Getting Even with ExxonMobil
Posted by Robert Rapier on May 4, 2011 - 10:33am
It is no secret that consumers are suffering from very high gasoline prices. And as a result of these high prices, ExxonMobil just reported a first-quarter profit of $10.7 billion — 69 percent higher than a year ago. The national level of disgust and anger is approaching record levels as we watch the loss of our hard-earned dollars become Big Oil’s gain. The question is, what are we going to do about it?
Before discussing how to deal with this, we should first discuss what it is that we are actually trying to do. I believe the very simplistic view is that by going after the oil companies, they are going to relent and lower gas prices. Thus, their profits will return to ‘normal’ levels along with our gas prices. We want a return to the good old days of sub-$2/gallon gasoline. But most of the proposals that are being floated won’t do anything to relieve high gas prices, although they may have an impact on oil company profits. If that’s the case, then what is the point? I would say that it is simply feeling like justice was served. We want to get even with Big Oil.
Take Their Subsidies
It seems preposterous that an industry as profitable as the oil industry receives subsidies. But does anyone know what they actually are? CNN just did a story breaking them down, and you might be surprised at some of the other companies that benefit from these ‘Big Oil’ subsidies.
But we should also ask “What is the the subsidy supposed to accomplish, and what is the impact of removing it?” It isn’t a question of whether a company making billions in profits “needs” a subsidy. Even companies that make billions of dollars evaluate projects on a case-by case-basis. Some of those projects may have poor economics, and companies won’t use their billions to subsidize projects with poor paybacks. So the question is, “Is the subsidy encouraging the company to do something that we would like them to do, and that they otherwise would not do? Is the net impact to create more jobs and tax revenues?” Those are the questions that should be asked, and if the answer to those questions is “No”, then that subsidy would appear to be a waste of money.
Section 199 – The Biggest Subsidy
The biggest ‘oil company subsidy’ — amounting to $1.7 billion per year for the oil industry — is a manufacturer’s tax deduction that is explained in Section 199 of the IRS code. This is a tax credit designed to keep manufacturing in the U.S., but it isn’t limited to oil companies. It is a tax credit enjoyed by ethanol companies (have you ever heard anyone call it an ethanol subsidy?), computer companies (we are subsidizing Microsoft and Google!) and foreign companies that operate factories in the U.S.
One never hears of proposals to entirely do away with Section 199. Apparently, since this tax credit was designed as an incentive to keep manufacturing in the U.S., many would feel that eliminating it for all companies would provide less incentive for them to keep their factories in the U.S. Some of the same people apparently don’t believe this reasoning will apply with the oil industry.
So, the proposal is to disallow a tax credit to Texas-based ExxonMobil for their U.S.-based refining operations, while leaving it in place for foreign-based firms like Mercedes, BMW, and Toshiba that operate factories in the U.S. After all, as one staffer from the Center for American Progress smugly (and naively) put it in the CNN story, “What are they going to do, move the oil field to the North Sea?” Exactly. They are trapped and there isn’t a thing they can do about it. They can’t move their oil fields, so we can tax them silly. Nor can they move their drilling rigs or refining operations. Wait, I guess they could move those, but will they? Well, this is the same model Hugo Chavez used to mismanage Venezuela’s oil industry into the ground and dry up foreign investment in the oil industry there. He thought that since foreign oil companies were trapped, he could tax them at will. Instead, they just left.
If we make it less profitable for oil companies to operate here than in foreign countries, surely they wouldn’t shift operations out of the U.S. as Halliburton did in 2007. OK, they might, but so what? It’s Big Oil we are talking about here. Who cares if they leave the U.S.? At least if we shift those refining jobs in Texas, Louisiana, and California to the new refineries being built in Saudi Arabia, we will no longer have to listen to reports of windfall profits, since Saudi Aramco doesn’t publicly disclose their profits.
Other Subsidies
Another category of subsidies is a percentage depletion allowance. It is worth about $1 billion a year for U.S. oil companies. Again, it isn’t limited to oil companies; other extractive industries are able to take the percentage depletion allowance. It is similar to a depreciation allowance in other businesses. What will be the net impact of eliminating this subsidy? It will make the costs of operating a well somewhat higher, which will probably mean that wells will stop producing at an earlier stage than before. After all, over time as wells are depleted the oil becomes more expensive to extract. It stands to reason that if the costs are even higher, the wells won’t produce as long. However, much higher oil prices should provide an incentive to continue producing the wells longer than if oil prices are lower. But oil prices rise and fall, and the net impact will be to make an oil well in the U.S. less competitive against an oil well in Saudi Arabia. This will impact small producers more than Big Oil, but at least it will help realize the goal of getting more of our oil from foreign countries where we don’t have to read about windfall profits.
Another category is the foreign tax credit. Again, you may be surprised to find out that this ‘oil subsidy’ isn’t limited to the oil industry. But it is worth $850 million to the oil industry, and is designed to make sure that profits that have been taxed by foreign countries aren’t taxed again when they are returned to the U.S. Eliminating the foreign tax credit will provide an incentive for oil companies to keep the profits out of the U.S. and reinvest them abroad, helping to accomplish the goal of shrinking the U.S. oil industry.
The final category of subsidies covered by the CNN story is intangible drilling costs (IDC). Once more, like all other industries the oil industry is allowed to deduct the cost of things like wages and is worth $780 million per year. The story suggests that most businesses have to take these deductions over the lifetime of an investment, but the oil companies get to take these deductions all in the first year. Someone in the oil business recently explained how the IDC works at The Oil Drum:
“The elimination of the IDC tax credit would have a huge immediate effect. The IDC is a significant incentive to drill. About 40% of the cost to drill a well is IC (intangible costs). The IDC allows a company to deduct that amount from the taxes owed…not the earned income. So if a company owes the feds $100 million in taxes and spends $100 million in IC it can subtract $35 million (IC X 0.35) from its taxes. Defiantly a huge break. So they only pay $65 million in taxes. But take note: the ICD doesn’t increase the company’s revenue or profits: it allows them to spend more money drilling. If they don’t spend it drilling new wells they lose it. That’s the logic behind the IDC tax credit: instead of letting the govt spend the money the oil industry gets to drill more wells. That was once considered a good thing. The effect on drilling activity: the economics of each project is evaluated on its own merits. This evaluation includes utilizing the IDC. Eliminate it and a number of projects become sub-economic and won’t be drilled.”
So the IDC credit clearly provides some extra incentive to drill, but are those extra incentives needed? President Obama says no, except in his recent energy policy speech in which he said the U.S. should be “finding and producing more oil at home” and that his administration would “provide new and better incentives that promote rapid, responsible development” of oil and gas. One might think an incentive that encourages companies to offset taxes owed by drilling more wells might be just such an incentive, but apparently the Obama administration knows better.
Bottom Line – 1.8 Cents Per Gallon
In a nutshell, a large chunk of Big Oil’s ’subsidies’ are the same as those of Big Ethanol (which also has direct per gallon subsidies), Big Computer (Microsoft, Google, etc.), Big Auto, Big Pharmaceutical, and all the other industries large and small. They are not like their subsidies, they are in most cases the exact same tax deductions from the same tax code. The oil industry already pays an estimated $36 billion per year in U.S. taxes, and they have a higher tax rate than that of Microsoft or Google — both companies with higher profit margins than those of the oil industry. But those who argue that we preferentially eliminate, for instance, Section 199 and the foreign tax credit for the oil companies are in effect saying they have no problems subsidizing industries that are more profitable than the oil industry.
But let’s say we follow through and eliminate the $4 billion just for the U.S. oil industry. U.S. refineries currently process about 14 million barrels of crude oil per day, and $4 billion works out to be 1.8 cents per gallon of crude oil processed through those refineries. Is that going to reduce the price you pay at the pump? Of course not. Will it cut into the profits of the oil companies, “punishing” them as we hope to do? Perhaps. Will it treat the oil industry differently than other industries, some of which enjoy higher profit margins? Definitely. Will it provide an incentive for oil companies to shift manufacturing out of the U.S.? Will it shift some competitive advantage to Saudi Arabia and Venezuela, both of which we are already highly dependent upon for our oil? Yes and yes.
The Naive and the Hopeful
I get that it doesn’t seem fair that ExxonMobil’s record profits are coming out of our pockets. But the current proposals won’t do anything to combat what is coming out of our pockets. It will ensure that more of that profit — and the jobs that those profits support — are shifted to foreign suppliers. As much as people hate ExxonMobil, would they rather those profits were being reaped by Saudi Aramco? That is the alternative.
I understand that some believe that singling out the U.S. oil industry for punishment would help level the playing field for alternative energy companies. I think the dream of many is that if we make U.S. oil companies uncompetitive, the alternative energy sector will flourish and make up for the lost production from the oil industry. The future can be cleaner and greener and the only losers will be the oil industry. This is an incredibly naive view. In fact, look at the situation in Europe. Gasoline costs $8 to $10 a gallon, and cars are still predominantly fueled by petroleum. And it will be the same in the U.S. if gasoline rises to $10 a gallon.
There are effective ways of making renewable energy more competitive relative to oil. I have written about some of them. What the current proposals will do is to disadvantage U.S. oil companies relative to foreign oil companies. That means a shift alright, but not from U.S. oil to U.S. renewable energy. There will be a shift from U.S. oil to more foreign oil and refined products.
How to Really Get Even
It is nice to think that we can force Big Oil to sell fuel at the prices of a decade ago and limit their profits, but that isn’t the way the world works. Big Oil doesn’t have to sell fuel period if we single them out for punitive tax treatment. And if they don’t, we will get our fuel from Big Foreign Oil. After all, refineries do close and oil companies do go out of business.
The proposals that are currently being floated for singling out the U.S. oil industry for punishment as a result of their profits simply feed on the public’s anger at these companies. They don’t represent good energy policy; indeed they aren’t about energy policy at all. They are about revenge. We want to stick it to ExxonMobil — even though the proposals would if anything increase the price you pay at the pump and ensure that more of our oil comes from overseas.
But there is a way that every individual can stop feeding ExxonMobil’s enormous profits. Stop buying their product. The reason they are so profitable is simply that the public keeps buying their product even as the price has doubled over the past few years. I understand that we are all dependent to one extent or another on oil, but most people use more of that product than we need to. Because of changes I have made in my own life, even though Big Oil is making record profits, they are profiting less from me than they were a decade ago. That is because of personal choices I made that you can make too. You can become more fuel efficient. You can use your car for fewer trips. You can carpool and use public transportation. Those things will have a real impact in reducing your contribution to Big Oil’s profits.
But that would require that we make some actual changes, and our collective laziness is too great for that. We want to keep consuming as we always have, while sticking it to the companies that make that consumption possible. But if you won’t make any changes in your life, then you can expect to continue transferring an ever increasing portion of your budget to Big Oil’s coffers. We might be able to drive the domestic oil companies out of business — which by the way support an estimated 9.2 million jobs — but you are still going to pay more (to Saudi Arabia and Venezuela) unless you use less. Of course your other option is to buy ExxonMobil stock. If you can’t help but feed your money to the beast, you could at least invest in them and get some of that money back as their stock value appreciates.
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
The above from the CNN report you pretty much paraphrased except for this part, my emphasis--certainly looks to me like this is being abused.
In addition, changing the foreign tax credit to a deduction would actually tend to favor domestic production to a minor extent. This whole issue is about tax fairness and reducing our deficit. We want Exxon to thrive and produce a lot of oil so they can pay their fair share. It is counterproductive to put this under a headline of "Getting Even With Exxon-Mobil."
Reduce the deficit? Address a Republican talking point?
No, I prefer a check in the mail. These aren't taxes, this is getting paid for what is ours.
The problem is that this is propaganda. It's bullshit. ExxonMobil doesn't make any decent percentage of the cake : barely 2.5% is for their bottom line (and this is exceptionally high as a result of fast-rising prices, normally they barely get at 1.6%).
Let's assume :
1) elimination of all US oil operations is free
2) doesn't cost jobs
3) doesn't cost the economy
4) doesn't impact supply lines
5) assume that profit + all tax credits = 15 billion (a very high number)
6) govt. doesn't lose any taxes as a result of this
So then by going 100% communist on the oil sector we could make oil cheaper by 0.09 dollar per gallon (15 billion / 14 million barrels per day, expressed in gallons). If you attack anyone for high oil prices, then at least do the decent thing : attack Saudi Arabia (or Iran, and ...).
Would a war on Saudi Arabia to steal their oil be cheaper than buying the oil from them ? Probably. Would such a war significantly lower oil prices ? Probably. And DON'T give the country control over their oil after conquest like Bush did. Let's get serious about stealing, or not steal at all.
Would a war on ExxonMobil lower oil prices ? No. There's no way the 9 dollarcents savings outweigh the added costs that the government will bring to the sector.
So if we're going to destroy things to make oil cheaper, let's please talk about stealing it from Saudi Arabia ... who have margins of (at least) 50%.
Well, there's propaganda all around, then. XOM is the richest corp since the invention of money. Oil exploration and extraction is an extremely mature business. There is no reason to subsidize, give tax breaks to, or in any other way coddle such a monstrosity.
Speaking of propaganda, part of what it uses its obscene profits for is to dis-inform the public and policy makers about AGW and, yes, PO.
These very basic facts are so very blazingly obvious and so deeply morally disgusting and repellent to anyone with a scintilla of honestly and integrity, one has to wonder about the motivations of at least some of the apologists for XOM on this thread.
That's great. The part I take issue with is the "let's curtail those profits to make gas cheaper". That's a lie. Destroying ExxonMobil won't make gas cheaper by a single cent.
If you want to "bankrupt immoral companies" then great, I do think this will be a LOT of work though. But please don't lie about your "intentions to lower gas prices".
What a pathetic strawman. The post you commented on said absolutely nothing about lowering gas prices. Derp.
Look at the top of this page. Read the first paragraph of the article ...
You've got to be joking. The fact is that they are the richest corporation since the invention of money and you are trying to make it sound like they are BARELY SURVIVING.
Eliminating subsidies has nothing to do with making gas cheaper. It just has to do with helping fund a Federal government that is deep in the red by eliminating a subsidy given to a company that clearly does not need subsidies.
Exxon Mobil's 2010 profit of 30.46 billion was 16.5% of its equity and about 8% of sales. http://en.wikipedia.org/wiki/ExxonMobil#Revenue_and_profits
It paid federal income tax of $1.27 billion, about 4.1% of its net profit. http://tax-evasion.org/2011/04/cagle-post-whos-2-in-tax-avoidance-how-ab...
If the company paid the standard corporate tax rate of 35% it would have paid $10.66 billion.
Maybe you are in the industry and looking out for number 1. If not, you have been drinking a lot of koolaid.
Are you trying to be disingenuous? Every number you posted is wrong. You're mixing and mashing different filing periods together as if it were all Q1 2011 figures. Why not just look at the actual filing rather than what wikipedia says.
http://yahoo.brand.edgar-online.com/DisplayFiling.aspx?dcn=0001193125-11...
For Q1 2011, they had $10.65 billion net income. That's a lot, right? Well, Total Revenue was $114 billion, which means that's about a 9% net profit margin. That is hardly a "windfall." I don't see anyone screaming for windfall profits tax on AAPL's 24% net profit margin, or GOOG's 30% net profit margin.
Additionally,
Income taxes: $8,004 million
Effective income tax rate: 47%
Sales-based taxes: $7,916 million
All other taxes and duties: $10,316 million
Total taxes paid: $26,236 million
see also:
In Q1 Exxon Paid Almost $1 Million per Hour in Income Taxes
http://seekingalpha.com/article/266554-in-q1-exxon-paid-almost-1-million...
My figures are for all of 2010. This is more representative than your figures, which are for a single quarter. The so called total income taxes to which you refer are a propaganda figure because they are mostly foreign taxes. The foreign income taxes are really royalties, not taxes. It is what you pay to buy the oil in the ground from the foreign government that owns it. See Luke's comment at beginning of thread. Royalties are a deductable business expense, but should not be a tax credit.
Profit on equity (16.5% in 2010) is the true measure of percent profit, not profit on sales, because POE shows what the investor gets back for his investment. A very high volume business like a grocery store chain typically makes 1% profit on sales, but their profit on equity in a good year is comparable to ExxonMobil, because they turn over their inventory so quickly.
I always suspected that big grocery store chains make significant profits. They turn over their inventories so quickly and essentially have cashiers just ringing up purchases constantly. Compare that against sit-down restaurants which have a ridiculously low throughput in comparison. If you have a commodity that the vast majority of people require day in and day out, you have a constant revenue stream and the potential for profit.
USDA used to have a small extension program called the National Sustainable Agriculture Information Service, formerly known as the Appropriate Technology Transfer to Rural Areas (ATTRA) program. The FY2010 budget was $2.8 million, and the FY2011 budget was $2.8 million until enactment of the most recent Continuing Resolution. The budget for this program is now $0.00, as in nothing.
