the U.S. will be to the liesure and hospitality industries as well as to auto manufacturing as people will drive less with higher gas prices. As the price of gasoline, jet fuel and petroleum rise, disposable income falls and business operating margins shrink. That translates into fewer jobs and a lower standard of living.

California leads the nation as to what will happen.

Drivers in California bought 1.8% less gas in 2011

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2012/03/30/BUMA1NSPMG.DTL#ixzz1qtC882vY

Squeezed by rising prices, California drivers bought 1.8 percent less gasoline in 2011 than they did the year before, according to data released Friday by the State Board of Equalization.


California leisure, hospitality jobs still down from recession

http://www.bizjournals.com/sacramento/news/2012/03/30/california-leisure-and-hospitality-jobs.html

California might be a great place to visit, but the leisure and hospitality industry still hasn’t recovered all the jobs lost since the beginning of the recession, according to a new analysis from the U.S. Bureau of Labor Statistics between January 2008, just after the recession began until January 2012. Many states fared better than California.

The Golden State lost 1.93 percent of its jobs in the industry, going from 1,578,200 in January 2008,to 1,547,700 jobs in January of this years.
That’s a loss of 30,500 jobs in the last four years, and the biggest decline in terms of raw numbers in the industry.


Latinos Hit Hard by High Gas Prices

http://www.huffingtonpost.com/jorge-madrid/latinos-high-gas-prices_b_1387818.html

Gas prices are reaching record highs for this month, increasing 53 cents since January. American families spent $3.7 million more on gasoline the week ending March 9 than they did the week ending January 2--even though average weekly gasoline purchases are among the lowest in 11 years. But while high gas prices affect all Americans, Latino families bear a heavier financial burden than most.

Seventy-two percent of Latino households are experiencing financial hardship--with 41 percent reporting "serious hardship"--as a result of rising gas prices, says a new Center for American Progress Action Fund poll. The numbers are even worse for Latinos in the heavily car-dependent state of California, where prices regularly breach $4 per gallon and an overwhelming 88 percent of Latinos reported financial hardship due to rising gas prices last year.

 

[Randolph Kinney]

Senior citizens continue to bear burden of student loans

http://www.washingtonpost.com/busin...tudent-loans/2012/04/01/gIQAs47lpS_story.html

The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens.

New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.

 

[Terrel L. Shields]

At least oil employees are paid better than the slave-like labor at Foxconn that builds Apple products. But Exxon can't hold a candle to the cash on hand at Apple.

Further, the geopolitical risk of an oil company is 10x that of a softward company. They have to get a good return because they risk being nationalized at all corners. Russia nationalized a bunch of companies. Venezuela. All the OPEC nations nationalized these companies and paid them a pittance for the investment as "compensation" when they bother to...and outside Kuwait and Sauid Arabia I cannot think of any of them that gave anything. Certainly not Chavez nor Khomeni.

You are asking oil comanies to give up tax breaks that every other corporation and PERSON in America qualifies for. So let's stop letting appraisers deduct mileage and computer costs..phone expenses. That is the same thing. Pay your tax on the gross.

I work with checks from royalty owners who get checks of $2.00 a month for some wells. Yet they pay 15 - 30% of that out for "expenses" and "taxes" -...then they get a K form and pay income tax.

So what do they do? The same thing Warren Buffet does. Create LLCs and "deduct" a fungibility adjustment for the shares in the LLC and gift it to their children at $10,000 a year....They use every trick in the book and so does that self-important Mr. Buffet.

If he wants to pay more taxes write a check or increase his secretaries salary to say, maybe $40,000,000 a year.... see if she dont' bust her butt trying to pigeonhole money here and there to keep from paying out the wazoo, too.

The argument that the oil companies are making too much money is worse than stupid....if they just make so much money, why is there no Amoco anymore? Why is there no Gulf? No Texaco? Mobil. Arkla. Texas Oil & Gas, Dome Petroleum (the Canadian Exxon at one time)...on and on. They didn't make enough money to keep going, that's why. They had to sell out and/or be taken over. And name one company that has existed since the 1930s in the oil business... Carter? nope. Humble? nope. Magnolia? nope. Indian Territory Illuminating Co.? nope. Sinclair. Tidewater. The Superior Co. Only pieces of these companies exist as minor divisions of some larger firm and a few of the old trademarks are still recognizable...

"Cheap" alternatives do not exist. Your Solar panel has been dumped in the U. S. subsidized by the Chinese who lend us the money to buy the stinking things and become evermore enslaved to the Chinese. The "true" cost is something environmentalist bellyache about the environmental cost of oil...so what is the "true" cost of solar panels? It's high...dam high.

The solution is not to try and tax one business out of business and say "See...it's not economic"...then give breaks to other industry and claim it's the wave of the future. Anything that is forced on you by a gun is certainly the way you are going to spend money, but it doesn't make it right and it doesn't make it good.

As for the Bush's supporting this or that. How cares. I didn't vote for Bush I and I didn't support Bush II either. Bush I threw the entire industry under the oil by making a deal over Kuwait with the Saudi's that they would continue to dump oil on the market and keep prices low. It came too late for Bush I (ha ha) and the economy didn't recover from his expensive little half-done venture in Iraq....and Clinton got the benefit of that largess of the Saudi's. When OPEC realized that cheap prices pretty much wrecked the domestic oil industry in the 1990s, they were back in the cat bird's seat again and only now is the price of oil allowing the industry to profit.

