Republicans unanimously vote to continue OIL subsidies

[UncleMatt]

http://thinkprogress.org/2011/03/01/hou ... subsidies/

"House Republicans voted in lockstep this afternoon to protect corporate welfare for Big Oil, even as they call for draconian cuts to programs that everyday Americans depend on each day. As the House of Representatives moved toward approving a stopgap resolution to avert a government shutdown for another two weeks, Democrats offered a motion to recommit that would have stripped the five largest oil companies of taxpayer subsidies, saving tens of billions of dollars in taxpayer funds. The motion failed on a vote of 176-249, with all Republicans voting against (approximately a dozen Democrats joined the GOP). A similar vote two weeks ago to recoup $53 billion in taxpayer funds from Big Oil was also voted down, largely along party lines. The former CEO of Shell Oil, John Hoffmeister, recently said Big Oil doesn’t need subsidies “in face of sustained high oil prices.” From 2005 to 2009, the largest oil companies have made a combined $485 billion in profits."

So if subsidies for solar and wind are bad, why are they good for oil? You know, the industrial sector that is making record, ever increasing profits, while at the same time paying ever decreasing amounts of tax, and creating fewer and fewer domestic jobs...

[UncleMatt]

http://nationaljournal.com/daily/ex-she ... s-20110211

Ex-Shell CEO Says Big Oil Can Live Without Subsidies

[UncleMatt]

Here is a graphic that compares the subsidies fossil fuels receive vs. what solar gets:

http://www.good.is/post/what-if-solar-w ... -like-oil/

Cost per taxpayer over 5 years for fossil fuels subsidies: $521.73
and for solar subsidies: $7.24

Its pretty obvious where the spending cuts need to occur...

[Diogenes]

What subsidies are "Big Oil" getting?

Please explain.

[chrismb]

To my way of thinking, it doesn't really matter what the subsidies are, because the answer is that all energy sources should be subsidised.

We've already had a couple of posts on the relationship of GDP to energy consumed. To generate activity, wealth and the modern world, you need to use energy. Ergo; the more energy you can get, the greater your country's wealth, ergo; the more you can stiumualte energy production in your country the richer your country will get, ergo; all govs should subsidise energy because they'll get the investment back.

[Diogenes]

To my way of thinking, it doesn't really matter what the subsidies are, because the answer is that all energy sources should be subsidised.

We've already had a couple of posts on the relationship of GDP to energy consumed. To generate activity, wealth and the modern world, you need to use energy. Ergo; the more energy you can get, the greater your country's wealth, ergo; the more you can stiumualte energy production in your country the richer your country will get, ergo; all govs should subsidise energy because they'll get the investment back.

You are saying that energy subsidies produce a net economic gain.

Not sure I agree, but if this is true, it seems as though the companies could subsidize their own production without need for government involvement.

[Roger]

World wide fossil fuel subsidies are on the order of 500 billion

http://www.iea.org/weo/docs/G20_Subsidy ... Report.pdf

@ chrismb, a fair point, they all should be subsidized. In the US Energy is too important, and the need to expand out energy portfolio is vital. Adding extra capacity, fission, solar and wind etc gives us flexibility we currently dont have.

@ Diogenes "net economic gain" at this point in time is so not where its at, when I look to 2050. Sometimes a strategic vision is more important than what a balance sheet looks like next year, Looking to 2050, to me, means more conservation, expanding fission, solar and wind, and my Lib friens hate it, but some drilling too, In fact they hate me for saying this but I include some drilling and fission in the mix, only because it puts the country in a far better spot down the road.

If we listen to only the Libs on drilling and fission, were going to be in a bad spot very soon, actually a worse spot than we're in now.

Boeing has started production facilities for solar PV that hits 39% efficiency, over the next 20 yrs thats a lot of GW. And if handled properly we can be number in the world producing this quality of PV. The US is still #3 in world crude production and conservation can do a lot as far as limiting the amount of foreign oil we import in the coming decades.

I'm done with the political theater on both sides in DC Re inaction for 30 years. Chris, yes, invest in it all, lets get it done.

[Tom Ligon]

Durn, where are the subsidies for the 130 watts of PV I put in? Or the 90,000 BTU/day of solar heat, at average January sunlight, with another 60,000 soon to be added?