ATTRA provided educational resources for (mostly small) farmers who wanted to adopt sustainable agricultural practices.
My favorite new statistic: ExxonMobil netted $2.8 million profit in less than 34 minutes in 2011 Q1!
Federal support for industrial agriculture continues apace.
Petrol here in NZ hit an all time high today of NZ$2.21/L. We have a motoring organisation here called the AA (I imagine an off-shoot of the UK version). Everytime the price goes up they rail against the petrol companies. Never once have I heard tham question what might be actually underlying the rise or making meaningful suggestions about longer term solutions motorists might take (get a more fuel efficient car for Christ sakes!).
Sounds like another non-solution from the 'Drive baby Drive' crowd. I propose putting a $5.00 a gal tax on motor fuel and using the money to invest in paradigm change at all levels of our society.
I'm happy to report that despite the fact that I could never imagine something like this happening where I live, this was just in the local news!
The UK AA rails not against the oil companies but against the $5 a gallon (approx) fuel taxes we pay in the UK.
I recently paid $9 / us gallon for diesel fuel.
However, the fuel tax is great. I brings in a lot of tax for the government, which would otherwise have to come from some other source. It has been around for 20 years and has resulted in UK /European cars being smaller and much more efficient than US ones. It has not stopped us driving. It has not made our cars less safe.
We are a smaller country, and have more compact cities, but we are just as lazy and just as fond of gas guzzlers as status symbols. We also have an expectation of personal oil driven transportation, especially among the young.
However, the biggest single cost for most young drivers, is not fuel, tax, or the car. It is insurance, with simply prices many young people off the roads, and results in thousands, maybe millions driving illegally without insurance.
I recently bought a small (by US standards) diesel car which seats five, as the only vehicle for my family of four. It is great. Real world it gets better than 50 mpg (US) 62-65 mpg (imperial). The only downside, is that it is so cheap to drive, I am driving more often that strictly necessary...
Sounds like a good example of Jevon's Paradox at it's finest. This is where paradigm change at every level of society has to come in. We need to ostracize, (not trying to be personal here)those who take the car when not necessary. We need to make people who drive cars feel like pariahs. We need to somehow make the private automobile become the poster boy for the epitome of 'Un Cool'. Disclaimer: I myself still own and drive and 11 year old compact car here in the US. Still trying to drive it less and less. If it finally dies I don't plan on replacing it.
Picture I took at a train station in a small German town last summer
http://i289.photobucket.com/albums/ll225/Fmagyar/Germany%20Solar%20and%2...
The Amsterdam bicycle parking lot at their Central Station hold thousands of bikes:
http://www.google.com/imgres?imgurl=http://byrmartin.files.wordpress.com...
We need to see what measures they took and take to encourage biking. I would like to mostly lead with carrots, but their may have to be a few sticks attached. We certainly need to stop making car travel any more convenient than it is.
I agree that driving needs to be seen as undesirable. However, attempts to make it seem socially unacceptable have singularly failed, as conspicuous consumption is a primal indicator of genetic health.
My preferred approach would be to socially equate driving with ill health - something you only do if you are so ill, weak and feeble that you are incapable of travelling any other way. We should legislate that cars be packaged the same way as cigarettes in the UK, in uniform plain white with graphic photos of cripples and invalids on the sides.
I live in Cambridge UK and the station also has cycles clamped to every available stand, post and piece of fence for a 100 metres around. Unfortunately, most of these cycles are rusting hulks, abandoned by departing students as disposable consumable items not worth recycling.
The UK is facing long term recession and falling real terms incomes. In some ways it cannot come soon enough.
I have more faith in our marketing and advertising knowledge than you perhaps. I'm not in any way endorsing their tactics when applied to creating artificial consumer needs. However we have acquired an enormous body of knowledge in how to manipulate people. Perhaps it might be time to use that knowledge for some good?
Smoking used to be considered a sign of some status at one point now we almost equate smokers with being junkies. One of the ways we have achieved that was by using the same tools the we used to market cigarettes, against their use.
Your sentiments are the same as those espoused by every benevolent dictator who has ever used propaganda to control his populace. Manipulating people for what you deem to be the "greater good" is almost certainly a bad idea, even if you genuinely believe it is for the greater good. China's leaders no doubt genuinely believe that censoring the Internet is good for the long-term sustainability of their society. That doesn't make it the right thing to do, though.
There is only one way you will be able to convince people to use fuel efficient vehicles and use them less often: when fuel costs are so exorbitantly high that most people have no choice. Be patient, young Jedi, that time is fast approaching.
I think you misunderstand what I mean.
Right now we are already manipulating people by selling them things like bags of specially flavored salty potato chips in colored aluminum and plastic packages as food, and carbonated water sweetened with corn syrup and laced with caffeine as drinks. All I'm saying is, use that same kind of manipulation through advertising and sell a product to the public. The product would be: 'The notion that driving ain't cool'
Yes, this may be construed as a form of propaganda. But if you have a problem with it then why are you not up in arms already about all the artificial needs that corporations create for us through advertising? I think you'd be rather hard pressed to argue that what they are doing is benevolent and that they are interested in the greater good. It's all about profits to the detriment of the commons and the
suckerspeople.I'm afraid my patience is very quickly running out!
Probably because when governments go down that road they tend to quickly progress to the "shooting people who disagree" stage.
OK, so how many smokers has the US government shot in the past year for smoking? For having the flu? For not immunizing their kids? For buying a gas guzzling truck? For littering? Do you realize we've had public marketing campaigns against all of those for decades?
For buying a gas guzzling truck?
I must have missed that one, but I sure do see a lot of pickup commercials--aimed at as many slices of the market as can be targeted. Maybe I notice them more as I've had a 1950, 1955, 1970, 1974, 1988, 1999, and currently 2003 GMC or Chevy truck (the 1955 was a two ton with a long hay rack). That jump past the sixties shows a little more affluence on my part as I could afford quite a bit newer used trucks by the late 70s.
They have been right useful tools in the past--but my need for a truck has diminished the last handful of years. So I cut my driving down hard. I did that more because I just didn't want to run up the miles and need a new truck anytime soon (possibly as in this lifetime)--higher gas prices really haven't made all that much difference once I adopted that mindset.
It wasn't a very good campaign, but it did exist.
http://en.wikipedia.org/wiki/Esuvee
For buying a gas guzzling truck? For littering? Do you realize we've had public marketing campaigns against all of those for decades?
It really looked that campaign was to teach you how to safely drive a gas guzzling truck so you could live long enough to buy another one.
Good points. I am always amazed that so many are so sure that absolutely everything government does will lead to horrid results while also seeming to deny that anything industry does could ever have any bad consequences. Can't we see both as possibly threatening agglomerations of power that can be made to serve the common good with enough regulation (for industry) and citizen involvement (for gov)?
So it's OK for private industry to use those same tools to artificially create demand (known as marketing), but not OK for the people of the country to use the same tools? Since when is censorship a form of marketing? Why is private propaganda OK but public marketing a problem?
Have you read the original Hirsch report? Waiting until the prices rise so high that people have no choice is a recipe for disaster.
I don't know what paradox to term it, but it's just as true as Jevons', that the more costly fuel gets, the more that its use is restricted to wealthy people, the more desireable the use of it becomes. (see "indicator of genetic superiority" above). The higher the cost of fuel becomes, the more that unpaired mating-age women will admire the vehicles and drivers using it.
The only real solution is to revise things so that young women despise men proportionate to the amount of fuel they use. A real tough nut to crack.
The only real solution is to revise things so that young women despise men proportionate to the amount of fuel they use. A real tough nut to crack.
Len, you are spot on, and that sounds like a great challenge for the marketing/advertising industry. unfortunately, that whole industry is geared to getting people to do/buy more, not less. And then they have tried to get people to do less, like smoking, it has been typically unsuccessful.
Staying within this interesting world view that it's all about the single young women, maybe an alternative like EV's will do the trick, though not many single young men can afford them.
i think at the moment what the young women would likely value most in a potential partner is a stable job.
I don't know where you are but here in California the anti-smoking campaign has been pretty successful. My daughters think smokers are real losers. And smoking rates for adults is about half of what it was in 1985.
And we didn't have to shoot anyone.
Non-smoking is an easy sell, because smoking is a hard sell.
Cigarette smoke smells awful if you aren't a smoker.
How old are you?
Your Doctor Wants You to Smoke
ROFLMAO. See, I find that the ad matches up well, in its perverse way, with reality. That's 'cos I used to sing in a choral group that sent breakout ensembles to holiday parties as a means of outreach and fundraising. So here's the biggest laugh: guess who put on the smokiest parties, the ones where you could cut the air with a knife... no peeking until you've made your guess.
No, not country clubs. Not private employers, not even at parties held at bar-restaurant places. Not civic or arts associations. Not well-to-do families. Noooo, none of the above. The thickest smoke by far, as thick as in any bar in town, was to be choked on at on-premises parties for doctors and nurses at local hospitals; it took a day or so to recover, every time. It stayed that way right up until the year in the 1990s when smoking was banned in workplaces.
The rank hypocrisy that turns up time and again among supercilious "experts" indulging themselves in self-righteous run-everyone-else's-life know-it-all nagging - be it with respect to smoking or other more current issues - simply beggars belief.
I'm an ex-smoker.
First, I don't for a moment think that those advertisers who have the Big SUV and Pick Up accounts are going to suddenly give up their juicy paychecks and start a campaign against driving ICE powered vehicles. So no, this is not in any way a challenge for the marketing/advertising industry at all.
What I was suggesting, is that someone or a group of people interested in changing public opinion against the use of automobiles would have at their disposal a vast depository of real world studies on which they could draw should they wish to embark on such an endeavor. In other word they wouldn't have to start from square one to learn what works or doesn't.
Curious that you would say that advertising or propaganda if you will, did not work when they used it to try to get people to smoke less. The exact opposite is the case! It has worked pretty darn well. There aren't too many people left who think smoking is a good thing even if they themselves actually smoke.
As for sex, selling, that is a well known advertising technique with a very successful track record. I'm pretty sure that if as a result of some kind of advertising campaign it became apparent that to be attractive charming and successful one needed to eschew the gas guzzler and ride that sleek new recumbent to attract the opposite sex, than a well designed marketing campaign based on that concept would probably have a better chance of achieving it's goal.
Well, a lot of really talented advertising folks have certainly joined the anti-tobacco campaign. I only see a little commercial TV, and only in California for the past few years, but some of the product is really compelling. And we're making the tobacco industry pay for it.
I don't know if any of the agencies involved used to work for RJR, etc., but, maybe... after all, we severely limited the upside of those accounts.
We could do this. We just need to convince opinion leaders that it's a good idea, and create a set of choices that make this one seem attractive to the energy and auto industries.
Fred, I'm not suggesting those companies with the SUV /Pu accounts would do it, but that if the opportunity was presented to another company that didn't have those accounts, I think that would be a challenge they couldn't turn down. Now whether such a campaign would achieve anything is a different question.
AS regards smoking, I remain unconvinced that the advertising campaigns, which have run for decades, have really been the deciding factor. I think it is the health effects that have been the deciding factor - most young healthy people want to stay that way (both young and healthy). Of course, young people are becoming unhealthy by diet, but that's a different story.
After a decade of working in demand side management for water and electricity - where my job is to make people use less - I have to say I am of the opinion that :"marketing" and "education" programs achieve little, if any, real change. Some people are pre-disposed to being efficient with resources, and some not, and some, that if they can afford them, then they can use them. We can make some generational changes, but even that is harder - we can teach stuff to kids in school, but getting them, as adults, to voluntarily do without when there friends are doing with, is very hard.
That is why I am in favour of well thought out efficiency standards (of which CAFE is not) and appropriate mandates. In the water supply business, every water authority knows that occasional water restrictions do wonders for preventing excessive consumption, for for preventing planning of excessive consumption. If we had occasional restrictions of fuel supply - last one was in the 70's - I expect that too, would do wonders for fuel efficiency.
We have four decades now of soft measures to try and improve fuel efficiency and reduce oil use, and none have really worked, except, perhaps the ethanol mandate which has displaced oil, though at other costs.
I see no problem with shaking things up a little, but unfortunately, in the US, at least, this is not going to happen - though it is exactly what is needed.
The only real solution is to revise things so that young women despise men proportionate to the amount of fuel they use
So how would this stop married men from buying F-150's and Silverado's (still the 2 best selling cars in the US)?
IMHO, what young women do, older women also do. And if wives despised F150 chrome-carriers, a lot less of them would be sold. To say nothing about the motivations for middle-age men to buy e.g. Ferrari's etc.
I think getting the meme out there that these huge machines are clearly compensation for short-comings (so to speak) elsewhere may help.
But really, there is such a huge juggernaut of advertising pushing these things that has been going on so long, even if all such promotional adds stopped tomorrow, it would take quite a while for the culture to shift. And the ads aren't stopping tomorrow.
The status-seeking game doesn't stop when people get married, and even if someone is unavailable, there's still status in being sexually attractive.
I'd also note that for a lot of people there is no such thing as unavailable.
"...most of these cycles are rusting hulks, abandoned by departing students as disposable consumable items not worth recycling."
Ah, Spring in the Berkeley of the Midwest, but even more so. Every Spring the campus police tag the parked bikes, and someone eventually gets around to removing many of the ones that stay tagged for a while. Plenty of rusting hulks, and no really good bikes of course, but a fair portion could even be made usable.
Here, once in a blue moon, instead of leaving the bike, they may instead break it up, and even stomp on the bits, as a celebration of graduation into adulthood. That ought to serve as a political caution to those who seek to ram bike riding down others' throats (as opposed, say, to simply making it more possible to do it) as some sort of self-righteously forced atonement for some sort of hypothetical original sin.
They took two blindingly obvious measures:
1. They settled on one of the flattest spots on the entire planet, namely the North Sea plain.
2. They settled in a place with a fairly benevolent maritime climate, with, from that chart, a record high temperature of a mere 92 or maybe 93F, and with the average high above freezing all year round. No dangerous heat, no dangerous cold. Some freezing in the winter, but at least the snow often melts off, rather than the December snow and ice lingering, being piled upon two or three times a week, and developing ever deeper hazardous ruts, until April.
Those measures would be absolutely impossible to replicate in most of, say, North America. I have been given to understand that they have also taken other measures including:
3. Rather strict liability for the driver of a motor vehicle which strikes a pedestrian or cyclist.
The risible penalties typically applied in the USA for such strikes suggest to me that while (3), at least, could in principle be replicated here, it would be both futile and politically impossible. As my driving instructor was fond of lamenting, serious traffic offenses are only rarely prosecuted vigorously, because prosecutors and defense attorneys both know very well that a jury will think, "there but for the grace of God go I", and find some way to let the defendant off.
"1. They settled on one of the flattest spots on the entire planet, namely the North Sea plain.
2. They settled in a place with a fairly benevolent maritime climate."
Yep, I was going to mention these. But really the first can be overcome with electric bikes. And as for the latter, I live in one of the coldest major cities in the US, and there is a growing cadre of people who bike right through the winter. That's what warm clothes are for. To paraphrase the old "NYNY" song, if they can do it here, they can do it anywhere.
I like your last point. There have been a recent spate of injuries and deaths of this kind here. In one case an intentional homicide charge was filed after the guy was overheard bragging about what he did, iirc.
As with everything else, the more people identify as pedestrians and bikers rather than drivers (even if they do still have to do some driving once in a while), the less sympathy killers in cars will have. It strikes me whenever I cross a street or bike on one that all these people are going around with extremely lethal weapons that are often pointed toward me, any of which could do me in or gravely injure me with a slight twitch of the hand or push of the foot.
If there were a class of people who insisted on going around with loaded shotguns always cocked and generally pointed toward others, how sympathetic would jurors be if one of those went of in someone's face, even if it was an 'accident'?
I thought it was the NZ Govt's fuel duties they tend to attack rather than the oil companies.
Generally I think its the companies they go for:
http://www.nbr.co.nz/article/petrol-prices-record-high-ne-92287
One of the best, most clairvoyant articles I've read on this site in the last year.
There's not much I can add other than Bob Hirsch has also covered this aspect in his latest (2010) book. National Oil Companies(NOCs) dominate the world market for oil. The Private Oil Companies(POCs) have a much smaller piece of the pie these days, it's not much more than 10-15 %. It's not like Exxon and the others are setting much of the price of gas for the world or even the U.S.
They have to follow the market, which is largely set by supply & demand over the long term but in the short term NOCs have much more leeway of much they want to supply to the world and at what price.
But it is convenient to scapegoat The Big Bad Oil Private Companies. It makes us feel righteous, facts be damned.
