I received a constituent email from Congressman Schweikert. It states: "I voted for HR 1230, a measure that overturned the Administration's blocking of oil and natural gas lease sales." What he didn't tell me, and the other constituents on his email list was that a yes vote on HR 1230 also meant the continuation of federal subsidies to oil companies, estimated to be between $2.7 billion to $4 billion annually.
The oil industry is the most profitable business in the world. While much of the economy has been in shambles, they have reaped astounding profits over the past 10 years. Their profits during this past quarter alone were the highest on record. Why, then, would the federal government need to subsidize oil companies?
Eighty-two percent of the Democrats in the House voted no on the bill because they couldn't find a reason for the subsidies to continue. But Congressman Schweikert, and all but a handful of Republicans, voted to continue giving billions in subsidies to oil companies. Didn't Schweikert and his fellow Republicans pass the Ryan budget cutting education and destroying Medicare due to a lack of funds? I think the Congressman and his fellow Republicans have some explaining to do.
Fred Barlam, Ahwatukee
Leon Ceniceros posted at 12:40 pm on Fri, May 13, 2011.
Folks, oil comes from the ground...you have to explore and sink test wells to find the oil. These test wells cost the Oil Industry ...billions and billions of dollars.
These "test wells" also created tens of thousands of jobs....support small towns where the workers live, eat and purchase food and goods.
America gets the taxes from these oil wells......not the King of Saudi Arabia...the Emir of Kuwait or the Sultan of Dubai......these taxes go to pay for your Social Security check every month and your Medicare.
The Democrats are ............PLAYING THEIR FILTHY "GOTCHA POLITICS"...WITH THIS ISSUE.
If you haven't figured out that .........DEMOCRATS ARE SOCIALISTS AT HEART...THEY WANT TO TURN AMERICA INTO A 3RD WORLD, SPANISH-SPEAKING WELFARE STATE ......THAT DEPENDS ON SOME MUSLIM...."OIL TRILLIONAIRE" .....FOR ALL THEIR OIL.
IF YOU WANT TO WAKE UP ONE MORNING AND GO TO CALL SOME ONE AND THE PHONE SAYS........DIAL 1 FOR SPANISH....DIAL 2 FOR ARABIC...DIAL 3 FOR RUSSIAN....DIAL 4 FOR CHINESE .....AND DIAL 5 FOR ...ENGLISH..................THEN VOTE FOR A DEMOCRAT.
Accuracy posted at 4:30 pm on Fri, May 13, 2011.
Fred Barlam wrote: “HR 1230 also meant the continuation of federal subsidies to oil companies, estimated to be between $2.7 billion to $4 billion annually.”
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H.R. 1230, “Restarting American Offshore Leasing Now Act” was passed by the U.S. House of Representatives. And if it’s enacted by the full Congress and signed into law by the President, the bill requires that federal offshore lease sales that have been delayed start up again in the Gulf of Mexico and off the east coast of the United States.
Oil industry doesn't need subsidies is another proposal in Congress.
Ending oil subsidies makes fiscal sense — even though it’s only a drop in the bucket with our $14 trillion national debt. Oil and gas companies have been fighting a Senate bill to take $2.1 billion in tax subsidies away from the five biggest oil companies.
On Capitol Hill, they’re discussing a relatively small $2.1 billion in subsidies, while the really problematic U.S. oil subsidies are not even on the table.
sockratties posted at 5:05 pm on Fri, May 13, 2011.
Fred – You’re right. We need to quit subsidizing businesses once they are up and running on their own. Many subsidies are incentives for start-up industries, such as recent “green” technologies and should have sunset clauses that cause them to be reconsidered annually to see if they are still needed. Obviously the oil industry is both off the ground and off the continent. The oil industry net profits are about 17% which is a pretty high, but not outrageous return for the stockholders. They pay taxes on those incomes. Oil exploration is expensive and risky so there must be cash to fund it. Some subsidies may be necessary to encourage specific ventures but every subsidy should be examined and justified periodically and no universal subsidies should be given to any industry.