I'd like to see the definition of subsidy myself. Oil companies do get tax credits for depletion of their resources and equipment, exploration credits, and cheap leases of government land. I doubt wind power would be going in at all without outright government subsidies.

The solar hot water panels I have come with a story. They were the demo system for the only solar dealer in Keyser, WV, a side business for his used car lot. He installed the system on his father's house. Dad hated it and said to pull it out. The guy never sold any systems except the demo I bought from him for about 10% of what it cost new.

Those panels cost a couple of thousand bucks each when new, back in the 70's. Why? Because that was in the age of Arab oil embargos, and the government was pushing solar heat and hot water as a way to become energy independent. They offered generous tax credits for putting them in. The effort failed. If you look around my town, there are dozens of homes with these nasty faded yellow panels on their roofs. These were the cheap-arsed aluminum and plastic panels Grumman made, but sold for a premium price. They lost output as the plastic yellowed, they pinholed, and the installations made roofs leak. You were lucky if you got anything more than preheating your hot water from them ... far from the energy savings promised.

When the tax credits ended, the industry collapsed.

Energy conservation measures should happen because they make good sense, and do so in a competitive environment like anything else. Otherwise what you wind up with bad ideas supported by subsidies.

The bad reputation of those crappy panels took down the good companies, too. My Revere panels are copper with dimpled glass covers, and they work magnificiently. Modern solar heat collectors are even more effective evacuated tube types. The main government help the industry could use right now is taking away the ability of homeowners' associations to ban the things on the basis of architecture standards.

If you want to subsidize something, make it actual energy production and efficient utilization, not crap that does not work.

[Diogenes]

World wide fossil fuel subsidies are on the order of 500 billion

http://www.iea.org/weo/docs/G20_Subsidy ... Report.pdf

@ chrismb, a fair point, they all should be subsidized. In the US Energy is too important, and the need to expand out energy portfolio is vital. Adding extra capacity, fission, solar and wind etc gives us flexibility we currently dont have.

@ Diogenes "net economic gain" at this point in time is so not where its at, when I look to 2050. Sometimes a strategic vision is more important than what a balance sheet looks like next year, Looking to 2050, to me, means more conservation, expanding fission, solar and wind, and my Lib friens hate it, but some drilling too, In fact they hate me for saying this but I include some drilling and fission in the mix, only because it puts the country in a far better spot down the road.

If we listen to only the Libs on drilling and fission, were going to be in a bad spot very soon, actually a worse spot than we're in now.

Boeing has started production facilities for solar PV that hits 39% efficiency, over the next 20 yrs thats a lot of GW. And if handled properly we can be number in the world producing this quality of PV. The US is still #3 in world crude production and conservation can do a lot as far as limiting the amount of foreign oil we import in the coming decades.

I'm done with the political theater on both sides in DC Re inaction for 30 years. Chris, yes, invest in it all, lets get it done.

I looked at your link. (scanned.) Could you boil it down for me? Where are we paying Exxon (for example) taxpayer money?


As for the long term efforts to conserve our own oil resources, I would say it was an intelligent plan but for the my belief that planning had not much to do with it. From my perspective, it appears that people simply caved into political pressure from environmental and anti-industrial groups who are emotionally, not strategically driven. Even if it were all part of a cunning plan, I think we have reached a point where it is economically (not to mention strategically) dangerous to keep sending money to Arab countries that hate us.

We need to ramp up domestic production just to stave off economic and military disaster for this country. Our nation is like a patient that needs a shot of adrenaline to kick it's metabolism back in gear.

Anyway, Love wind and solar, hope they work, but right now we need to ramp up proven energy resources. This spring i'm converting my truck to run on Natural gas. That will leave that much more gasoline for the rest of you.

[Roger]

.

Anyway, Love wind and solar, hope they work, but right now we need to ramp up proven energy resources.

Yeah we have to do some drilling or run the economy into the ground.

Solar and wind are not traditional baseload capacity, and that is an issue. That being said, they can provide significant downtime for traditional sources. One of my pet peeves is the NPRA, west of Prudhoe Bay, 40% more oil than ANWR, and 4 plays not 10. Conventional oil, not bitumen,The best field is at Umiat 70 miles SW from Prudhoe Bay, 70 million barrels, API of 36, which is as good as the bulk of Saudi or Iraq exports.