A gallon of fuel substitutes for one hell of a lot of human labor (try pushing a car up a hill). In dollar terms, nature's fuel is still spectacularly cheap!
agree 100%. But(#) our economy must 'adjust' to higher oil prices. Wife came home from the store yesterday. Sour cream $2.19 up from $1.59 or .99 on sale. Men's underwear 3 pk getting tagged as she was there from $12.59 up to $15.59.
It's like getting squeezed by a boa constrictor, everywhere you look prices are rising.
Our economy still contains many non essential occupations that were able to survive because of 'loose' money lending and cheap(er) energy.
This 'thing' we are in is attained self-reinforcement. Many people are starting to realize this. Look for more unemployment, underemployment, bankruptcies, defaults.
Underwear? I can do without underwear. Microbrewery BEER has gone up 50% in the last two years. That's serious, socially destructive, inflation.
"In dollar terms, nature's fuel is still spectacularly cheap!"
That is actually my next essay: "How Much is Oil Really Worth?"
Few here think it is not. We are just not sure that oil companies, many of whom are involved is some of the most despicable types of lying and misinformation about the most important issues facing humanity and life, should be allowed to make unspeakably enormous gobs of money out of a bad situation.
Well, yeah, but... just how smart is it to push a car uphill to carry a 150-200 lb. human to the top?
Well, given abundant "energy slaves", and a surfeit of hysterically moralizing attitudes demanding absolutely perfect ironclad "safety" at any and all cost, then not only is it smart, it's absolutely perfectly ironclad smart. Better still, it's even biomimetic (a buzzword that ought to pseudo-greenwash it quite nicely, no?) - think for example of heavy conch shells, which keep a small quantity of soft delicate innards somewhat "safe". And the really nice thing about the car is that you can shuck it off whenever you don't need it, something the conch can't do with its shell.
In other words, in today's real world, dumb as a box of rocks.
Mmmm. However, when you shed your carshell, you'll find yourself in an environment built to accommodate shells, not delicate, naked you.
Car-free is great, but if you live in the U.S. you're eating oil too. Unless you're eating locally grown food (and even then) you're still completely dependent. Personal choices are no subsitute for collective action (though I'm not saying you made that claim). It's just that I read your post hoping for more than "if we all drove less etc." Anybody reading this is probably right with you there. And *then* what?
Move onto a sailboat like ths well-prepared guy? http://www.energybulletin.net/node/23259
Great work Robert. Like many not in the oil patch I've never seen all the details in one spot. I'll toss out another disturbing fact for those who want to hurt XOM (or any other particular Big Oil). The gasoline you buy at an ExxonMobil station didn't necessarily come from an XOM oil field. It might not have even come from an XOM refinery. There really isn't anything such as XOM gasoline in one sense. All gasolines are the same except for the particular additives. I pass by refineries all the time. One can see an XOM tanker filling up right next to a Chevron tanker. But they'll add Chevron's additives to its load (Chevron's my personal favorite) and add XOM's additives to its load (one of my least favorites). And this is happening at a Valero refinery that might, at the same time, be offloading a Shell Oil ship carrying a load of Venezuelan crude produced by Hugo's NOC. And the profit you give up at the pump? Perhaps not a single penny went to ExxonMobil. If it's an independent gas station XOM has already made their profit by selling whole sale to the station owner. This scenario doesn't always work like this but OTOH it's impossible for the public to know exactly what the situation is.
Will cutting a tax break like the IDC make a difference? When we decide to drill or not drill a particular we'll the decision is based upon that one project's economic analysis. The decision has nothing to do with how much profit my company has or hasn't made. The fact that I may have $250 million budget available to me isn't going to lead to risk $4 million to drill a well that doesn't meet my minimum economic value. What costs do I use to do the analysis? The net cost which includes the IDC. Remove the IDC and the economic value of every prospect I evaluate is diminished. This will mean some well won't get drilled. Works the same way if my drilling costs go way up. Besides diminishing the economic value due to either factor it also means I can't drill as many wells with the higher net costs.
So will eliminating all the oil field tax breaks substantially hurt our efforts to change PO? Hell no! LOL. I know as well as any here that we can't drill our way out of PO. Might reduce the impact a very tiny near invisible bit but that's all IMHO. That's not why I favor not changing the tax code. It's very simple: do we want companies spending more money paying salaries, subcontractors, local/state/federal production royalties, private mineral owner royalties, etc. Or do you prefer to send that money to Washington and let the decide how it's spent. But some might prefer to do just that. Everyone has a right to their preference.
Think about this: the govt risked 100+ times (compared to the oil patch "subsidies" yearly costs) as much tax payer money to keep the auto industry alive. And for the moment it looks like the gamble paid off.
Rockman - I've always bought whatever regular grade gas was being sold at the lowest price in the belief that:
- any difference in additives, etc., between brands was negligible (essentially parallel to the non-functional "new, blue, crystals" added by marketing to laundry detergents), and
- there was no performance or mileage difference between grades, so long as your engine ran well on the lowest grade.
Is there any reason to change?
Merril - Just one experience on my part: mechanic showed me an enging run primarilly on ExxonMobil...lots of sludge. Chevron run motor...very little. I've had a number of mechanics tell me they can tell if a car has been running Chevron or some other brand by noting how dirty the engine was. Not very scientific, of course. I tend to avoid the small independent stations: two bouts of bad gas (water) cured me of that. But you can get the same problem at any station: my advice: never get gas at a station where you see a tanker unloading....stirs the crap of the bottom. Yes...they have filters...but seen them fail. Once saw a dozen cars crapped out along the road after filling up at the same Tenneco station.
Just a personal bias. Besides...I've consulted for ExxonMobil and just as soon avoid the sign of the Double Cross. LOL
I like any gas except Shell, with its "New nitrogenation additive". No idea what the intention of that was, but was using a 15 yr old oldsmobile compact on which the fuel pump was failing (took me 6 months to figure that out). Particularly at the beginning, on any other fuel, the car ran fine, but fill up on Shell gas and immediately on the freeway it would start cutting out at any speed above 80 KMH, really bad. Burn half that tank and re-fill with PetroCan or Esso and ran fine. Eventually became a minor problem on all fuels, so I had a pressure test done on the fuel pump, 255 kpa instead of 320, so had it replaced and now no more problems. I think all tested fuels were using comparable ethanol ratios.
The Techron Chevron adds does a lot to keep injectors clean. Even when I'm cheaping out I make sure every third tank at least is Chevron, it seems to help.
"Great work Robert."
And thanks for the info on the IDC. That helped a lot with my understanding of it.
Until recently, my primary job was working with geologists and engineers to create economic models of Permian Basin oil and gas prospects, so I am intimately familiar with the tax benefits of IDC. About IDC...you guys are generally right on, but maybe I can add some color. Generally, when a company drills an oil well, say for $1 million, the accounting entry will be to reduce cash by $$1MM and increase Assets by $1MM. That much is straight foreword. However, when a regular company aquires an asset, it is usually something tangible, like a building or a piece of equipment....something you could probably sell if you wanted to. But when you drill a well, all you really have is a hole in the ground (and a liability to plug it at end of life). Sure, there is pipe, maybe a pump, and some valves, but the majority of the cost of that well went to the drilling contractor, who used it to pay for fuel, labor, ect. In my experience, the split was around 70% Intangible to 30% tangible....depending of course on a lot of variables.
Now...for Tax purposes, (not financial reporting) IDC is written off as expense in the year incurred rather than being depreciated over the life of the well. I'm not sure I would call this a subsidy, but I can see how some would....there is clearly value, but what most miss is that I only get to write it off once...
For example, Say a regular business purchases a $1MM asset with a 10 year life. They will write off $100M per year, for 10 years...reducing their income, and taxes each year. This is standard, and fair. Now, in the case of our Oil well (and this is a generalization...) say the split was $700M Intangible, and $300M Tangible, and this well also lasts 10 years. The $700M gets written off in Y1...as does $30M of tangible. For the remaining 9 years, $30M is written off.
Now, you can see, that in the end, everything evens out. The oil company pays less tax in Y1, but more for the remaining years, and the other company would pay more in Y1 and less in the remaining years. Now, obviously, you have to factor in the time value of money. I think it is typical in the oil patch to use a discount rate of 15%, so anyone familiar with compounding can recognize that with such a high discount rate, the immidiate tax benefit of the IDC can have a huge impact on the profitability of the proposed well. For the government, however, it is just shifting the revenues around from one period to another...the total taxes remain the same....and that's what I don't think most people understand about IDC
So exactly how does depletion allowance work?
Depletion allowance is not my area of expertise...we just drilled wells and handed them over to operations, but I'll take a stab at it.
We just discussed the tax consequences of drilling a well...What if, however, I didn't drill the well...say I purchased a well, or oilfield that was drilled 20 years ago, with 5 owners in between. Lets say I purchase it for $1MM, it has expected reserves of 100,000 bbls, and is expected to produce 10,000 in my year 1, obviously at declining rates therafter.
Now, lets look at another business...say a car dealer. Perhaps he can purchase a Prius for $20M, and sell it for $25M...for a gross profit of $5M. He would pay tax on that $5M of profit, say at $25%. This all sounds fair right....we would not expect him to pay tax on the full $25k of revenue just his profit....he would lose money on the deal and never sell another car, or have to sell them at outrageous markups right?
Now...an oil well is a bit different transaction. In Y1, I paid $1MM for my oil well, and lets say my net revenue after op costs, royalties, production taxes was lets say $600M. Did I lose $400M this year? Well not really. Unlike our car dealers Prius, which is purchased and sold in the same period, this well is a capital asset, with a life of probably 20+ years. So we have to come up with some method of allocating these costs over the life. In the case of a machine, we may just divide the cost by the expected useful life, and expense that much each year. With oil and gas wells, the standard treatment is to determine a per bbl rate, then write it off each year according to production. For our well above, we have a cost of $10 per BBL (1MM/100M). With production in Y1 at 10,000bbls, we would write off 100 in capital to expense in this period. Each period, reserves are re-estimated, and a new rate is calculated and used to write off....this rate can go up and down, depending on the reserve revisions and remaining capital.
So the benefit of this is that oil wells are declining assets...so we will write off more in Y1 than Y10...but this all seems logical and generally fair. This is no more a tax benefit than it is to allow the car dealer to write off his cost to buy the prius...The $1MM it cost to purchase the oil well is a real cost...it just occurs over multiple periods.
Ok...just found this at mineralweb.com
"Percentage Depletion Allowance
Under percentage depletion, the deduction for the recovery of one’s capital investment is a fixed percentage of the gross income (sales revenue) from the sale of the oil or gas. For oil and gas royalty owners, percentage depletion is calculated using a rate of 15% of the gross income based on your average daily production of crude oil or natural gas, up to your depletable oil or natural gas quantity. An attractive element of percentage depletion is that the cumulative depletion deductions may be greater than the capital amount spent by the taxpayer to acquire the property."
That does sound a bit unjust, but not outrageously so. Most royalty owners are not big oil companies, but heirs of heirs, generally getting a small fraction of a percent of a well or fields monthly production.
Percentage depletion is only allowable as a deduction up to 50 percent of the net income per property before percentage depletion. It cannot be used to shelter all income and on stripper wells because they have high operating costs per barrel produced may or may not be any benefit to the producer.
Also, unless they have changed the rules, percentage depletion is not available to "big oil" --- only independents --- you can't punish or get even with big oil by taking away something they don't get.
You are using tangible and intangible in ways with which I am not familiar. Intangible assets usually refer to something like brand recognition, good will, maybe location and other some such. But the labor going into drilling a well is no less tangible than the labor that goes into constructing that building you consider a tangible asset. Labor will likely not be so high a percentage of the building's value as it will be of the hole in the ground's value but it will be a percentage none the less A carpenter or electrician's, or better dirt worker's contruction labor is no more or less tangible than a roughneck's well drilling labor.
Depreciation is a wild and woolly game in all business with accellerated, straight line and a few other varients all playing for the best tax advantage. The IDC itself doesn't seem any different than a construction company expensing off tools in the year of purchase rather than depreciating them over the life of the tool, except of course in scale.
Tangible....something you can touch...pipe, pump, valve, flowline.
Intangible....everything else...including $100M frac job
Not going to argue merit...just explaining how it works.
So above we discussed a successful oil well. Say the well was a dog...produced 3bbl/day for a few months then was shut in. In theory, I can salvage or sell for scrap some of the tangible items, but the rest...the intangible is gone...it is literally just a hole in the ground. I just lost $1MM... (I spent $1MM for a few BBLS of oil....that I sold at market for a huge per unit loss) but this loss offsets profits elsewhere.... You may not think that is just, but in a very real way...this is a critical piece of my drill/no drill decision. If I'm sitting in a project meeting....I know that worst case scenario....I'm only out $650M...not $1MM. Without the tax code being structured as it is, I bet my old company would have drilled half the wells we did.
Thanks for the clarification--actually the $100M frac job in a dog of a hole doesn't act much differently than a $100M advertising campaign for a product that falls flat does. In the latter case the intangible brand recognition either never occurred or became negative recognition--either way a real cash loss from spending something with no salvage value.
But that is kind of a stretch. The frac job and the hole on the dog well are much more akin to a mine shaft to a pay streak that plays out quickly. It sounds like in mineral extraction these are called intangibles, though kalliergo's definition below is the one I have been familiar with since my days as an undergrad in business. I'm certainly not going to search the tax code to ferret this all out.
On a related point, I'm pretty sure all advertising is expensed out in the year it is purchased also, which sort of folds into the IDC issue, as some of this advertising--at least when successfull--has a fairly long carry over period but it is not depreciated over such.
I don't feel the oil companies should be singled out any more the Robert Rapier does--however the first comment to this keypost, which happens to be mine, does point up a problem area.
Section 5. Intangible Property Valuation Guidelines
Besides which, labor isn't property at all, tangible or intangible, it's an expense.
If the tax code is treating it in some way more beneficial to oil producers than simply expensing it, I'd be willing to bet the rest of us are being screwed.
But, then, given our druthers, Hugo Chavez and I would nationalize it all in a heartbeat.
Besides which, labor isn't property at all, tangible or intangible, it's an expense.
Well the labor is an expense to the manufacturer, but is included in the cost of the product which then becomes someone's asset.
The expensing of the drilling isn't very objectionable to me. It would seem the real can of worms would be in the assessment of property taxes by the states. Alaska has been outflanked by BP and allies' army of tax accountants and lawyers every time they have had to deal with the issue. It seems the only ones who really gain from the complexity are the accountants and lawyers.
For all its issues, the US has been getting lots more oil out of its fields for a lot longer time than anybody else on the block--I don't think nationalizing the oil companies would improve on this. Regulation should be thoroughly overhauled. It can be streamlined and made more effective at the same time, but that is not likely to happen. No way the feds would do an even better job than they now do regulating if they were to try and manage the entire industry.
Yes, and whether or not that asset is "intangible" seems pretty straightforward, at least as the rules apply to the rest of the business world.
Agreed. The lawyers and lobbyists for the industry have pretty much captured the states on these matters--surprisingly (to me), rather less so in Texas than in many other places. Maybe Texas has just had longer to learn the tricks.
You're right. The federal system is just way too big to be efficient, even if we eliminated corruption and incompetence.
So, could we break up the industry and turn the pieces over to cooperatives organized at, say, the county level? Maybe we could call them "soviets." ;^)
A lot of this is glass half-full versus half-empty framing. If I'm a big oil company, and because market conditions have changed (the price of oil went way up), my revenues are gonna go up by $10B, then the government proposes to take $2B back, I'm gonna cry big crocodile tears in public. But, of course some marginal projects may be delayed? Prospect A was gonna be brought on line in 2012, but because of a tax change, I will wait until the price of oil rises a bit more, then I will complete it in 2016 instead of 2012. Is this a net loss or a net gain to society? Factor in the benefits of the tax revenues, as well as the fact that some more oil production was deferred into the downslope of the Hubbert curve.
EOS - Actually most companies won't delay a project because of increased taxes per se as long as they have the capex available. With the exception of the Intagible Drilling Cost deduction I've never seen a company use their tax burden as part of the economic decision to drill a particular project. But the IDC is an immediate benefit and most companies either use it quantitatively or at least as an anticipated fudge factor in their drilling decisions.
Transportation accounts for only 11 percent of the energy use within the food system, considerably less than agricultural production (17.5 percent) and processing (28.1 percent).
It should also be noted that nitrogen fertilizers are mainly produced from natural gas now, not oil.
Great article. Well written and easy to understand.
Our family has already done allot to reduce our petroleum usage. The house we live in here in NJ is net zero energy(solar electric, passive solar heat and solar hot water) and the cars my wife and I drive both have a lifetime average of 43mpg. Last year I drove a whopping 3,800 miles in my 19 year old Honda Civic.
When I look around me while I'm driving I see one person in a car that probably averages 20mpg. Seems like such a waste. Many people spend $5,000 and up to heat their house with oil. But nobody actually does anything about it. They just pay and complain about it.
Don't give your hard earned money to the oil companies and you take the power away from them.