We only have one truly U. S. oil company left, that’s Valero, based in San Antonio, Texas. All the recent off-shore exploring and drilling permits that have been issued are to global mega-Oil corporations. The profits and taxes from those wells will benefit foreign based companies and duties and fees collected by the U.S. will be minimal. You can keep poking holes in the ground, but even if in the U.S. we were to tap every possible oil source we would still have to import over half of our oil to meet demand.
Unless new technologies that fracture the strata that separate our ground water from the oil are employed we are past peak oil. We need to be certain that we are not destroying our water in return for oil. We can expect water to be the next big global shortage and what we squander now we will regret later.
Although people who are as short-sighted and uninformed as leon don’t believe it, this is not a political problem, although we will have to get past the politics to solve it. It is a survival problem and while the leons among us are distracted by their socio-phobias we circle the drain. We need to develop other technologies to reduce the demand for oil, find economically feasible ways to use natural gas and coal without continuing to impact our environment (regardless of if it is the cause of climate change or not) and develop comprehensible strategies that reduce our dependence on the Middle East.
Dale Whiting posted at 8:47 pm on Fri, May 13, 2011.
Leon points out that it is technically better to produce crude oil locally than buy it internationally. This is obvious.
But the larger question is "Does the United States need to continue to give domestic exploration and production "tax breaks?" Where Velero is the only 100% US oil company, the big five being international, paying taxes all over the world where ever they may conduct their business, a case might be made that the US needs to keep these companies interested in domestic production. But that would be a poor case. As crude oil supplies inevitably decline all over the world, as new finds become increasingly more rare, smaller and more expensive to produce, crude oil being "fungible," in the long run and sooner or later as the price of oil rises, market demand will increase price such that it all will get found and produced.
The wise nation will be the nation that is ready to develop new and renewable power sources. All of this Neo-con short term thinking is getting me worn out. When will the Neo-cons start thinking long term?
Accuracy and sockratties are right! To put an end to the controversies over oil and/or green energy subsidies, let's end all subsidies, oil and green energy, and allow the market to determine what gets done. On a level playing field, my bets are on green energy.
Didn't any of you catch this discussion Friday night on Bill Maher?
DemocraticDad posted at 9:04 pm on Fri, May 13, 2011.
Hey Leon, I was SHOCKED to read your comment!
I can't believe that you, of all people, are defending Social Security and Medicare as you do in the first paragraph of your comment? Don't you and your Tea Party friends consider those programs to be the evil SOCIALISM? I thought as a faithful Tea Party member you reject any program that even hints at socialism.
To quote you, your actual words in the commentary were, "DEMOCRATS ARE SOCIALISTS AT HEART...THEY WANT TO TURN AMERICA INTO A 3RD WORLD, SPANISH-SPEAKING WELFARE STATE ......THAT DEPENDS ON SOME MUSLIM...."OIL TRILLIONAIRE" .....FOR ALL THEIR OIL"
You have to admit, those are pretty strong words. It seems to me that if you honestly believe what you wrote, you have an obligation to back up your words with actions. So Leon, I hope you are sending your monthly Socialism Security check back to the federal government, and not accepting any of those socialist Medicare benefits. If not, I would have to say that your Tea just went to pot.
BKSPIK posted at 10:02 pm on Fri, May 13, 2011.
Fred, you cannot be serious. First, these are not subsidies, they are tax breaks that all corporations receive. Maybe study the industry a bit before you start castigating Congressman Schweikert’s votes. He knows what he is doing, and unlike your contribution (disguised as a constituent email) here is how the “subsidies” or “tax breaks” break down: Domestic manufacturing tax deduction-$1.7billion (designed to keep jobs in the US); Percentage depletion allowance-$1b (the cost of capital equipment); Foreign tax credit-$850m (companies get credit for paying taxes to other countries); Intangible drilling costs-$780m (a tax write off as part of the cost of doing business).