Eventually, the market always wins. Those who attempt to distort and control it lose. Look at China in the 50s-80s. Look at Russia and its collapse in the 80s. The market is going to determine the energy of the future and attempts to subsidize it in one way or the other will only lead to higher prices and an ever worsening economy that could ultimately lead to the Argentine problem....the most prosperous nation in South America in the 1920s declined into the abyss by subsidizing everything and everyone in a populist goverance that eventually led to hyperinflation and chaos.
We are killing the coal industry. We want to kill oil and gas off. We have nothing to replace them but China is not near so short-sighted. Canada is not near so short sighted. Brazil, ditto. We are making ourselves into a second-rate country pretending we can "green" out way out of this by destroying and taxing the very industry that has come through the crisis in the best shape.

 

[Terrel L. Shields]

California drivers bought 1.8 percent less gasoline in 2011

The one thing that Jimmy Carter had exactly right was that conservation (reducing use) was the easiest and fastest way to reduce fuel usage. That, combined with fuel standards, should see a general slowing of the use of gasoline.
The other things we need are Nat gas cars. COMPRESSED natural gas (as opposed to LIQUIFIED - high pressure- natural gas) stations could be very quickly and economically created. LNG is a little more expensive and the safety issues are greater. We could create that infra structure adequate enough to see 10% of new cars in America being CNG within 3 years.
Secondly, the diesel standards should be rolled back to the European standard and more diesel engines built. 4 cyl diesels in midsized sedans should be able to average 40 -50 mpg with virtually no loss in adequate power. Just converting 50% of the fleet to non-gasoline by 2020 would be a huge economy move.
Electric cars with back up engines will remain but I don't see them as anything but a bridge to something better. The metals needed to produce the maximally efficient batteries are generally controled by the Chinese and others and mining those we have hear is virtually impossible with the current environmental climate in this nation.

However, regarding current prices, I think gasoline is near peak and except a Iran-Israel confrontation in the summer, gasoline prices will drop and that likely portends the re-election of the President but possibly with both the house and senate in Republican hands. I would consider that an acceptable outcome.

 

[Randolph Kinney]

U.S. Standard of Living Has Fallen More Than 50%

Using the year 2000 as the numerical base from which to “zero” all of the numbers, real wages peaked in 1970 at around $20/hour. Today the average worker makes $8.50 hour – more than 57% less than in 1970. And since the average wage directly determines the standard of living of our society, we can see that the average standard of living in the U.S. has plummeted by over 57% over a span of 40 years.

The green line shows average wages, discounted by inflation calculated with the same methodology for all 40 years. Obviously that is the only way in which we can compare any data over time: through applying identical parameters to it each year.

Then we have the blue line: showing wage data discounted with our “official” inflation rate. The problem? The methodology used by our governments to calculate inflation in 1975 was different from the method they used in 1985, which was different than the method they used in 1995, which was different than the method they used in 2005.

 

[Randolph Kinney]

Cap-and-trade fees become key source for rail plan

http://www.mercurynews.com/news/ci_20318055/cap-and-trade-fees-become-key-source-rail


California's revised plan to build the nation's first high-speed rail system identifies an alternative source of funding if federal and private-sector contributions fail to materialize—fees generated from California's new cap-and-trade program for greenhouse gas emissions.

However, there are legal and logistical questions about whether those fees, which could range from $660 million to $3 billion in the first year of the cap-and-trade program, could be used to build a high-speed rail line.

The revised high-speed rail proposal released Monday puts the cost of a San Francisco-to-Anaheim system at $68.4 billion and targets completion of a 520-mile network stretching from the San Francisco Bay area to Burbank by 2028.

The latest proposal refers repeatedly to the possibility of tapping money from California's new cap-and-trade program. That plan, which is set to begin in November, requires companies to buy permits from the state to offset their annual greenhouse gas emissions.

 

[Terrel L. Shields]

In 2004 Shell wanted to close a Bakersfield refinery. Sen. Boxer objected arguing it was a cash cow for Shell. She raged,

that Bakersfield had the biggest margins of any Shell refinery in the nation as of that date

Shell choose instead to sell to Flying J to process diesel.

Flying J shortly went bankrupt ...so was Shell wrong??

Alon USA Energy Inc. bought the Bakersfield refinery in 2010 for $40 million and invested in converting it to process . In January this year, they were forced to suspend operations. So is this refinery economic or not?

The Shell boss who initially wanted to close the refinery is Lynn Laverty Elsenhans. She, now CEO of Sunoco is the one that announced their Philidelphia refinery will close if they cannot find a buyer. And so Boxer and others are once again raging against her decision.. The commonwealth of PA stands to lose over half a billion in tax revenues...plus all those jobs. So? Let the state buy the refinery then... see if they can do a Flying J and Alon with it.

Other East coast refiners are reporting losing $1.2 BILLION over the past 3 years in the refineries. Old refineries lose money especially when that capital can be put into a new facility that is more energy efficient and lower cost. That seems to zoom right over the heads of folks who argue for higher energy efficent cars with lower carbon footprints. Threaten to close an inefficient, high carbon output refinery and it becomes some sort of conspiracy to inflate the price of gasoline.