We have a garden and in the summer get all our produce from a local CSA, and have a small flock of chickens for fresh eggs.
These are all relatively easy things to do. At the very least anyone can choose to buy a more fuel efficient car and get a state subsidized energy audit of their home. When people see what we've done and I ask - well what do you think you might do? They give every excuse imaginable as to why they can't do anything. From my point of view the biggest excuse is sitting right in their driveway - typically $50k to $100k dollars worth of cars sitting there chewing up a huge portion of their income.
It's hard to do alot when Wall Street and TPTB have infinite ammo (fiat money) at their disposal.
I salute your efforts and someday plan to do the same once I settle down a bit, but IMHO if you still believe in the system (holding alot of dollars, keeping money in a retirement account, investing in stocks/bonds), then you have solved nothing.
You actually have to buy precious metals, keep them in physical possession outside of the banking system, and be prepared to defend them with your life, if you want to make a real difference.
If you are doing that already then I salute you twice.
You actually have to buy precious metals, keep them in physical possession outside of the banking system, and be prepared to defend them with your life, if you want to make a real difference.i>
I'm afraid the most precious metal in that scenario would be lead, though gold is soft enough to cast or if you prefer you could go the lone ranger route ?- )
I would recommend to everyone angry or upset about ExxonMobil's or any other big oil company's profits to first look at their 401k, pension or retirement account to see how much of those "obscene" gains are accruing to their own personal bottom line...and if they are not, instead of complaining about the price of gasoline, buy some shares of big oil. Assuming that most Americans began driving when they were 16 years old, you don't have to have a PHD in economics to understand that the price per gallon for gasoline has risen steadily for the last 100 years.
As a follow on to this a recent article shows how many people are profiting from big oil's profits in their 401(k)'s, etc.
"$4-a-gallon gas may be lifting your fund portfolio
Pain you're feeling at the pump may become a little easier to bear"
"Chances are your fund portfolio holds big oil names that have been reporting Texas-sized profits this week and boosting dividends paid to their investors. Exxon Mobil, for example, is the biggest component in the Standard & Poor's 500, the most widely tracked benchmark among index funds anchoring many 401(k) plans and retirement accounts."
read more here:
http://www.msnbc.msn.com/id/42817572/ns/business-personal_finance/
What about the poor non-union construction worker or window washer who needs a pickup for their work and can't afford a pension plan? What's your advice to him? Shut up and die I suppose.
Like ants at a picnic,
Like Sharks beside the Titanic,
These are the plays of our lives!
Ah! XOM....easy to hate after the way they squirmed out of their Valdez 'obligations',,, and along with JPM, gave us credit default swaps (see section on 'Litigation').
That said, what is their year over year profit margin relative to total revenues and the rising prices for oil? Seems like a fair question.
They didn't squirm out of them, as much as Bush jr. let them off the hook via one of his federally appointed judges.
Rising prices are the only way people will cut back and use less. The question really is what behaviour to we want to encourage ? More drilling or less consumption ? Any way one looks at it, less consumption is in our future and more drilling is a largely a mirage.
For that reason, I'd say the subsidies ought to go in order to keep a floor under the price. Of course, politically, it is probably not a winner to have prices rise even further.
My personal estimate is that the floor under prices is bedrock solid and rising from here on out, with some short term dips ppossible of course.
Change of subject:
I have recently heard a new way (to me) of explaining EROEI, and why it matters, which might be useful in explaining EROEI to laymen and kids .
Consider a person who necessarily drives to work, owning a car for that specific purpose, and no other.
As his driving expenses rise, his true income, after all work related expenses,such as taxes, lunch, transportation, etc, necessarily falls, unless he gets a compensating raise.
Note that the car is an EXPENSE, RATHER THAN A GOOD, from this perspective-just as new wells, pipelines, and refineries are an expense, rather than a good, from the larger viewpoint of society.
The more skilled labor, materials, and professional expertise that goes into extracting, processing, and distributing energy, the lower the standard of living SOCIETY WIDE.
This is not to say that the people who build, sell and work on cars,and in the energy industries, don't prosper as a result of our buying and driving them-of course they do, it's just that all the rest of us have less money for everything else as a result.
We can have rising prices without making these pigs obscenely wealthy.
The economist Hazel Henderson, iirc, once calculated the annual global subsidies for the oil business at a trillion dollars.
Take the money from the subsidies then add carbon taxes at every level and use that revenue to build mass transit and super-insulate homes and businesses, with some left over for alternative energy production. THAT would make the country more resilient. But we will instead had over more and more of the countries wealth to the individuals and corporations that already have nearly all the wealth.
Just a comment to show how well we understand the oil we have in the USA. This table from the EIA
http://www.eia.doe.gov/pub/oil_gas/petrosystem/us_table.html gives the distribution of production rates from existing oil rigs. Thanks to a couple of commenters from TOD who pointed to this info, which looks fairly recently added.
I decided to plot this as a histogram and compare it to the only physical model for reservoir size distribution that exists:
Besides the excellent fit to the data, you can actually see how dependent the USA is on these relatively small producing wells. And as I think Rockman has said, lots of these are from small independent operators.
This is the kind of data that you would have to pay thousands of dollars for to some hack oil consultants (if you didn't have the time to go through all the public records yourself) so I have to thank the EIA for making this available. Too bad the EIA is just now getting their funding cut for producing these kinds of statistics. It will be up to TOD'ers to make up for this hole in the future.
The derivation of the model is in The Oil ConunDrum. There are a lot more ways to analyze the data and I will post more as I get around to it.
WHT,
Excellent analysis as usual. Countries like the UK with offshore wells will not see the very long production tails we see in the US.
On the data-viz side, I would suggest that the graphic is in need of some Tufte-inspired cleanup. And the red-green color choice is killer for the color blind. I ran your graphic through Vischeck and this is what I got for deuteranopes:
Regards,
Jon
Cool. Is there a similar tool for political blindness?
I am red-green colorblind, and I see absolutely no difference between the two pictures. So yes, please do avoid using those two shades of red and green. Dark red and bright green work, but the bright red and dark green you chose look identical.
I made one set diamonds and one set circles.
I made the mistake of putting in a gravel background which increased the memory size of the GIF. So I scaled down the model in area and put it through an optimizer so Leanan wouldn't delete it. Which means that you apparently couldn't distinguish between the diamonds and circles.
I think it is still blatantly obvious to see diamonds vs circles. But then again, it is apparently my scientific fault that the points sit freaking right on top of each other!
So let me spell it out for the color-blind. Calling Chico Esquela: The model numbers sit right on top of the actual data.
But those two images are exactly the same! ...oh.
Although one could discern it from your chart, it's easier to just look at the numbers. For example, wells producing less than 25 bpd produce over a third of the total oil, and over half comes from those producing 100 bpd or less.
Which misses the whole point. The simple model based on first principles requires only a single parameter to describe the entire curve. In the last TOD Tech Talk (http://www.theoildrum.com/node/7858/798733), commenter benamery21 only gave a few of the points, which are essentially the same ones you mentioned. Based only on those points and an application of the Dispersive Aggregation Model, I predicted a PDF of p(R)= r/(r+R)^2 where r=median rate=1.6 bpd, which when I plotted it against all the tabulated data, it happened to fit exactly. That is the entire model and you don't have to carry around the data set any longer. Good models always trump the data because you get conciseness and a complete understanding of what is happening.
Yes, one purpose of modeling data is to reduce it down to something that is more understandable. And yes, it is amazing that you can reproduce the data with only one parameter using your model. But if you showed your model before any group of people, they would want to see the data instead of taking your word on how good the model is. And most people would still look at the histogram with a dumb look on their face. But if you instead simply told them that one third of the production comes from wells producing less than 25 bpd, they would actually remember something about the presentation.
Actually you have to be careful when examining log plots, they can hide a lot of detail.
For instance, around that kink in the graph, if you read off the real values you'll find errors of over 100% at that point. Yes there will be an approximately exponential variation in no of wells at a well size - to be expected. But it's the variations in that which actually tell you something new and should be bought out rather than hidden by your presentation method.
In this case it's that there are lots and lots of stripper wells left over from an orgy of past exploitation - its not a totally well behaved population. If you have a viable technology for enhancing extraction in these wells, you could make a noticeable difference to the total recovery. Alternatively, if you don't, you must expect the volume to continue to fall off with time, moving the kink down in bpd terms, with a predictable path. Actionable knowledge.
As for getting a group of people to take in the meaning you are attempting to portray - graphs tend to be very poor for anyone but those that deal with them everyday. Animated simulations that users can adjust parameters on tend to be much better - give them a toy.
Not really. The agreement is over 4 magnitudes in each dimension. See my next statement.
I call BS. The highest error is 41%. I also did a cross-entropy measure between the model and data and that metric barely registers. You can ask why the model underestimates a little around 5 to 50 bpd. I noticed that the model is in barrels of oil yet the production bracket data is in BOE or Barrels of Equivalent I presume. The average oil in bpd is less than the bracketed interval in this range, which only makes sense if some other equivalent is forcing the data to fall into the interval. I don't know why they did the interval in BOE other than the goal of intentionally obscuring the data. See what you can do by looking at the data against a model?
It's not an exponential! Why would it be expected? You have just made an unscientific assertion which does not match the data! I obviously labeled the model as a power-law as shown, and this is based on a first-principle model of entropy-driven dispersion in sizes.
Are you talking about yourself? It looks like you are having a few problems interpreting what the data says all on your own. Try not to speak for others, as they are smarter than you give them credit for.
WHT,
I'm doing the comparison by eye, since you haven't provided the tabulated data, but the values around that kink seem to be different by much more than 41%. By eye we seem to be talking about 4000 vs 8000 wells model vs reality. That's a substantial error that would be more obvious with a different presentation. Even 41% would be pretty far out.
I've always consider the inverse of a log to be an exponential, so straight line on a log plot denotes an exponential; but that's just an automatic reaction so's probably wrong. You're right a power law model should be the expectation of the variation in size for this general class of probability variation (terrorism is similar). Either way, its just curve fitting of function shape to data and is the expected variation type basis. It's the difference from this base expected shape that provide useful knowledge.
Nope. Been there, done that. Graphs are both quite dangerous if used to hide rather than illuminate, and tend to go down poorly with policy types getting a feel for what you are trying to say. If they are hostile to start with they will nit pick a graph to death and miss the big picture. To get things across you need to change the mental model first, then have graphs as backup.
If you want an example of that, look at what happened to the hockey stick graph in climate change.
the data came from here
http://www.eia.doe.gov/pub/oil_gas/petrosystem/us_table.html
gthompson posted the data link the other day on Gail's key post. There is little more info on how this evolved if you follow the thread its' in--you won't miss it the graph is in the middle of it all--and the link back to the Tech Talk where it started.
Thanks Luke, Yes I provided the link right there that Gary could have followed if he felt inclined to.
--
Back to GaryP's claims:
Honest mistake. It's a double log plot, so a straight-line is always a power-law variation.
That's a knee-jerk reaction. I carefully modeled the actual mechanisms for oil reservoir formation and oil extraction to arrive at a conclusion, so that it is not blind curve fitting. If you follow back through the thread you will notice that I estimated the curve through the knowledge of only a couple of points that benamery21 posted (like the mean and median). Only later did I try to lay that curve on all the data points. There is also a knee in the curve that occurs at very low rates that would show up if the data was presented in a finer histogram.
You, sir, have been there and done that. Frankly, I don't think a lot of people care about your personal single-data-point anecdote. I do agree about mental models, and that is why I have articulated the entire model in The Oil Conundrum across several pages. I won't do that here as this is a lowly comments page meant for people to argue. This is the first time I have seen data like this and am very pleased to see how well the theory works when I finally got access to data of this fine a resolution. So bring it on and argue all you want.
This is useful as a comparison. I agree that the climate skeptics are fools, but they are arguing over pulling the data out of noise. I am freaking showing data that agrees over 4 orders of magnitude where there is no doubt about the trend and where it comes from. The data is there and pretty much noise free, and only has been problematic in its public availability (that is another story). That's why this graph is a winner.
WHT--is your book still downloadable on pdf.? Not that I will ever follow it completely--I was just starting to enjoy diffyQ the last time I touched it, the beginning of Nixon's first term. I had difficulty last time I tried your pdf. download and can't even find the site anymore.
I won't do that here as this is a lowly comments page meant for people to argue. More than once I have seen well reasoned debates on these boards--there are more lowly forums. You could have left the word 'lowly' out and you very well know that--you just love to argue ?- )
Arguing by either side reveals weaknesses in the model. I usually argue hard to try to coax more criticism, as people will then think of it as a challenge to find something wrong with it.
Yes, but that doesn't include WHT model output - which you would need to compare accuracy.
WHT isn't going to fudge what he gets running his model, the graph was just a simple expression of the results of his model output--but yes eyeballing a small graph could easily make your estimate of the divergence of the two (or error as you call it) be a bit double the 41% it actually was. The overall agreement is what WHT was crowing about.
I quickly looked at the aggregated dispersion section in WHTs book, it didn't take but a minute for me to realize I'd have to go back and rebuild all my lost skills in the fields and then bring them forward to jump in at that point. You may well be skilled enough to take that little bit of data benamery21posted and run it through WHTs model generating your own results. A quick explanation of each variable in the equation he posted
The dispersive aggregation result for production PDF is p(R)= r/(r+R)^2 where r = median rate = 1.6 bpd and maximum production is 15,000 bpd
might have helped me out--but in statistical modelling often the variables stand for things that you won't understand unless you had already learned what those variable stand for so I just thought it best to move on.
What would cause the sharp kink at around 60 bpd, particularly in a model? I.e. what's magic about that number?
Paul Nash asked about the same question when WHT posted this to Gail's key post yesterday.
WHT replied;
I at first wondered why his model would follow it so exactly at the point but I'm guessing he must have used the same varying intervals to generate his numbers so as to better demonstrate the agreement.
That's really weird. You'd think that for a good, useful visualization, you'd want to vary the interval smoothly (if you need to vary it), and correct for any distortion that causes... rather than do something that adds a conspicuous large artifact.
No you wouldn't. You match the exact same artifacts that occur in the original data. Otherwise you risk the consequences of having the *sshole climate skeptic copycats coming out of the wooodwork claiming that you are fudging the data.
As they say, MNFTIU.
Oh, the kink was an artifact in the empirical data too. OK. No wonder this stuff gets confusing.
Green public transit, most especially Rail-based, is the best thing
to do to reduce oil/ energy usage, greenhouse emissions and land wasted
by asphalt.
HOWEVER it is NOT an individual decision!
Federal, State and Local governments have to support it and actually
run public transit frequently, reliably and affordably as well as provide
the last mile connection.
If people want public transit then we have to fight for it.
Since 2008 despite increased demand for Green public transit, 150 US
cities have had their public transit services cut and fares increased.
Republican tea-baggers have killed the New Jersey to NYC rail tunnel
(and absconded with $200 Million redirected towards more highways),
the Wisconsin to Chicago connection, the Florida high speed rail from
Tampa to Orlando which was just estimated to bring in a $10 million profit
in its first year if it would have been built, and a proposal for
train service from Baton Rouge to New Orleans, Louisiana.
Instead of restoring train service on existing tracks to New Orleans
they are brilliantly planning for "yesterday's tomorrow" by spending
millions on highway expansion in the middle of crowded I-10.
The other Rail project just to restore normal 110 MPH train service
from Cincinnati to Dayton to Columbus to Cleveland, Ohio was killed
by Republican Gov John Kasich and his Transportation Chief who
came from the asphalt/paving lobby.
We need to increase gas taxes and use them to fund Green transit
(i.e. Rail, Light Rail, buses, shuttles, bicycling and walking).
Until Reagan public transit operations was subsidized.
Last year $1 Billion was allotted to actually fund public transit operations not just build new million dollar train stations while
their train service gets cut.
The major organization supporting public transit and transit alternatives
is Transportation for America :
http://t4america.org
As Pogo said, “We have met the enemy and he is us.” I think that a large portion of the US oil & gas industry has basically shot themselves in the foot, by agreeing with, or failing to confront, assertions such as the following by CERA, ExxonMobil and OPEC:
CERA:
EXXONMOBIL:
OPEC:
Given the consistent message from most of the oil & gas industry that the worst case scenario for oil production is an "Undulating Plateau" many decades away, I think that consumers are to some extent justified in their anger against oil companies. After all, if we should have seen decades of steadily increasing oil production, but we haven't, then there must be a conspiracy to reduce supplies.
If global C+C production had kept increasing at the 3%/year rate that we saw from 2002 to 2005 (when we went from 67 mbpd to about 74 mbpd), then global C+C production in 2010 would have been about 86 mbpd, versus the 74 mbpd that the EIA currently shows.