Exxon paid 42% of income before taxes in the 1st quarter of this year—that is $8billion. And what did they do with their “windfall” profits (liberals love to put a bumper sticker phrase on everything they don’t understand just to confuse everyone else)? They invested $7.8 billion into capital and exploration!
Well the Obama administration is going to subsidize one company—yes, Petrobras, invested in by George Soros and Brazil’s state-owned oil company! And this “subsidy” is for Petrobras to drill in the Gulf, where we can’t, and create jobs for Brazilian’s but not us and send tax dollars to Brazil’s economy, not ours. I hope I have done some explaining to you Fred.
[sad]
sockratties posted at 1:05 am on Sat, May 14, 2011.
BKSPIK- Just a little bit more ‘splainin here. You are perpetuating a myth…
The supposed subsidy to Brazilian Oil Company (Petrobras) is really a loan guarantee to be made by the U.S. Export-Import Bank (Ex-Im). This is a self funded bank that works under the oversight of U.S. Congress (not the president) to make loans to foreign companies only when they buy U.S. goods and services. In fact, since 1992 the Ex-Im has earned and sent to the U.S Treasury more than $4.9 billion in fees and interest earned by the Bank. It’s a little like when you have a store credit card that you can only use at that store. The current amount available is $2 billion and it will be interest bearing loans. If Petrobras uses the entire amount available it should result in over 500,000 U.S. jobs.
The Bank is self-sustaining and no taxpayer dollars are involved. So far, Ex-Im has approved a $300 million credit provision to finance the purchase of U.S. oil and gas equipment and services. That $300 M is underwritten by Chase Bank. The Ex-Im Bank's bipartisan Board unanimously approved the preliminary commitment to Petrobras on April 14, 2009, before any Obama appointees joined the Bank. In fact, at the time the Bank's Board consisted of three Republicans and two Democrats, all of whom were appointed by George W. Bush.
Of the 37 million of Petrobras shares held by George Soros’ hedge-fund firm, it sold off 5 million in May 2009 and another 22 million in August 2009, both before Petrobras received any loan funds from Ex-Lm.
BKSPIK posted at 11:52 am on Sat, May 14, 2011.
Socratties: Thank you, but according to the Wall Street Journal, "The US is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance oil exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro". It begs the question: why are we loaning money to drill in the Gulf to a foreign government when we shut down the drilling of oil (east coast, west coast, Alaska, the Gulf of Mexico) from our own US companies? If this administration knew anything about economics or finance they would cease the punishment of our own companies and find ways to support them by removing the regulations that keep our country from energy independence. When you regulate something, you get less of it.
You conveniently did not address the main thrust of my argument which was to knock down Fred's silly arguments against Congressman Schweikert's vote and the mis-labeling of tax breaks as subsidies. Nor, do you address the taxes paid by the oil companies, nor do you address the amount of re-investment that oil companies make into making us energy independent.
Finally,if this administration targets the oil companies as an industry and leaves all other manufacturing industries out of the equation, they might be in violation of the US Constitution where the Congress and the administration are forbidden to single out a specific industry for mis-treatment--it is called a "bill of attainder".[sad]
sockratties posted at 1:49 pm on Sat, May 14, 2011.
BKSPIK - If I didn’t address some point in your post, it’s because I let it stand. I either didn’t take issue with it, consider it trivial, or think that even if I don’t agree, you have a right to your opinion. I’m not challenging you, I’m commenting on points that are important to me.
I agree with your definition of tax break vs. subsidy. I think one of the best explanations I’ve come across is this excerpt from the Washington Examiner by contributor Christopher Taylor 05/02/11 1:41 PM.
“When President Obama gave a speech on the high price of gas, one of the things he called for was for congress to "take immediate action to eliminate unwarranted tax breaks for the oil and gas industry and use the dollars to invest in clean energy.” Usually these tax breaks are referred to as "subsidies" by the press and Democrats who point the finger of blame for high gas prices at oil companies.