Theres a crap load of nat gas (30-50 Trillion cubic feet) at the north slope, I can see a nat gas pipeline being built to follow the crude pipeline to Anchorage.

Points, the oil at Umiat is easy to get at, so we wouldnt be all over the tundra causing damage to a widespread area. Modern drilling means 40 wells in a 400 by 400 ft pad. And the oil there is way better (Med API 36) than Prudhoe Bay, which is heavy at API 28.

SO what we get @ Umiat is good quality oil, that can be got with as minimal additional impact as can be expected.

http://www.dog.dnr.state.ak.us/oil/prod ... n_NPRA.pdf

AS far as ANWR is concerned, the oil there is on the western border, so horizontal drilling from the Prudhoe side puts that oil in reach in the next few yrs..

[UncleMatt]

If I expect someone else to pay my own tax bill, that is lawfully levied upon me, am I being a responsible citizen? As a taxpayer, am I allowed to simply pass on any tax burden I do not want to pay to other entities in the economy? If not, why not? That is exactly what many posting here want companies to be able to do, pass the buck when it comes to their OWN TAX LIABILITY! If that isn't okay for individuals, its not okay for companies either! A company's taxes should be paid OUT OF PROFIT just like individuals are required to do.

And the idea that a company can simply increase prices to escape its own taxation is simply and patently FALSE! If a company attempts to raise prices to pass on taxation, and there is insufficient demand to allow for that is the marketplace, that company will lose sales and profits, not gain anything at all. Econ 101!

And its so obvious and transparent, the continous self-serving mis-characterizations of taxation as "theft" that reveal that often people's personal agendas take precedence over facts and practical realities...

[UncleMatt]

What subsidies are "Big Oil" getting?

Please explain.

Oh right, subsidies are merely a figment of people's imaginations, right? (rolls eyes) If that is the case, then what were all these elected officals voting on then?????

Again, trying to define everything in self serving ways in an attempt to promote an agenda is a very transparent and see-through tactic.

And if subsidies are just fine for oil and gas companies, then they are JUST FINE for solar and wind companies AS WELL. True or false? You can't have it one way one second, and then expect people to accept your about-face in another second as valid.

[Ivy Matt]

If I expect someone else to pay my own tax bill, that is lawfully levied upon me, am I being a responsible citizen? As a taxpayer, am I allowed to simply pass on any tax burden I do not want to pay to other entities in the economy? If not, why not?

You do pass the burden on, in a way, whether you want to or not: in the form of reduced revenue for the companies and individuals whose goods and services you would otherwise be able to afford. Of course, you can still buy on credit, but that merely postpones (and worsens) the effect.

That is exactly what many posting here want companies to be able to do, pass the buck when it comes to their OWN TAX LIABILITY! If that isn't okay for individuals, its not okay for companies either! A company's taxes should be paid OUT OF PROFIT just like individuals are required to do.

"Want companies to be able to do"? I think most here are simply pointing out that what laws, regulations, and taxes are "intended" to do is not always what happens. What would you expect companies to do when faced with increased expenditures with no accompanying increase in revenue? You might as well say, "Let's print lots and lots of new money! Hopefully the evil stores won't raise their prices this time."

"Isn't okay for individuals"? More like, it isn't really possible, except in the sense I pointed out above. On the other hand, some individuals own practices, contract their services, and sell goods, so if you want to be able to raise your prices to shoulder your tax burden, there you go.

And the idea that a company can simply increase prices to escape its own taxation is simply and patently FALSE! If a company attempts to raise prices to pass on taxation, and there is insufficient demand to allow for that is the marketplace, that company will lose sales and profits, not gain anything at all. Econ 101!

That might be the case if our government, in its beneficence, for some reason decided that Exxon ought to pay higher taxes. Exxon would then find itself at a disadvantage compared to its competitors. It's paying higher taxes, therefore its costs have increased. It can either raise prices, lay off employees, cut salaries, or cut operating expenses. Or some combination of those options. Raising prices may be the worst option, of course, because it will cause them to lose market share. However, it doesn't matter what Exxon ultimately decides to do, because it will still be put at a disadvantage compared to its competitors.