Having said that, in effect the US heavily subsidizes energy consumption, relative to the energy consumption tax rates in most OECD countries. It's a little ironic that, having effectively subsidized consumption for so many decades (resulting in what Jim Kunstler called the "Biggest misallocation of resources in the history of the world," i.e., the 'burbs), the key question is how to punish the producers, but as noted above, the oil industry basically painted a big fat target on its back.
Well, they were right about the first two. The third, probably not.
"By not taxing income at 100%, the government heavily subsidizes income production." Refusing to triple the price of gasoline by taxation is not a subsidy of energy consumption, relatively or otherwise. Don't muck up a great argument, stuffed with interesting facts, with terrible semantics.
I disagree about energy consumption taxes. By not taxing energy at about the same rate as the Europeans, we effectively encouraged the cancerous out of control growth of the suburbs after the Second World War. Consequently, our per capita energy consumption in the US is about twice the EU level.
Our transformation from net oil exporter to net oil importer status in 1948--about the same time that we had our maximum level of electrified rail mass transit systems in the US--was a clear signal that we should have started heavily taxing energy consumption.
Its strange that something so blindingly obvious needs to be so often re-stated.
Here's a few more:
1) Some level of government is an absolute necessity for any group of humans not VERY closely related.
2) Operation of that government will cost some portion of the group's wealth.
3) That portion of the group's wealth can be collected in a variety of ways.
4) The more formal and documented the system of government is, the better.
5) The more that every individual equally gets to control that government the better.
Question: Is the United States simply too large an entity to operate with present systems of democracy? (e.g. "representative"). Evidence people's distrust of government and representatives, unwillingness to pay taxes at very low rates compared to smaller countries where governments are much more trusted. Given that representative democracy is simply a means of providing some sort of democracy to groups too large and dispersed to all get together and make decisions, and modern electronics and communications are once again capable of allowing every citizen individually to inform themselves and vote on every decision, shouldn't representative democracy with all its failings (influence pedalling, factionalism, secrecy, corruption, etc.) be replaced by reverting to true democracy?
Given that representative democracy is simply a means of providing some sort of democracy to groups too large and dispersed to all get together and make decisions, and modern electronics and communications are once again capable of allowing every citizen individually to inform themselves and vote on every decision, shouldn't representative democracy with all its failings (influence pedalling, factionalism, secrecy, corruption, etc.) be replaced by reverting to true democracy?
Len I have to admire your dogged idealism, but I only see a "Max Headroom" scenario every time you suggest this. No way many will get that involved. In such a system a few informed souls on each issue getting drowned out and big enough mass herded by a few polished demogogues steamrolling through the process would be the most likely result. Case in point would be the proposition process--which seldom works all that well.
But you do have a point--I certainly feel I've some input with our state legislature--it really helps our state has less than 3/4 million people. That said I only watch so many minutes of our legislature per session, and I'm am somewhat informed. This is a truly tough nut to crack.
Exactly how is that different than present representative "democracy"? In a well-designed system, likely very few people would actually be casting ballots on legislation. Most citizens would be expected to "allocate" their voting rights on issues in which they felt little interest or expertise, to others who they believed, from personal experience or research etc., adequately reflected their own opinions. No-one could charge any fee for "carrying" another's votes, in fact no-one would even know how many votes were allocated to them, nothing would be public about such a personal decision process. That way, big corps couldn't know who to try to influence. Vote allocation would be "by issue (secretariat / ministry)" and changeable at any time the allocater wished (e.g. one bad decision). Each person could learn the voting record of anyone else who chooses to make their voting record public for purposes of accepting allocations.
I can see you and others have given this a great deal of thought--question what penalties would have to be imposed to force that level of involvement on the general population--that is a very serious question.
Even assuming a voluntary high level of involvement it would a appear a high level of campaigning would be required to make voters aware of who their proxy choices might be. This is how it it in the world of corporate boards, a place where bad decisions should get decision makers turned out but seldom does. The proxy votes the entrenched seem to be able to hang onto almost regardless of their actions keep them in power. I don't see the fluidity in the process you propose which you see. Obviously just my own jaded opinion though.
I still like the old athenian system.
Exept for generals and priests, there were no public officials to speak of.
All cases were decided by juries, chosen at random : at the smallest level, 50 people decided on local misdemeanors, 500 people decided on criminal cases, and 'everybody' (which was in fact less than 5000 out of a 50.000 or so population) decided on national policy.
Randomly chosen juries, made up of relatively large numbers, ensure that the mean of opinion floats to the surface. In experiments, groups of 20 or more people are remarkably better at estimating than individuals. For example, how many red balls are in a glass bowl filled with mostly black balls. Similarly, in matters of justice and policy, larger groups of people have an uncanny way of finding the least bad way out of a problem, given free discussion of viewpoints.
So yes, I do advocate more widespread people participation, and I do advocate random choice of juries, because it constrains corruption. But we do need a lot more levels than the greeks did. At the top level of decision, at least ten percent of the population need to be summoned, if we want a meaningful sample to make decisions for the rest of us. For the US, that means a parliament of 30 million people. Technically, it isn't impossible. But quite a challenge. In more than a few matters, some understanding of physics, biology, medicine, chemistry etc. is required. How do we make sure that enough people are well enough educated and informed? How do we make sure that all relevant information is available to everyone?
I think the system I propose could work very well, but I'm also quite sure it is just a beautiful dream.
I think the system I propose could work very well, but I'm also quite sure it is just a beautiful dream
Maybe in a simpler world, but we have so many issues. I will be honest, I never have been all that fond of coming to a verdict on a jury whenever I have had to do it.
There may well be some way to implement the type of decision making you suggest. But the involvement would seem to consume a huge amount of time. Fine and dandy for a guy like me right now who can while away a few hours a day on a blog, but when my family was growing and ten to twelve hour work days six and seven days a week were never a rarity, I couldn't have spent an hour on this site a week or maybe even a month.
Once you break it down so the info is more manageable and people can decide which decisions they want to deal with which to delegate, as Len suggests, much of the real power will be in the hands or the people that actually route the information--not so very different from our current bureaucracy.
At least people are trying to figure out a more equitable system. Enough, ideas, energy, and hammering back and forth and we may just muddle forward.
I think you over-estimate the complexity. 1) As of right now, we already have a great system of laws which work very well. If no new legislation other than standard budget approvals got enacted for the next year, who would suffer? The biggest problem we have now is that full-time representatives have too much time to fool around with and complicate the laws. 2) Right now, about 60% of eligible voters cast ballots for an entire faction platform perhaps once every four years (if they can identify a faction which they can hold their noses and support). 3) Part of implementing the system will be to have the government run new 100 MBPS / 50 MBPS ADSL dedicated fiber-optic cabling into every home from new area switching stations. 25 MBPS can provide a dramatically high-quality high-resolution digital image, better than any current "Hi-def" video. It is assumed that a) 25 MPBS bi-directional is needed at each home to enable participation in democratic debate and keep up with legislation debates. b) For those whom the civil service has hired to act as debate moderators, and additional 25 MBPS of their bandwidth is dedicated to their moderating function. c) the balance of the bandwidth is available for sale in media auctions similar to present mobile phone frequency auctions to private enterprise for whatever application they may find applicable.
The capital cost of the system, e.g. for Canada, would not be more per capita than what our forefathers spent building the railroads which tied the continent together and made the nation possible 125+ years ago. The sale of bandwidth on the fiber media would provide the funds required for ongoing operation of the system.
No penalties at all, simply that certain types of legislation couldn't pass without a minimum percentage of all eligible votes cast in favour, percentages varying. e.g. to pass a new annual overall budget or a new annual department budget might require only a minimum 25% in favour, whereas to modify the constitution might require 50.1% for minor issues and 75% for dramatic changes. If the new annual budget can't accumulate 25% votes, then the civil service simply continues to operate with the past year's budget. Some experience applied of course.
From my earlier commentOnce you break it down so the info is more manageable and people can decide which decisions they want to deal with which to delegate, as Len suggests, much of the real power will be in the hands or the people that actually break down route the information--not so very different from our current bureaucracy
I usually am very far from people in that line of work--but I will never forget the arrogant little guy I met a Christmas party I happened into at the home of Montana's US representative at the time--can't for the life of me remember how I was invited. Anyway I got to talking to him and found his job was pretty much to work out the information flow between governmental departments. No way his job was in jeopardy. Very annecdotal I know, but the impression was strong as I'd never even imagined that layer in the organization. You never came close to addressing this concern.
As of right now, we already have a great system of laws which work very well. If no new legislation other than standard budget approvals got enacted for the next year, who would suffer?
???Which set of laws Kenya's, Winnepeg's, Alberta's, Canada's, Alabama's, English common law, Mexican civil law. Set all the ill fitting, unbelievably nuanced and often very contradictory laws in stone and deal with them via budget--oh I can see that playing out in an real interesting fashion.
My earlier point about campaign for proxy votes is very real--most people would have very little interest in almost all the day to day goings on--a parallel universe next to your officially moderated sites would spring up. It would be dedicated to garnerring critical mass sized blocks of proxy votes--can't imagine the money would be interested in such goings on. Free speech laws on the books would of course guarantee such a parallel universe's right to exist--freedom of speech does appear to be the very foundation of your system, so I'm guessing once the set in stone laws were placed it would be central.
Your description of the physical electronic means by which this sort of voting would be carried on shows where the most where you have thought in most depth, but human behavior is the element that needs to be best understood when designing such a system, gaming it at the inception of its very design will be the goal of those will most and thus most to lose. It certainly would be interesting to watch it all evolve.
Where is it you live? THAT set of laws. At the outset, there is no reason at all that areas now autonomous would change that status. Ideally, an evolutionary process should develop to allow now-"independent" polis' to merge parts of their sovereignty, e.g. present EU, NATO, etc.
Where'd you get that Via budget? You clearly don't understand the proposal. Re-read and you'll find that the {general} budget debate deals only with budget issues. Other issues are dealt with directly by dedicated discussion and voting once the proposed changes make it "out of committee" by whatever process is chosen to initiate new legislation.
Citizens accumulating proxies for money would be breaking a fundamental law, stated above. I see no reason to propose that this sort of illegal activity might be more difficult to police or easier to conceal than influence-peddaling among current legislators (where in fact such activity is not even illegal, see "campaign donations" where the line of personal benefit to the rep. is extremely wavy.) The issue of "interested parties" spending large sums to influence voters is, I presume, your concern, and that activity is more likely with a representative system than a true democracy system.
Agreed, gaming it at its inception / physical design / drafting of its constitution could be a problem, but clearly not insurmountable. On the physical implementation, almost any system "works" provided everyone is treated equally.
Where is it you live? THAT set of laws. At the outset, there is no reason at all that areas now autonomous would change that status
Of course in another post further down the page you are touting a one world government--no disconnect there
Where'd you get that Via budget?
from here
As of right now, we already have a great system of laws which work very well. If no new legislation other than standard budget approvals got enacted for the next year, who would suffer? The biggest problem we have now is that full-time representatives have too much time to fool around with and complicate the laws.
a simple extension since you did not give any reason why the year in question would be any different than the year after that or the year after that. If we weren't messing with our messed up laws directly a way would be found to use the budget for that purpose.
The issue of "interested parties" spending large sums to influence voters is, I presume, your concern, and that activity is more likely with a representative system than a true democracy system.
Actually I can see interested parties gaming this system much more cheaply--most people will not be interested dealing with much of this much of the time--they will be happy to give an incidiously designed 'nested set' of 'Sarah Palins' their vote most of the time. Don't worry the modelers would be "enlisted" to work on it instantly. The big money knows all about product placement and advertising--that could be where the real competition lay, in whose model can capture the critical mass of votes best. And the instant results make that look like
You assume a level of interest comparable to that demonstrated at this blog but on a myriad of issues--I see near complete apathy brought on by the overwhelming number and types of issues for which someone would be required to cast or at least delegate individual votes. That could well bring on Facebook 'like' delegation I guess--never been to the site just saying that is where the biggest mass of people seem to gravitate towards central figures--oh so I hear.
you interpretted my error close enough
gaming it at the inception of its very design will be the goal of those with most and thus most to lose
had better flow than 'the most' or 'most assets' to me but without the 'with' it was one tough read.
but all that said I believe your system may have a great deal of merit if it were to be piggybacked on top of a representative system. Budget votes and some others would need a full popular vote. Let the elected pros and their staffs bang at it till there were sets of options. Those would need the full popular vote.
There could be oh so many possible configurations that could be presented for vote but sufficient testing should be able to come up a configuration that was both relatively simple to understand and offered real workable choices. The need for popular final vote in critical areas might remove enough power from the representatives so that the 'campaign contribution' system of influence peddling we have now would wither and fall away. Designing that would be a great challenge but like you say 'doable.'
The hidden sinister evil is perhaps a bit too well hidden for me to percieve it. Budget proposals are presented on a schedule by the professional civil service, who above a certain level, e.g. assistant deputy minister, serve "at the pleasure of the people". (30% of eligable voters to hire one, 40% to fire one). Items of legislation are proposed by any individual citizen, but require seconding from perhaps 5% (+/- ?) of voters before they become active for general debate / moderation / possibly voted into law. All proposals awaiting seconding are open for any citizen to browse. Perhaps proposals die after standing for 3 months without gaining a seconder, and all new proposals are compared to past ones by the moderator staff for merit, subject of course to appeal, see below.
No opportunity for anyone to "control the process" by controlling "the routing". All is clear, fair and open to appeal to the courts. Obviously initially a quite informal court similar to "small claims court" where the frivolous appeals (repetitive, lacking evidence, lacking significant merit) would get quashed. All public, recorded decisions.
Perhaps you misunderstood my statement. people can decide which decisions they want to deal with which to delegate referred to the individual's personal decision of whether they wished to cast their vote themselves (in a particular "ministry / secretariat") or delegate it to a friend or other person they thought qualified. No hidden evil there is there?
I see you aren't filetering what is to be acted on at all--any of 300 million (close enough to US pop) people could propose legislation and once 15 million people decided it was worth pursuing before it would go to the floor for debate for before the whole 300 million.
so say a mere ten percent of the people propose a piece of legislation within a given two year period--a person would only have to review a mere 15,000,000 proposals a year to decide if they were worth pursuing--wouldn't take much time at all. Of course there are only a bit over a half million minutes a year so people really would have to learn to read fast.
Yes I exagerated the numbers--but only to show why filter are always in place. I'll stand by the suggestion that your system would be best piggy backed on top a representative system.
Luke, what you are talking about sounds like the Swiss system where the laws passed by parliament can be put to a referendum;
I don;t know anything about the quality of government in Switzerland, but I'm sure it can;t be too bad.
a little different--not a referendum on single pieces of legislation that has been passed but rather winnowing down from several options agreed to by the legislators (procedures need to be designed for this as well). I could visualize this in a budget scenario, kind of like looking at the stickers on several cars and manipulating option packages on each, then choosing one car--the trick would be trying to set it all in blocks that would offer real choice, would be functional in whatever final configuration passed but would still be simple enough to understand.
I'm having no luck finding how large of documents the budgets congress passes are but I did find reference to a 134 budget Obama request to congress--but it seems whenever I've seen photos of a budget its one heck of stack of paper. It wouldn't do to have mass voting on piles like that.
I just thought it up and threw this out there in a hurry, because I do like aspects of Len's proposal but the shear volume of decisions that need to be made do require institutionalized filters. It seemed worth typing out anyway.
What you need for that is a system called Range Voting, which incorporates Len's idea of giving your vote (proxy) to someone else that you think will make the right decision. This the voting system used by - bees and ants!
Fascinating description here, and they get the "right" decision 90% of the time - normal human voting systems would only get it "right" about 30% of the time. This is why bees and ants have been around for tens of millions of years - and we likely won't be!
Range voting sounds good, though its much like answering polling survey questions--not my favorite activity.
The bees manage to come up with about 20 options to choose between. 20,000 bees winnowing the whole world down to 20 options would be the tricky part its seems, some complex filtering system is already in place. For government I'd think the elected representatives would be an exellent filter--time and space would limit both choices presented and pursued. Certainly range voting could be used to elect the representatives.
In the case of budget and taxes (I should have included taxes immediately) the whole 'colony' should get to vote--budget/tax decision is very much like choosing a hive location, it very much determines energy input and outflow in the system. Those representative might have to use a range voting system to arrange the options they consider to determine the configuration presented for the mass vote. Why not?
What on earth do you mean by "true" democracy as opposed to representative democracy? Every one of 200,000,000+ adults puts in his or her oar on every one of countless tens of thousands of pages of laws and millions of regulations?