“The truth is, a tax break is not properly a pure subsidy.
Subsidies are funds that governments give to someone to encourage and assist them to take an action. By reducing taxes for an action, that can have the same sort of effect, but it is more properly a tax break.
“This is a critical difference, because it reveals a distinction in how people understand taxes and earning. Money businesses earn is their money and taxes are a small portion they send to the government. Calling tax breaks a "subsidy" reverses that fact, turning earnings into something the government owns, while taxes become the government allowing the company to keep some of their earnings.
“So in a sense, taxes could be considered a sort of subsidy to the government, by sending it money to allow it to take actions, rather than the reverse, and as Jack Gerard, president of the American Petroleum Institute, says, the oil industry ends up paying $95 million a day in taxes.
“In the case of oil companies, the tax breaks in question are part of IRS Code Section 199, which allows any business to deduct certain expenses from their tax returns. The maximum allowable deduction is 9% of those expenses, and this is part of the tax code passed in 2004 under the American Jobs Creation Act.
“The idea at the time was to make it possible for businesses to take some risks and if those risks didn't pan out to get a tax break to reduce the pain and cost. This in theory would encourage businesses to expand and hire more.
“These tax breaks apply to all businesses, not just oil companies, but the tax code specifically states that oil companies can only get a 6% break, not a 9%. Naturally since this is the tax code it’s a bit more complicated than a straight cut in taxes, but that's the basic gist of the law.”
BKSPIK - The Washington Post is wrong about the loan. It’s kind of like a Glenn Beck half-truth. The deal they’re talking about is exactly the one I described. It is not a loan to Petrobras for exploration. It is a loan to Petrobras that can only be used to buy equipment and services from U.S. companies (which they can use for exploration and development). That’s another important distinction.
BTW – During the same period that the $2B loan guarantee was being made available to Petrobras by the U.S., China was making them an $8B loan which would guarantee access to 500,000 barrels of oil a day by the Chinese oil ministry.
You added another misconception in your comment to me implying that the tax breaks single out the oil companies. You can see in the excerpt above that is not true except they are limited to 6% vs. 9%.
DemocraticDad posted at 4:30 pm on Sat, May 14, 2011.
Guys, Guys, you're so caught up in your argument about semantics that you've lost sight of the REAL issue!
Whether they are subsidies, or tax breaks, is not the issue. Either way, they are still revenue that the federal government is not receiving from the MOST profitable American businesses in the world today. I understand that the current law gives them the legal right to those breaks (or subsidies), but all that tells me is that the law needs to be changed. On my personal federal income tax form I used to be able to write off credit card interest, but the law CHANGED some 20 years ago and I can no longer do so. The law needs to change so that the most profitable businesses on the planet pay their fair share.
sockratties posted at 6:28 am on Sun, May 15, 2011.
DemocraticDad – While we’re busy missing the point…
The difference between subsidy and tax break is important, both in perception and action.
When the government takes our money and gives it to someone else it’s a subsidy. That’s redistribution of wealth which is one of the problems of creeping socialism. In this case it would be paying Big Oil to do something.
When the government takes less in taxes when Big Oil does something the government wants done than when they do something else, it’s a tax break. It’s not our money until we take it from Big Oil. We take less when Big Oil’s behaviour meets our needs. Like any entity, Big Oil responds to positive reenforcement.
The real question might be, “Why do you think I should help you pay your credit card debt?”
DemocraticDad posted at 12:17 pm on Sun, May 15, 2011.
Sockratties............WHAT?
Where did you ever get the notion that I want you, or anyone else, to pay down my credit debt or anyones credit debt. Certainly not from my comment! I was just showing an example of Congress's ability to make changes through legislation that affects their ability to collect or retain revenue, that's all.
And by the way, I do agree with you that the government giving OUR money to Big Oil is socialism. That is the crux of the problem!
sockratties posted at 12:43 pm on Sun, May 15, 2011.
Thanks, DemocraticDad... I needed that! (chuckle, chuckle)