Dems redirect billions in oil subsidies to alternative energy

[bascule]

http://abcnews.go.com/Politics/wireStory?id=2805859

 

Well, they're not cutting spending (surprise surprise) but when the oil companies are turning record profits this only makes sense.

[Pangloss]

I'm talking off the cuff here (looking for more information), but I've been reading in a couple of places (discussion boards) about how the energy bill contains what ammounts to a new, domestic-only gas tax. Some criticism is starting to take shape suggesting that this may be a bad idea.

 

I don't mean to be vague, but this is a developing thing.

[Amos Schuman]

http://abcnews.go.com/Politics/wireStory?id=2805859

 

Well, they're not cutting spending (surprise surprise) but when the oil companies are turning record profits this only makes sense.

 

I'd help if you were more specific when say that "record profits" justifies "redirect[ing] oil subsidies to alternative energy." What exactly is this subsidy? What purpose did it ostensibly serve. Does Domestic Oil's profit margin really justify a repeal of the relevant tax breaks? If the government already takes 4/9ths of oil's profits, and the shareholders get a quarter on the gross, and if this legislation is proposing to fund a third of its new spending by renegotiating exploitation rights in the Gulf, then what exactly are the risks?

 

I'm not saying that HR 6 is necessarily inappropriate or undesirable, just that its merits cannot be weighed on the strength of a soundbite.

[bascule]

What exactly is this subsidy? What purpose did it ostensibly serve.

 

Here's a breakdown:

 

http://www.moles.org/ProjectUnderground/drillbits/6_09/vs.html

 

Does Domestic Oil's profit margin really justify a repeal of the relevant tax breaks?

 

Yes

[bascule]

the energy bill contains what ammounts to a new, domestic-only gas tax.

 

It's more like removing exemptions for existing taxes than a new tax

[Amos Schuman]

Here's a breakdown:

 

http://www.moles.org/ProjectUnderground/drillbits/6_09/vs.html

 

Did you even read this list? Whatever crazy wrote this up has decided oil companies should expense, presumably out of their profits and without any change in the price of futures, the costs of federal expenditure on USCENTCOM's AOR and the strategic strategic (upwards north of 4/5ths of the final total) and savings from asset depreciation of equipment in use (well damn, when was the last time you drove your Prius into several hundred meters of sand and basalt looking for oil?). What a hoot!

 

Yes

 

Well, if you remove all those subsidies that you have listed there, and divide the burden by market volume, Exxon Mobil's starting with a net annual income $30 bilion with $36 billion in liabilities and shareholder obligations. That leaves XOM $6 billion in the hole [1], and that's before their stock price tanks. You want to try this again?

 

It's more like removing exemptions for existing taxes than a new tax

 

No it's not. For one thing the Gulf lesses are going to be forced to renegotiate their leases, the intent to raise upwards $5 billion of the $14 that way. That's going to be financial expense on top of existing tax conditions. Then you're also going to repeal the tax breaks as well. Now there's a case to be made that XOM can do without an extra $7 billion, but then the question is what will happen to oil futures as a result? And will XOM respond by simply coughing up the dough or divesting from domestic production. Now you're in the space of uprooting American jobs. The government already takes half of what XOM makes annually. Why should XOM feel that it's not being a good corporate citizen? ConocoPhillips does a lot of deepwater work. It's worth three quarters of XOM and makes only a tenth of its annual net.

[bascule]

Did you even read this list? Whatever crazy wrote this up has decided oil companies should expense, presumably out of their profits and without any change in the price of futures, the costs of federal expenditure on USCENTCOM's AOR and the strategic strategic (upwards north of 4/5ths of the final total) and savings from asset depreciation of equipment in use (well damn, when was the last time you drove your Prius into several hundred meters of sand and basalt looking for oil?). What a hoot!

 

Really? Where did they do that?

 

Well, if you remove all those subsidies that you have listed there, and divide the burden by market volume, Exxon Mobil's starting with a net annual income $30 bilion with $36 billion in liabilities and shareholder obligations. That leaves XOM $6 billion in the hole [1], and that's before their stock price tanks. You want to try this again?

 

Perhaps you can pull up the relevant bill and look at what subsidies this law actually applies to.

 

When you look at, say, subsidizing oil exploration vs. investing in alternative fuel research, why would you ever go with the latter knowing it's only putting a band-aid on a problem when a sustainable solution can only possibly lie in the latter?