No, of course not. If I'm not particularly interested in energy issues then I simply identify any other individual who's opinions appear to make sense to me, and one-time assign my voting rights (on that issue's category only) to them using the smart video terminals / entertainment centres provided to every home as part of the system. e.g. I'd probably assign my votes on energy to ROCKMAN or Nate. On economics to Gail. etc. (they wouldn't know I'd done that). Then I'd simply check in once in a while to look at their voting record to see how things are going. If I don't like it, I can pull my vote and cast it myself or re-assign it to someone else. Any time, to anyone who has agreed to make their voting record on that topic public for the purpose, no limits. "Voting Issue categories" would be approximately comparable to present "ministries / secretariates", e.g. inter-group affairs (Secretary of State), economics (Ministry of Finance), transportation (Ministry of Transport), policing and internal security (Justice), defense / war initially while nation-states still exist (Secretary of Defense), later for controlling e.g. civil uprisings or attempts by demagogues to take regional power by force, etc. etc.
Example, Government of Canada has the following 18 Ministries / Departments of the civil service. At minimum, I would have separately assignable voting rights for each of those, and likely several more as well.
Agriculture and Agri-Food, Canadian Heritage, Citizenship and Immigration, Environment, Finance, Fisheries and Oceans, Foreign Affairs and International Trade, Health, Human Resources and Social Development, Indian and Northern Affairs, Industry, Intergovernmental Affairs, Justice, National Defence, Natural Resources, Public Safety, Public Works and Government Services, Transport, Veterans Affairs, Western Economic Diversification
The civil service would operate continuous professionally moderated public debating forums on each "topic / ministry or department / significant piece of legislation". The moderators would be multi-lingual, trained in managing debates, fairly well-paid government employees. They would operate from their homes using separate provided "moderator terminals" in order that their other family members could still participate in other debates on the "standard terminals". All debates would be verbal and, at the moderator's discretion within legal rules, transcribed to text for permanent record. The civil service would also employ transcribers for the purpose of making the records of debates, which would be available and searchable to all citizens. NO STATE SECRETS obviously. Wikileaks and no-value-added political news media go out of business.
Every citizen would have equal voting rights, but those of minors under the age of majority would be automatically assigned permanently to their legal parents, 50/50, until they came of age. e.g. for each child under 19 yrs, a mother's vote would count as an additional 0.5 votes above her regular vote, same for the father, regardles of marital status. Citizenship rules etc. all same as present.
What i'd like is a government that doesn't ask me "who" should be in charge but "what" the person in charge should generally be doing. Anything else is just a popularity contest on your tax dollars. This is made even sillier by the fact that whoever is in power still has to listen to the losing team anyway.
Exactly. Government should be "all voters equally deciding policy, permanent highly qualified professional civil service providing implementation".
This may be true, but it's not a subsidy. People will hang on that word and ignore your argument, because you're misusing the word. Moreover, there's an actual subsidy in there: the interstate highway system and its various expressways.
Of course, it might help to carefully read what I wrote, emphasis added:
Along similar lines
A discussion of tax loopholes available to oil companies requires addressing the bigger picture including underlying assumptions, as well as both the political and practical implications.
As an advocate for action on global warming, I believe eliminating these tax breaks can produce the only response that will decrease oil-derived CO2 emissions, i.e. leave it in the ground.
As a person who believes in fairness, I agree that decreasing tax benefits for oil companies (not specific to oil companies) is unfair “gotcha” behavior. Having said this, Exxon/Mobil has and continues to play a leadership role in the disinformation campaign designed to discredit science (and scientists) establishing the human basis of global warming. In the face of this gross crime against humanity, it is certainly the case that some oil companies have only themselves to blame for being such an easy target. Given most US oil companies have had a pile of cash for several years, with some engaging in stock buy backs rather than investing in new production, these tax benefits do seem like corporate welfare. In any case, corporate tax code simplification applied to all companies would certainly remove this moral consideration.
In a pure business sense, it must be the case that increasing the cost of producing US oil will marginally decrease US production. The real issue is how much and does this marginal decrease in US production justify the cost of the tax credits. Whether marginal job loss supports the arguments for retaining the deductions is not addressed in the post. I would guess most oil companies will continue fairly high levels investment as self-liquidation otherwise results.
Perhaps most importantly, the attempt to limit oil company deductions is a political act. By leading the attack against oil company deductions, Obama blunts the Republican charge that he has not done enough to increase US production, accents Republican efforts to increase tax loopholes available to oil companies and shifts the debate to the benefits of renewable energy. By reframing this debate as a choice between supporting oil production (BAU) or new energy sources, Obama may well succeed in his efforts to diversify US energy production and increase sustainability.
Indeed, I believe Republican attacks on US support for renewable energy are a part of oil company efforts to prevent the development of alternative energy sources. In a world where supply is limited, the only practical way to decrease the price of oil is to speed transition to alternatives and thus decrease demand. Fossil fuel producers fear this outcome above all others. Despite the fact that many include good citizens, I must admit to having only crocodile tears for the plight of oil producers given the recent and probable future increase in the price of crude oil.
I agree that if it is true that increasing taxes on oil companies would decrease production and increase prices, then that is a good argument for increasing taxes. Even without global warming, why should we be in such a hurry to deplete a nonrenewable resource? At current oil prices, however, I find it hard to believe that production would decrease. Further, this is a global market heavily influenced by national oil companies so it does seems that a modest tax increase on private oil companies would have a little, if any impact on the price of oil or what we pay at the pump.
All this, of course, does not even deal with all the external costs, environmental and otherwise, that are incurred in the process of producing and burning oil. It also does not include the costs of maintaining a global empire that exists, in part, to keep the oil flowing. Somebody pays for this so I think it would be more efficient and fair to internalize these costs at the end user level.
Having said all that, the sums being talked about in this thread are rather trivial so I don't see it making much difference one way or another whether we address the current subsidies, tax breaks or whatever you want to call them.
In the mean time, the demagogues on the left and the right will argue about the best way to decreases oil and gas prices without regard to the impacts of the increase consumption and production resulting from those lower prices.
Further, vive le resistance against consumption wherever possible.
Good points, and I think this gets to one of the main central differences in assumptions driving much of this debate. The other seems to be whether corporations should be trusted with money more than government. The latter overlooks the fact that gov has been essentially taken over by corporations. And of course if the gov doesn't get money from corps, they will take if from us (though I suppose the same could be said about corps, particularly oil corps).
What is really needed, of course, is a dissolution of all corporations, perhaps followed by the recreation of some temporarily under much tighter controls and fewer rights.
But the time for that revolt is perhaps not yet. We will likely become ever more thoroughly under the sway of the corporate elite until the earth becomes completely unlivable.
Robert,
Great summary and insightful point of view.
There is just one little (but consequential) point I would make about the depletion allowance. It actually isn't similar to depreciation which applies to plant and equipment. The original idea was that depreciation was a kind of implicit recognition that things wear out and need replacement/repair in order to keep productivity up. As with all accounting categories, the way the tax code is written, and company's natural inclinations to take advantage of those laws to improve their short-term profits, the original intent is not always how it works out. But the point is that it goes to supporting fixed asset replacement.
A depletion allowance is supposed to recognize that the source of revenue (oil) is depleting at some rate (production) and will never be replaced. Hence the future revenues of the company will necessarily decline over time. The original intent of depletion allowance was precisely to allow companies to take much larger profits earlier to compensate for lower total profits from dwindling supplies later and provide incentive to drill the next well (starting the process over again).
At the time, the thought of permanent depletion must not have entered anyone's mind because they saw it as a repeat and rinse sort of operation. The logic applied to all extractive industries, but back then the world looked a lot more like an infinite resource than it does today.
I am not implying that this front-loaded higher profit idea justifies what we see in XOM. I just wanted to set the record straight on the difference between depletion allowance and depreciation.
Robert, very helpful input. Thanks. I have some questions. I have read that Exxon pays a tax rate of >40% of revenue, while the corporate tax rate in the USA is only 35%. I have heard on the TV that Exxon includes sales tax to come up with there elevated number. What sales tax do they pay? Are they including the sales tax the consumer pays at the pump? Do you know what there real USA tax rate is? Murray
I just linked to a CNN article below that excludes all of those other taxes, and says their income tax rate is 29%:
http://money.cnn.com/2011/05/04/news/companies/exxon_oil_taxes/?section=...
I agree that things like sales taxes and payroll taxes shouldn't be counted when we are trying to compare tax rates across industries, and the CNN article cuts through all of that.
Thanks muchly. Don't know how I missed that. Reading the fine print it looks like they averaged slightly less than 20% for 2008/9/10.
The main reason for the rise in commodities prices is the ongoing destruction of the US dollar by the Federal Reserve. But the Fed, for some unknown reason, isn't as sexy a target for activists as "Big Oil."
Actually, on second thought, the reason it isn't as sexy is pretty clear. Big Oil has large profits to show and so it looks like that is the reason prices are high, they're charging too much in order to generate those profits. But really their profits are just in de-valued dollars. The Fed, on the other hand, doesn't show profits so they don't appear to be profiting in any way.
The supply argument follows. Given the very real supply problems, I wonder if the weak dollar is more a function of constrained net oil exports, especially declines in what I call ANE (Available Net Exports).
Following are what we show for global net oil exports for 2002 to 2009 (oil exporters with net oil exports of 100,000 bpd or more in 2005, which account for 99% plus of global net oil exports).
Note that global net oil exports increased at about 5%/year from 2002 to 2005, and then we had flat to declining global net oil exports. I suspect that this inflection point was quite a shock to oil importing countries, especially developed oil importing countries.
Also shown are Chindia's combined net oil imports. The difference between the two is what I define as Available Net Oil Exports (ANE), i.e., global net oil exports not consumed by Chindia.
As you can see, ANE fell from 40.8 mbpd in 2005 to 35.7 mbpd in 2009. A plausible estimate is that ANE could be down to about 27 - 30 mbpd by 2015.
Global Net Oil Exports Less Chindia’s Combined Net Oil Imports = ANE (BP + Minor EIA data, mbpd):
2002: 39 - 3.5* = 35.5 (ANE)
2003: 42 - 4.0 = 37.4
2004: 45 - 5.1 = 39.9
2005: 46 - 5.2 = 40.8
2006: 46 - 5.5 = 40.5
2007: 45 - 6.1 = 38.9
2008: 45 - 6.6 = 38.4
2009: 43 - 7.3 = 35.7
*Chindia's combined net oil imports
This table shows the detailed data for 2005 to 2009:
http://i1095.photobucket.com/albums/i475/westexas/Slide3-1.jpg
For more info, do a Google Search for: Peak Oil Versus Peak Exports.
This is one of the few times I feel the need to comment. I normally just read for my own education.
Getting even;
I started by wanting to get even with Pacific Gas and Electric (PG&E) after having to pay an $700 electric bill during the CA energy crisis. I installed Solar Electric panels on my house. In Nov 2001 my solar went online.
A friend mentioned that I needed an electric car! What a golf CART??? Well much research and months later - June 2002 I bought a Toyota Rav4EV electric car. I have since driven almost 70,000 miles and not a drop of gasoline. I have not paid a single dollar to PG&E for the electricity I used to charge and not a penny to an oil company for gasoline.
So yes I got even using one big utility PG&E to $(@#** another - Big Oil, as friend commented -- 'that's better than hugging trees' My electric costs are now fixed at $0.03 per KWH - includes maintenance of my solar system.
-- Brandy
Good show Brandy. More Americans should take your lead. Better tax policies would effectively guide the markets to do what you did.
Darn I did forget to mention that CA had real good rebates in the early 2000's, over all between the solar and car I got about $21,000 in rebates not bad but I still laid out a pile of cash up front. I had a few lean years after those purchase were done. Car is paid off now as well as the solar installation.
After all these years of driving on Solar Power I'm not sure I could afford to commute on gasoline any longer. When I stopped buying gasoline the price per gallon was ~$1.75, some people thought I was nuts!
-- Brandy
Sweet!
Agreed. Exactly!
Thanks for the detailed description, Robert.
While it may not make sense to pursue cutting the 'subsidies', I do think that within the context of under taxed US corporations it would make sense to raise the corporate tax level for the oil companies as well as other US corporations. I'm sure you've heard the stories of GE paying no taxes and, in fact, getting tax credits. Realistically I don't think we will be able to do this as the corporations, including oil, have too much power to influence the legislative process and it looks like the middle class and working class folks are going to continue to bear the brunt of taxation.
Let's look at the whole picture for worldwide ExxonMobil Q1 2011:
Income: $114.0 billion
Taxes (to multiple governments):
Income taxes: $8.0 billion
Sales taxes: $7.9 billion
Other taxes: $10.3 billion
(add it up, $26.2 billion in taxes)
Capital and Exploration Expenditures: $7.8 billion
Profits: $10.6 billion
It should also be noted that on the U.S. accounting side, Exxon's average effective U.S. corporate income tax rate over the last six years is about 29% - one of the highest rates for any industry.
Tax 'em more. lol. They are making too much money and the people know it. Blood is in the water ;-) Percentages are dubious ways to report profits and taxes.
Oil company workers should also ask where is my share of the dough too. ;-)
Sales taxes: $7.9 billion
could you elaborate on this. Sales tax I am aware of is a point of purchase tax collected from the end purchasers by the merchant. Is EOM paying this much sales tax on new plant and equipment it is buying each year? Or is this amount mostly just what they are collecting directly from their customers at the pump.
Of course the consumer in the end pays all corporate taxes--but sales tax is a horse of separate color. That money is only parking with the seller for a second or two on its way between the consumer and the government entity levying the tax.
No way. Sales and other are just pass throughs paid by comsumers and employees mostly. Income tax of $8B on income of $114B is about 7%. When comparing corporate taxes paid, or talking about the corporate tax rate, only income tax is considered. You are extending the Exxon obfuscation.
Tax the holy heck out of oil companies. Or Congress can risk people rioting at gas stations and refineries. LOL.
It is up to our business and political leaders to figure out the path forward, but using profits as a regressive form of taxation on the poor is obviously anti-robin hooding and quite disgusting.
Poor people do not have stock portfolios to at least get some of the excesses in profits back from oil, but poor need to buy gasoline and oil-derived products.
I am dying to ask. Why all the LOLs all the time? Must be great to be able to laugh out loud all the time. All I can seem to imagine is a little smile. Except when I watch the Daily Show and Colbert.
ts - maybe it's just a lack of suitable alternatives. How about "SG" - sarcastic grin. or "AS" - absurd smurk. Let's see what other folks can offer. I've been a lot of LOL's myself lately just to let folks I'm not being deadly serious. LOL
Well Oil is playing a game by taking excessive profits when oil prices are high. I laugh because it is funny. Normally Oil folks get on the airwaves and say all the good things they do in the community, but high profits when average joe is taking the heat makes for funny satire.
Either you think that is funny or not.
Last time we had an oil problem they busted Standard oil into a bunch of smaller pieces.
Hey I like oil engineers and folks but the profits need to be tempered a little bit.
But Oil taxation (I mean high profits) are unfair when you consider which elements of society have stock portfolios.
Do you get my drift on that?
BTW: LOLs to me mean maybe -- tongue in cheek -- I appreciate all the oil peeps. I think the political theater here is always taken with a dose of sarcasm. Hence the holk heck which is the PG-13 way of saying that I am real mad ;-)
Oct – here’s different angle of the same picture. Any company’s profit for a year is a function of its income vs. expenses that year. But that number doesn’t represent the return on its investment. Thanks to high oil prices ExxonMobil had a big spike in revenue. But the source of that revenue is from capex spent over decades. No way for me to make a WAG on what that cash flow represents in term of profit. But here’s a silly comparison: Joe 6 Pack is a manager at McD’s and makes $48,000/yr and gets paid monthly. On the first of the month he gets a check for $4,000. Wow…talk about obscene profits: he goes into work and gets paid $4,000 for that day. But wait, you say: he got that check for the effort he put in the other 29 days of the month, Yeah…but he got paid $4,000 IN JUST ONE DAY. And then hell…it’s Christmas bonus time and he gets a nice 10% kiss from McD. So now he gets $8,400 IN JUST ONE DAY!!! Now that’s really obscene. I know you’re a clever chat Oct so I don’t have to press the analogy any further.
I also wonder how many folks were asking their congressmen to send some aid to the oil patch in 1986 when thousands of companies and hundred of thousands of oil patch jobs disappeared when the KSA dumped oil on the markets below the costs US companies spent to develop their reserves. I don’t recall any of the folks complaining about high fuel prices today were demanding the feds hit that cheap ME oil with an import tariff like they did the Japanese when they tried to dump cheap steel in the US.
Just saying, ya know. I'm not saying I have no sympathy for folks struggling to pay for higher energy. I have as much as they had for me when I was driving a Yellow Cab around Houston back in 1986.
Well a decade of bust and now a decade of boom later. What will the new policy be?
My feeling is that citizenry will pump Congress to do something unless the billionaires have a plan on how to tame the demand for oil this time. Like bust the housing market again or something.
Probably something stupid will happen too -- something that makes the situation worse.
I do not mind what happens actually. I just posted a controversial idea that the poorest are hit the hardest with higher than average profits. Middle class folks are not that bothered. They just shop less, buy less, and do less.