Of course, that's not what we're talking about. We're talking about taxes levied on an entire industry, or on all corporations. If all the oil companies are paying the same tax, they are all at an equal disadvantage. (Not entirely true: the larger corporations are inevitably more insulated to increases in expenditures than the smaller corporations.) All of the oil companies now have higher costs with no accompanying increase in revenue. All of the oil companies have to make the same choice: raise prices, lay off employees, cut salaries, or cut operating expenses. What do you think they will do? If all of the oil companies raise their prices, there isn't going to be much of a change in market share. But, yes, it will result in less overall demand for their product. (By which I mean, of course, that their product will become less affordable.) Of course the companies won't gain anything from raising their prices; they're just trying not to lose anything. Higher prices, smaller markets. Too bad. It's the consumer who loses, of course. Who do you think gains?

And its so obvious and transparent, the continous self-serving mis-characterizations of taxation as "theft" that reveal that often people's personal agendas take precedence over facts and practical realities...

I think calling taxation "theft" is a bit melodramatic. However, taxation is most certainly a form of coercion. That it is a part of the social contract does not change that fact; it is merely something we are willing to tolerate while all parties keep their part of the contract.

From what I have been able to find so far, it seems the subsidies mentioned above are mostly tax breaks used as incentives. For what it's worth, I'm not to keen on the idea of government incentives, but if we're going to reduce or eliminate incentives, why shouldn't we do it for all industries at once? And then again, why shouldn't we do it for individuals?

[chrismb]

And if subsidies are just fine for oil and gas companies, then they are JUST FINE for solar and wind companies AS WELL. True or false? You can't have it one way one second, and then expect people to accept your about-face in another second as valid.

Depends. It takes around 10MJ to generate a USD for the US GDP... so if one dollar of subsidy leads to >10MJ of energy that would not otherwise be produced, then it is a no-brainer not to subsidise.

If one dollar of subsidy leads to 5MJ, well that would pay off in most european countries (UK is around 3MJ per USD) but let's just stick to US; if it was felt that this investment would lead to a new energy sector that could then produce 10MJ for less than a dollar, then it should be subsidised. If not, then there is no financial [at least] incentive to do so.

So to address your question, one must ask a further question: What is it likely $/MJ return rate from solar and wind likely to be in the near future.

[chrismb]

I think it has previously been suggested here that the 'Joule' should be adopted as the unit of currency, or something along those lines.

Let's say I go to fill up the car. The energy in a litre of diesel is around 30MJ. Tax and duty on top of that (in UK) would then be charged in Joules, so to get my litre of diesel I would probably pay something like 100MJ, and therefore it is immediately clear that the gov and the oil company get a payment of 70MJ of that 100MJ between them.

Let's say the gov gets 50MJ of that. When the government comes to try to figure out how much they are going to make with that, the question no longer makes any sense, y'see!! The answer is.. they'll get 50MJ! Now, if they have a budget of 100 exawatts per year, but the GDP is only 50 exawatts for that year, then it is immediately clear that the government is useless [or you could then say they are 'only 50% efficient'!!] and has squandered its money (read: 'energy').

My employer should then pay me in Joules. So let's say I get paid a salary of a gigajoule per year. It would then be easy to use that currency in a very meaningful way because there is then a direct link between the energy contained within, or required to make, whatever I buy. The difference would be clearly visible as the total taxation.

Adopting the joule as a unit of global currency is a brilliant idea. In days-of-old, our currency had an implicit value - one pound of sterling silver was 'One Pound'. A value of a coin was its actual value, and when it moved to paper and cheques it was still backed up by reserves of that value. The whole problem of today's financial system is that these are now only promisary cheques as the physical reserves of precious metal have been sold on. Most currencies don't actually have reserves that can honour the full issued currency any more.

Now imagine that changes to 'the Joule' as the currency. We know that 'joules = USD' to a pretty consistent ratio in all countries, so the only variations in actual value between countries is how efficiently you use the energy. In other words, a Joule would buy you more in a country that uses energy more efficiently!! What better incentive could there be to then improve your country's efficiency!?

So now we return to the question/point of this thread; if we assume that the above is all exactly true and therefore there is a given conversion ratio between joules and dollars, all you have to say is 'if I subsidise the production of 11MJ of energy with a 10MJ subsidy, then the country's economy has gained', or 'if I invest 10 petawatts in this energy project, how much energy will it provide?