[Amos Schuman]

Really? Where did they do that?

 

Dude! Bullet number 1!

 

Perhaps you can pull up the relevant bill and look at what subsidies this law actually applies to.

 

Here you go [1]. Read up and let me know specifically what you mean by "subsidies."

 

When you look at, say, subsidizing oil exploration vs. investing in alternative fuel research, why would you ever go with the latter knowing it's only putting a band-aid on a problem when a sustainable solution can only possibly lie in the latter?

 

I take issue with the premise of your question, particularly:

1. "Subsidizing oil exploration v. investing in alternative fuel research." You have established that these are competing interests in a zero sum game, or even that redirecting oil "subsidies" to alternative fuel research will show any profitable return.

2. Characterizing "subsidy" of domestic oil exploitation as a band-aid for an as yet unnamed "problem."

3. The unnamed "problem."

 

I've got no problems with debating you on the general issue. I just don't have any intentions of parsing vague claims or answering ambiguous questions of dubious merit. Otherwise, this is just boils down into an exercise in regurgitating soundbites and cliches.

[bascule]

Dude! Bullet number 1!

 

I don't see any bullets on that page. Perhaps you can paste the relevant text.

 

Here you go [1]. Read up and let me know specifically what you mean by "subsidies."

 

That link doesn't work, but this one does:

 

Ending Subsidies for Big Oil Act of 2007

 

The specific outlined goal is:

 

"To amend the Internal Revenue Code of 1986 to provide that oil and gas companies will not be eligible for the effective rate reductions enacted in 2004 for domestic manufacturers."

 

Not being a lawyer, I don't think I'm qualified to distill from the bill exactly what changes it proposes, since it's using language like:

 

In General- Subparagraph (B) of section 199©(4) of the Internal Revenue Code of 1986 (relating to exceptions) is amended by striking `or' at the end of clause (ii), by striking the period at the end of clause (iii) and inserting `, or', and by inserting after clause (iii) the following new clause:

 

`(iv) the sale, exchange, or other disposition of oil, natural gas, or any primary product thereof.'.

 

So it's difficult to discuss without having the interpretation already been done for me by someone qualified.

 

Subsidizing oil exploration v. investing in alternative fuel research." You have established that these are competing interests in a zero sum game, or even that redirecting oil "subsidies" to alternative fuel research will show any profitable return.

 

I'm having trouble lexing that statement. Perhaps you accidently omitted a "not"? Can you restate it, or perhaps provide some further explanation?

 

Characterizing "subsidy" of domestic oil exploitation as a band-aid for an as yet unnamed "problem."

3. The unnamed "problem.

 

There are two problems:

 

Americans are dependent on foreign oil

 

Oil is not a sustainable resource (I thought that was ostensible from my post... perhaps not)

 

Boosting alternative energy research may provide a potential solution for both.

[1veedo]

The fallacy here is assuming that every subsidy listed on that page is being removed by the government. I may be wrong, but it seems that the government is only removing some and not all.

 

Amos Schuman's examples, therefore, might be equivocations and in reality aren't effected by the bill.

 

Alternative energy research is definitely needed because of the peak oil crisis. Maybe this is the wrong way to do it but at least it's nice to know that the government is actually attempting to do something for a change.

 

http://www.scienceforums.net/forum/showthread.php?t=24220

[Airmid]

Let me get this straight..... you Americans have actually been subsidizing OIL COMPANIES? Why on earth would one want to do that?

 

Airmid.

[bascule]

Let me get this straight..... you Americans have actually been subsidizing OIL COMPANIES? Why on earth would one want to do that?

 

Ostensibly because our government thinks in similar lines to Amos Schuman, or at least did until the Democrats took control

[Pangloss]

It wasn't a subsidy in the sense that it was intended to make them more profitable. If memory serves, the money was intended to be used in the search for more domestic sources for oil, in an effort to make us less energy dependent. As I understand it the recent deep-water strikes are a direct result of this investment, and those strikes are supposed to increase the domestic potential by a large amount.

 

At any rate, the subsidies were put in place before the majority of the speculation that drove gas prices to record highs. Had it happened the other way around I doubt the subsidies would have passed (even if they were a good idea).

 

My personal opinion is that they were probably not worth the investment. The oil companies had (even in the 1998-2002 time frame) more than sufficient incentive and capital to explore all potential revenue sources. Balancing the budget is more important.