Profits are basically taxes levied by industry on citizenry. All the corps are taking big profits now. It is the in thing.
Either way you cut it -- same net effect.
Goes without saying.
I don't recall any controversy about that. The question is about piling on a tax that will hit them harder still by raising the pump price another bit more, one way or another. IOW how do you keep a tax imposed on their alleged behalf from boomeranging? And if you manage to keep it from boomeranging, how do you keep it from causing physical shortages that will hit them even harder still by making it difficult or impossible to get to work, or by eliminating their jobs?
Oct - I also didn't think your comment was as controversial as it was inspirational to the thread. Obviously we're not agreeing on everything but that's not the goal of TOD IMHO. I don't really need folks to agree with my positions...my ego doesn't let that bother me much. LOL.
I made a point long ago that if some angel had offered the oil patch a deal: oil will always sell for $50/bbl (just picked a number out of thin air) the oil patch would have jumped on it like a duck on a June bug. I've lived through several boom/bust cycles and fun of the booms comes nowhere close to the pain of the busts. And now the cycles come so close together much of the industry is like deer caught in the headlight: don't know which way to jump. Consider what happened when the feds gave a royalty break of Deep Water GOM drilling to encourage companies to risk those very big bucks out there. Then 10 years later oil prices explode and folks are pissed some companies aren't paying royalties on some of the production. But go back to the goal: get more wells drilled and production started. So the feds may not be getting royalty from all the oil being produced in the DW GOM. But if they hadn't given the tax break maybe there would be even less oil being produced and less royalty being collected today. A lot of those wells drilled with a royalty holiday led to a lot more wells being drilled that had full royalty burdens on them. As I've said a number of times: give the oil patch tax/royalty breaks or not...we'll survive either way. But the public will have to live with results. So don't bitch if you get what you ask for. LOLLLLLLLLLLLLLLLLLLLLLLL.
Yes, I see the business cycle for oil. I am not an economist or an oil guy at all. I just read for sport because I see oil as a key problem.
But you are right that tax breaks that are used well by industry to produce oil should be considered useful to the citizenry.
I just think some of the profits could be redirected to communities. Hey I recently took a few pay cuts and I educate about 400-1000 students per year. Seems in my business the more I produce the less I get paid, since the number of students per class is increasing.
In oil the less they produce the more they will get paid. Hard facts to face.
So I favor skimming a little and keeping some of our institutions going a little while -- until the economy begins to really cave in.
"oil should be considered useful to the citizenry"
It's useful and lethal. That's not 100% the fault of the oil patch, but I don't think we should be doing anything to encourage oil extraction.
An oil company, like any other, is an abstraction. It's physically impossible - no, it's devoid of operational meaning - to tax it, even though it's certainly a highly useful accounting convenience to pretend that you're taxing it. Sooner or later the tax must fall on some person who must enjoy less of the fruits of his or her labor than otherwise.
So if you tax the holy heck out of oil companies, then in some combination they'll pass the tab on to someone (who, in practice, will never be the executive "star talent", but will be a customer or a pensioner), or they'll shrink as others overseas take on some of their business, or just conceivably they'll go out of business altogether.
Now, we'll probably get some self-righteous comments alleging the third alternative, especially, to be a Good Thing; go back to the horse and buggy days. But be that as it may, it's hard to see how any combination of those alternatives would benefit the "poor [who] need to buy gasoline and oil-derived products." Most likely, any combination of the alternatives would drive up their cost, make the products less available to them, or both.
That's probably why guys like Hugo Chavez, who - wisely or unwisely, sustainably or unsustainably - seek to make a great show of making the products cheaper and more available to the poor, normally find some way to net-subsidize the domestic sharp end of the business rather than net-tax the holy anything out of it. Of course he does it at the expense of overseas customers, since even he can't really get something for nothing. But for a large net importer such as the USA, that option seems closed. So, in the real world, as against the world of pious pronouncements, how would you propose to actually have it both ways - punish the producer and make it wonderfully cheap for the consumer - once the dust settled?
Tax heck out of petroleum, then use the funds to provide free medical care etc. for the poor.
Interesting that in a significant article and a hundred blogs about subsidies, no-one ever mentioned he possibility of subsidizing low wage workers until you.
Paul,
I am not punishing the producer.
Profits go to the shareholders.
I am saying why should the poor pay an "excess profits tax," which is the tax we are talking about that oil extracts from the average joe at the pump, when they do not have the resources to have extensive investments in oil companies to receive some dividend back?
That is the question.
Besides, in a democracy, who is in charge: Average Joe or Big Oil?
I know in theory Average Joe should be, but ...
Well, politicians and Big Oil can dance around and say, "We/they will pass on the excess profits tax to consumers." Then we may see if they are re-elected."
Of course they will pass on an actual excess profits tax somehow, just as with any other tax. If they don't, then at a minimum, future investment will flow elsewhere, outside the taxing jurisdiction. It's not like they have a bottomless Fort Knox hidden away somewhere to tap at the drop of a hat any time some politician or citizen throws a tantrum.
Is anyone really delusional enough to think that a tax won't get passed through, one way or another, under the table if need be? In what universe would the price of gasoline in, say, East Saint Louis, go down if it were taxed more, even if "only" indirectly? What I still don't see amidst the crocodile tears being shed on the supposed behalf of the poor is any proposed mechanism to ease the burden the inevitable passthrough would place onto the poor. So I'm inclined to speculate that they're merely being used as a distraction from whatever is the real subject, which might well be, let's just say, middle-class angst.
See, that's the problem with trying to operate a rational democracy which is fragmented into a couple hundred supposedly independent nation-states. The investors can (and always do) use the threat to "take our investments elsewhere", resulting in systems which are FAR more favourable to the wealthy than is fair. Pollution, global warming, resource waste and depletion. All these issues are made impossible to deal with simply by the accident of history that the world is quite arbitrarily divided up into 200 "nation-states".
It's world government (at least on many issues, gradually) or eventual chaos.
I assure you, nothing would be more chaotic than the central planning bureau of a world government.
That's just the sort of comment that US brainwashing is designed (by the large media corporations) to elicit. I'm favouring a "true democracy" model of world government, which you'd know if you read my other posts.
Paul, tax them. Profits -- taxes. Same difference. Who cares? Oil consumption needs to be shut in anyway. What not?
It took me a while to realize there is little difference between companies extracting wealth from citizenry and taxes extracting wealth from citizenry. The nice thing about government is that it can at least fund education, infrastructure, R&D projects which provide value that corps fail to do on many levels.
See you are also forgetting the other side of taxes. You redistribute the proceeds to fund public works. Unless you think Exxon is a real community friend. LOL. They don't care really imho. Maybe Exxon likes Texas. But there are 49 other US states paying into the till. The Exxon image is just a bunch of ads on TV, which honestly are PR with no follow through. Take the ad money maybe 10% and invest that. They are investing less that 1% of their ad money in communities.
Exxon needs to grow up imho. Ask anyone whether they see Exxon as helping the community when gas prices are > $4 a gallon. They need to be taxed to pay back to the communities they are presently robbing.
It is just the way things should work. Call it any demon you'd like but to average joe -- profits going to the top 1% make less sense that taxes that come back down to the communities.
That recalls the Clintonian definition of "investment": any money spent for any purpose by any branch of government. They'd probably "invest" most of it in yet more stadiums for spoiled-brat multimillionaire ballplayers to ponce about in, or in something else equally worthless. Meanwhile J&J6P would still be screaming bloody murder over the price at the pump just as they are now - never mind whether "oil consumption needs to be shut in anyway", which from J&J's point of view is at the very best a remote academic abstraction, and much more likely a random collection of nonsense syllables.
To give J&J the experience of being better off according to their own lights (i.e. to quiet the screaming of bloody murder), you'd have to do more than merely extract money from their right pockets and return the same money (minus a cut for political pet projects) to their left pockets. Most likely it wouldn't be convincing without increasing the quantity of physical resources J&J use, at least indirectly and probably also directly. Which pushes in the direction diametrically opposite to "shutting in consumption". And therein lies the rub: after all the discussion, we have brought a great deal of inchoate fury to the surface while still failing utterly to find the free lunch. Possibly the free lunch is nowhere to be found. Or, "Before you embark on a journey of revenge, dig two graves."
Paul,
I am not for the free lunch. I am only for a little mechanism to cull excesses and send them back to communities. People work hard and do the right things. But yes there is waste of course. Exxon could put marble on a skyscraper or whatever. The public could build a bridge to nowhere. One does need smart people deciding what to do of course. We can debate whether Exxon or University research units are "smarter" but that is not what I think at all. We probably need both.
So maybe Exxon decided to give back a little more. Maybe Exxon realizes they have patrons in 49 other US states.
Who knows?
True, but have you compared the best selling cars in the U.S. vs. Europe?
USA:
Europe:
Btw, Ironically Transocean is meanwhile a Swiss (landlocked) company:
http://en.wikipedia.org/wiki/Transocean
Note the environment destroying imagery associated with the trucks! For there American truck marketers, the trucks are a way to put your stamp on the planet, for Euros, the cars are just transportation.
I think I can remember a time (and I am not that old) when trucks had two doors and cars had four!
Four doors on a truck make it much more useful to those who really need a truck. My young kids made the trip from Wisconsin to AK to Wisconsin to AK (one and half round trips in four years) strapped into my 88s single front bench seat. I was hauling a lot of tools at the time--they literally all could not fit into the 80 Accord I traded out of. The back seat would have been great back then but the couple Gs extra put me off.
But you are right--these new trucks are mostly going to people who don't need trucks. A few years back an accident forced me into a rental. I was hauling pretty regular, and needed a four wheel drive truck. My driveway is steep, 4x4 isn't absolutely necessary, but without it chains are needed from time to time.
What I got was a joke--a very short box on full four door 4x4 Ford. The four wheel drive had no limited slip--it couldn't manage the slippery climbs my old '88 rear wheel drive could--that Ford was treacherous. And load carrying--a full sheet of plywood barely balanced on the bed with the tailgait down. The only thing that truck was designed to carry was a double dating young couple on their trip to some trendy city club.
these new trucks are mostly going to people who don't need trucks.
Exactly. and their design reflects that. In Australia, you can tell any pu that is a real work truck because it wall have a flat deck tray and drop down sides - infinitely more useful than a "box". It is also likely to be a diesel, and a 2-3L four cyl at that.
It used to be that trucks got certain exemptions from passenger car safety rules because they were utility vehicles. The mfrs gamed this system and made the utility vehicles carry passengers but not meet passenger standards - still don't have to, I believe. That led to results like this - the unrecognisable wreck, with the dead driver, to the right of the Mini, is a 2003 F-150
Trucks also get special treatment under CAFE - I would be Ok with two seat trucks (utility vehicles) not having to meet passenger car fuel standards, but if its a four seater then it's a passenger vehicle and should meet the requirements.
Well I don't drive Ford pickups. My 99 Chevy T-boned a Ford crew cab that turned left directly in front of me--taking my truck from about 50mph to zero in less than a car length. It looked way better than both the rigs you showed though the radiator was pushed back some. I thought I was toast--but the airbag, which I never even saw deploy it was up and down so fast, let me walk away just a little bruised from the seat belts.
I really don't think I would have preferred to be in that Mini doing about 40mph when my 2003 GMC had the misfortune to scare a moose up out the ditch either. A bit tough on the glass, and the moose. The windshield was completely covered by the moose, nothing to see but hair the instant before it turned into translucent spider webs. No glass would have come into the cab at all, if the side mirror its hoof caught hadn't had remote control wiring tying the mirror to the rig. The wires swung the mirror into the passenger window. The glass and couple little dents in the front bumper were all the damage to the truck, the moose was less fortunate.
I've seen some really bad small car moose through the windshield wrecks up here. Maybe I was just lucky or maybe GM makes a little more crash worthy pickup than Ford--I don't know. With the profits those companies made on trucks I don't know why any should have reduced safety standards. The workplace usually has a fairly high safety standard, why shouldn't the work truck?
Looks good, guess its what you get used to.
As for the full sized box, it can really work well for construction. You can throw stuff in it including 4x8 sheets and slam the gate shut, drive off, no tie downs. I have hauled 20 foot long steel roofing atop 20' lumber with 16' lumber holding it all down 'in' a full sized pickup box...looks a bit long of a load for the rig pictured above. The ten foot with the tailgate down is pretty handy and real easy to get used to. I really don't need to mess with trailers or racks.
I had a good sized home made tool box sitting on joists resting on the above the wheel well ledge in the GM box. Sheet goods and long dimension lumber, pipes and conduit slid right under all the way to the front of the box and my tools were dry. The 5'x 3.5' x 1.5' box was specifically designed to hold a small table saw, chop saw and a myriad of other tightly packed tools and fasteners. I'm still amazed at what I crammed in it and it still left me visibility out of the top half of my rear window. The darned truck seemed to get better mileage with it as well, I might have lucked into a reduced drag design?- )
In fairness to those two crash tests - they were into a fixed concrete barrier - you had the advantage of running into a something that could both deform, and slide sideways, so the collision energy is both shared and reduced.
A moose is a different beast of course, the height of the truck is possibly an advantage there, regardless of other safety measures. My old car in Australia had plastic "roo bars" on it - specifically designed for hitting kangaroos - the bars deform and absorb some of the energy, and the roo bounces off. Hit three of the over the years - cost me three $20 tubes and one broken headlight. Without them at least one would have been a tow away accident.
A neighbour near my family farm in Australia has a Mahindra truck - loves it. 2.5L, 4cyl turbo diesel, 35mpg, 2200lb payload, 5000lb towing capacity, cost $24k. The GM equivalent (a diesel Colorado) is not much change from $35k and a Toyota Hilux diesel (equivalent to a Tacoma) is over $40k.
I won;t argue that a full size (8') box can;t be useful, but you can't get that one a midsize truck here, you have to go to a full size truck. But with a midsize, like the ones I mentioned, you can get a 6x8' drop side tray, and, if you want, it can even be a tipping tray. Can take any sheet goods, two pallets, 40 bales of hay, a round bale or large square bale, a 6'dia cable or pipe reel, etc. Take the drop sides off and use them as ramps for motorbikes, atv's (can fit two sideways) etc, can even put an animal cage on the back to transport stock.
Some of the trays (like the one on our nissan truck) had integrated mounts for pipe racks, and the rack bars stored under the tray side - no problem for long loads - my dad once brought back a windmill that he bought that had a 25' tower, with the tower in one piece - was quite a sight.
On balance I would say most of the midsize cab/tray PU's in Aust do more work (carrying stuff) than the full size PU's here, and they do it using much less fuel - since most of them are midsize and diesels. Of course, a lot of people here buy trucks here that never intend to use them for work, like the short box you describe, and that is a big part of the problem.
One of the reasons why Ford/GM/Dodge push the heavy duty trucks so much is that it is the *only* market segment where they have no Japanese competition. In the rest of the world, trucks with that much power and load capacity are registered and taxed as commercial trucks, and other options are then much better for serious work and load carrying, like the cab forward types.
People are free to buy what they want, of course, but the fuel certainly aint free - I have no time for people who choose to buy large vehicles, that don;t really need to, and then complain about the cost of driving them around (empty) all the time. Not saying you are one of those, but I know of plenty that are.
Well one real nice thing about the fold up back seat in the pickup--it holds a whole lot of winter gear, not much of an issue in Australia, but I never leave home without it here--or without heavy rain gear and extra tuff boots.
Yeh those little diesel trucks do look handy--none up here--yet. A fair sized tool box would cut the load capacity quite a bit though--you'd always be loading and unloading the thing or using the rack for materials, thats what a lot of guys do anyway. GM still gets you a full sized 4x4 for about $25 Gs but it barely beats 20mpg highway and I never get too many highway miles in a row anymore.
But the wreck I described--the truck collapsed as it was supposed to and not very much, 50 into concrete would have been rougher but that left turner was coming at me at bit of angle as well. The other time, when the moose hit my windshield, the truck must have scrubbed about 15-20 mph instantly. That is a heck of a hit for a windshield to take but the weight was nearly evenly distributed across its whole surface.
The idea that North American pickup trucks are safer than average North American cars in a collision is pure nonsense. Wishfull thinking and bad advertising.
Pickups have far worse rollover performance than passenger cars on average. The intitial two photos showed the F150 was far worse than the Mini in the crash test. I personally would like to see how the GM 1/2 ton fared in the same barrier test as I have far more anecdotal experience in those rigs.
A Mini would not have fared near as well hitting that moose as my pickup--unless it pretty much drove right under it, and it does go down that way sometimes. Lots impact scenarios, sometimes the greater mass is favored, especially when it collides with another moving mass.
In the fixed barrier test the collapse energy absorbtion design would tend to favor the small vehicle as speed increases since squares are involved in the calculation. Much easier to design a 2500 lb vehicle to handle a 50mph barrier impact than a 6000 lb vehicle. This will show up big time if the auto companies safety design tops out say for a 35mph fixed barrier impact--the farther above that speed the worse the heavier rig will fare.
Quite so - in a single car -static object collision, you are better off in smaller one, in a two car, you are better off in the bigger one, and also, generally, if you are the one doing the crashing!
The standard crash test speed is 35mph - and has been since the days of a 55mph highway limit. Would be interesting if vehicles were speed limited according to their crashworthiness!
A major design consideration is peak acceleration as experienced by the crash dummy. For a fixed velocity that is basically the amount of distance that can be crumpled up, irrespective of mass. Many of the test targets are a crushable honeycomb material. For stuff like side impact the impactor is on a sled, and pushed into the vehicle. I think they mainly check for acceleration, and penetrations (stuff getting pushed into the passenger compartment that could skewer occupupants. I do know of at least Auto company that is working on computer dummy models, that contain internal organs, and damage models for those organs. Its pretty much an arms race that goes on and on.
Its amazing the things careers are made of. I've met engineers who spend their entire careers investigating highway crash barrier performance...
A major design consideration is peak acceleration as experienced by the crash dummy. For a fixed velocity that is basically the amount of distance that can be crumpled up, irrespective of mass
I understand that, my point though I'm having a heck of time phrasing it, is that if a two vehicles say 2500lbs and 6000lbs are engineered to have the same occupant peak acceleration at 35mph and are built to just handle that speed safely, at higher speeds the greater mass would lead to higher peak occupant acceleration because there was more mass still travelling at the higher speed after the designed crush area had absorbed all the energy it could. Which pretty much looks like what happened in the two pictures that started this whole birdwalk.
There is the peak acceleration, and also the "survival space" - and the F-150 did not fare well in that score. Luke you are spot on of course, the bigger vehicle has a lot more energy to dissipate - and even more if carrying or towing a load. The F-150 can tow 9000lbs - i wonder what that crash test result would look like?
The physics a side - there is lots of scope for good design in crash performance. The Euro car makers have put a massive efforts into the crash safety of their passenger vehicles over the decades. The same can hardly be said of the US truck makers - they are playing catch up.
Having started this whole thing I want to finish it be getting back to my original point - trucks should be used for carrying stuff, and cars for people. It is much easier (and more energy efficient) to make a safe car for four people than a safe truck. And if there are less trucks on the roads, and they are driven by serious drivers rather than yahoos and commuters, the chances of crashes involving them go down sharply. Too many people driving too many big trucks has consequences for more than just oil usage.
Maybe one solution is to reclassify large PU's as commercial vehicles and require their drivers to undergo professional driver training (all drivers should, IMO) and re-testing every decade or so.
A bit less yahooing in these things would save a lot of lives.
Having started this whole thing I want to finish it be getting back to my original point - trucks should be used for carrying stuff, and cars for people. It is much easier (and more energy efficient) to make a safe car for four people than a safe truck
We will have to agree to disagree there, though not entirely I don't see tractor trailers rigs getting designed to let the driver walk away from hitting concrete or steel barrier while towing a full load and travelling at 50mph. The workplace has fairly stringent safety standards. The truck is the professional drivers workplace. And it needs to be quite a bit safer than a piece of heavy equipment because it is on the highway with all those other vehicles full of people unlike the former.
As for towing loads. I had old truck driver friend that lived in Dawson Creek. He drove a fuel tanker from Dawson Creek to Fort Nelson for years, back when the Alcan washed out with regularity-often between his run up and run back. He used to stop and take pictures of all the wrecks--had a shoebox or two full of polaroids.
Hands down the worst wrecks involved tractors, towing two more tractors behind each of the latter rigged to be rolling on its rear wheels (kinda looked a dog in heat with suitors stacking up to the rear). Every one of the towing rigs in those situations was flattened almost beyond recognition. You don't see tractors getting towed like that any more. Up hear tractors ride on low trailers if they are getting hauled. Certainly not a 100% safe but worlds away from the old way.
Not too many moose or roos wandering around loose in Europe. The largest thing you are likely to hit in the UK is a munkjac. Up in Scotland you might just land a red deer.
About 15 years ago the fashion in the UK was for chromed steel 'roo bars' on SUVs. These did not deform at all and reduced any child the vehicle hit to mincemeat, even at low speeds. They were eventually banned.
Not too many moose or roos wandering around loose in Europe.
If you count the Aussies in Britain as "roos" there are lost of those (I was a among them once), and probably a few people would be happy to run some of them over!
The largest thing you are likely to hit in the UK is a munkjac. Up in Scotland you might just land a red deer.
From my experience as a pedestrian for the summer I spent there (London and Gloucestershire) I came to the conclusion that being hit by a car was quite likely. A friend told me that driving in Scotland, around or after pub closing time, you chances of hitting a Scot on the road were pretty good too. he did land himself a Scottish wife though - so I guess you could say he hit on a "redhead dear"!
There was a fad in Australia for a while for chrome "nudge bars" but I think they have gone the way of the dodo, though maybe not by regulation.
The company that made the plastic roo bars did a thriving export trade to Japan for a while. They were very popular with Tokyo taxi drivers for the precise reason that pedestrians would bounce off them! Eventually Tokyo banned them as they were encouraging "excessively aggressive taxi driving" - so I presume it is back to "normally" aggressive taxi driving.
I had read somewhere that the rigid bars could interfere with the "crash deformation" of the cars, and sometimes cause unnecessary deployment of airbags, as they bolt rigidly to the chassis, and negate the crumple zone at the front.
Just the small roos called Wallabies. Don't half jump out in front of you.
EDIT: Beware sheep in Wales jumping down the valley hillsides into the road, perfect for the windscreen attack.
NAOM
The camera angle is low on the American vehicles. You are looking up. You are worshipping.
The camera angle is high on the European vehicles. You are looking down on them. They are a tool.
NAOM
good observation though you'd need a full sample from all advertising photos to see how well that held up. Could have all kinds of fun with your point though--those European wanna be nobles looking down on their serfs...and those Americans becoming slaves to their mechanical beast of burden after emancipating their human one...
Oil company profits are not even abnormal right now. The change is that the capital intensity of oil production has gone way up, so to maintain returns on capital, which are already rock bottom, the absolute dollar amount of profit has to go up. Otherwise oil companies would lose access to capital over time.
I think the point of removing subsidies for the oil companies is not so much for lowering the price at the pump, and paying their fair share of taxes. This extends to all corporations including Microsoft and Google. Many of these companies reap benefits from subsidies - and pay little in taxes. Meanwhile, our national debt spins out of control.
Too bad we don't have enough national spine to nationalize the oil companies here!
"Many of these companies reap benefits from subsidies - and pay little in taxes."
http://money.cnn.com/2011/05/04/news/companies/exxon_oil_taxes/?section=...
Exxon's average effective U.S. income tax rate over the last six years is about 29%, according to the firm's security filings and an interview with a top Exxon tax lawyer. It's one of the highest rates for any industry.
Silver just fell from close to USD 50/oz to USD 39/oz within a very short space of time: In fact that's a 20% fall in 3 days. Now silver did spike up sharply just beforehand so it might just be a speculative peak being erased.... Or could it be the start of a total collapse in silver - and more importantly perhaps - other commodity prices? As QE2 unwinds in June it would seem reasonable to assume that commodity prices will fall. The question is just how far? And how fast? Will we see oil back at USD 50/bbl within a few months? Time will show - but things may happen very, very, quickly indeed when they do.
Help! I'm feeling almost clairvoyant today! :-) Only hours after I posted the above post world commodity prices started collapsing! :-) Perhaps we'll see USD 50/bbl oil within weeks and not within months?
Nice one. Too bad you didn't put money on it.
But what is behind this collapse? And how far will it go? The stock market seems to be gliding happily along. Yahoo news says it is "worry of weaker US demand." Why would that be more of a concern in the last few hours than before?
http://finance.yahoo.com/
Why would that be more of a concern in the last few hours than before?
yeh financial headlines are a trip--pretty much rumor of the minute type stuff. Read them for a couple months and they seem more and more like the tabloid headlines we all read in the checkout line.
This article was horrible. One of the worst I have ever read.
The biggest subsidy that the oil companies get is free petroleum. They don't have to pay the American people for it. How much is that worth? Let's see.
10 million barrels a day at $100 a barrel for 365 days. According to my math, that's $365 billion dollars a year. Now THAT'S a subsidy! In fact, it borders on fraud.
It's our oil, and we should insist that they pay us for it... and pay us well. This "Don't buy the product" nonsense is ludicrous. How about I get a check in the mail for the oil produced AND I get to choose how to spend that money? I like that answer a lot better.
This notion that "the jobs will go elsewhere". What a load of BS! The oil is here. Does anybody in their right mind think that the oil industry would walk away from 10 million barrels a day? If not, then somebody has to produce it. As for the refining process, that's different. But there is no reason to believe that refineries will be shut down because the people of America are paid for the oil extracted from their land.
Now, around here, you'll need someone stupid enough to reply... and I'm just the one.
Let's ignore the data suggesting that the U.S.A. peaked long ago. Also, let's ignore the native peoples. Too, no particular point will be made about the free dumping of the waste products of combustion into the common air. Nor will any financial assessments be made of damage to lands and waters.
A model for your assertion would be Nigeria. Any monies are paid to a few well-armed people in power. The oil is pumped-out from under the feet of the populace. The people get nothing for the resources that are part of the lands they have inhabited. The losses are permanent.
http://en.wikipedia.org/wiki/Nigeria_oil :
"The petroleum industry in Nigeria is the largest industry and main generator of GDP in the West African nation which is also the continent's most populous. Since the British discovered oil in the Niger Delta in the late 1950s, the oil industry has been marred by political and economic strife largely due to a long history of corrupt military regimes and complicity of multinational corporations, notably Royal Dutch Shell." I imagine the usual failure of the agent-client relationship absorbs any distribution of that wealth.
A difference might be that the Americans are among the largest consumers of oil. Anything paid to anyone for any aspect of oil production comes right out of the American lifestyle.
The biggest contributor to savings isn't the electric car or the bicycle. It's the JDAM.
http://www.youtube.com/watch?v=O9XRa_Q9WhM
This article was horrible. One of the worst I have ever read.
The biggest subsidy that the oil companies get is free petroleum. They don't have to pay the American people for it. How much is that worth? Let's see.
That's because you are spreading misinformation. They pay whoever owns the property rights for the oil, and then on federal lands they pay severance taxes and such -- after paying for the bid for the lease. So try to inform yourself in the future. The problem with this whole debate is that it is being driven by angry, uninformed people like yourself.
Given that $360 billion worth of oil is extracted, I'm thinking $200 billion a year should be sent to the American citizenry _equitably_.
So you're telling me, that this is already happening. Or are you saying that we get more or less?
They pay. No doubt. How much? $20 billion? What is that 7%?
They pay. Yeah. What percent of $360 billion a year?
Oh, $36 billion. 10%. Boy, that's some hard nosed negotiating our legislators have done for us.
Given that $360 billion worth of oil is extracted, I'm thinking $200 billion a year should be sent to the American citizenry _equitably_.
Once again, the Chavez model. And how that worked out for him is that companies stopped investing and his oil production fell off a cliff. That is the feedback loop you don't get. Just as soon as you jack the tax rates up, $360 billion in oil won't be extracted. The oil companies will seek other projects with better paybacks. So what you think is equitable is really irrelevant. What is relevant is the actual response to changing the tax code -- which you naively believe will simply be more tax revenues.
They pay. Yeah. What percent of $360 billion a year?
But you just said they didn't pay. So why did you say that? If you aren't interested in a factual discussion, then why bother to comment? This is the problem; people aren't interested in facts, they only respond emotionally and don't consider consequences.
I have no idea where you got $36 billion, but it looks to me like you are mixing up income taxes with severance taxes and payments to the owners of the mineral rights. The CNN article broke it down to 29% taxes on income, but that does not include severance taxes, lease payments, or royalty payments. The fact is, you have no idea what they pay (after all, you did claim they paid nothing), and you aren't really interested in finding out. You demand justice without understanding the issue at all. This is the sort of ignorance that drives these emotional discussions -- and our political leaders are just as guilty. They suggest ExxonMobil isn't paying their fair share, even though Apple has higher profit margins and has a lower tax rate. When is the last time you saw someone on TV raging about Apple or Google not paying their fair share?
I said they don't pay for the oil. Paying taxes and fees is the same thing that everybody else does to do business, what are they paying for the oil? If they do pay, how much per barrel? That's how everybody else pays. Oh and they pay taxes on it too.
Apple and Google don't extract finite resources from the ground. They aren't brokers in fossil resources. I would think that the difference would be clear.
Oh, and the Huga Chavez thing again. I see. So Alaska gets paid, but they aren't like Hugo Chavez? It's only like Hugo Chavez if it's on a national scale? Or you think that Alaska is like Hugo Chavez? Or Alaska doesn't get paid?
Which is it? Big Oil does pay, but not in a Chavezian way. Or Big Oil doesn't pay, and it's not Chavezian?
I said they don't pay for the oil. Paying taxes and fees is the same thing that everybody else does to do business, what are they paying for the oil? If they do pay, how much per barrel?
Isn't that something you should have determined before claiming they didn't pay? What they pay will be a case by case basis. In some cases, it is directly negotiated with land owners. If the land owner is the federal government, then they bid for leases on the land and then pay severance on the oil they extract. And if you think it is such a good deal, you can put your money at risk and if you hit pay dirt you might get that check in the mail you desire. If not, then you will start to understand that oil business isn't like printing money.
Apple and Google don't extract finite resources from the ground.
So? They use those finite resources to make and use their products, increasing the rate at which we deplete those resources. The oil companies that extract the resources from the ground pay once to extract them, and then again when they sell the product. And when they sell the product, they pay higher tax rates than Apple or Google.
So Alaska gets paid, but they aren't like Hugo Chavez?
You become like Chavez when you have an agreement in place, but when you see that the oil companies are making money, you change the deal to be more favorable to yourself. You take none of the risk, but want more of the reward. Sarah Palin did in fact do this in Alaska, and I have referred to her as the Hugo Chavez of Alaska. The oil companies don't have a problem operating in a system that pays royalties to citizens, but that has to be the deal going in. You don't change to that deal after billions in investments have already been made, you make that deal and then the investments will be made based on that deal. Projects take years to complete and often billions of dollars. To properly evaluate the project, you have to know what your tax rate is going to be.
So being like Hugo Chavez is somewhat like what we used to call being an "indian giver". A term unfairly used to characterise the behavior of native american indians that would supposedly cut a deal and then break it later (probably because they wised up to the fact that they were getting completely screwed).
I think I get it now.
So being like Hugo Chavez is somewhat like what we used to call being an "indian giver".
You really like your straw men, I will give you that.
What Chavez did was allow companies to take the risks on projects, and then when the risks paid off he demanded more of the take. He tried to force renegotiation of all the contracts to benefit him. Oil companies said "We invested billions based on the contracts we had in place." Chavez said "Tough, I have you right where I want you. Now pay up." So they left, and his oil production has been in free fall.
So what you idealistically believe will happen, won't happen. What will happen is we will continue to pay dearly for oil, we will just pay to Saudi instead of keeping it in the country.
I think some of the disconnect here is a difference in goals.
Do we all really want as much oil pumped out of the ground as fast as possible?
Shouldn't those of us that don't want this be encouraging the government to do everything it can to discourage oil production wherever and how ever it can?
umass - Did you know the feds get 1/6 the value of all oil/NG produced from fed leases? And that's off the top: a royalty with no deductions for the investment, expenses or anything else's. And that doesn't include the many tens of $billions they recieve just for the rights to drill on fed leases wheter the comanies found production or not. Do you know that most counties in Texas also get 1.5-3% of the value of all oil/NG produced in the county? Do you know that most private minerals owners get anywhere from 15 - 25% off the top of the value of all the oil/NG produced form their leases? Do you know that the state of La. get 15% of the value of all oil produced in the state. So if I own an oil well in La. I'm may be giving 15% to the state and 25% to the land owner and 2% to the parish to I giving up 42% of the value of all the oil I produce and that's off the top before I get to recoup my investment and the cost of producing that well. And then, if I make a profit, I pay taxes on that profit.
I'm glad you're here...honestly. You may be expressing thoughts others have had and didn't want to share. I've always known most Americans (at least outside of Texas) didn't really understand the nature of oil/NG ownership in this country. I suspect you picking up info you've never imagined. If some folks seem to come down a little hard on you just ignore them. One reason I devote a good bit of time to TOD is to broaden the knowledge base of folks out side the oil patch. There may be lot of criticism the oil patch deserves for one thing or another. But best to approach those issues with a clear understanding of how the system works IMHO.
Here's a few facts from a congressional staff report:
Oil companies pay a fraction of the value of oil produced on federal land
to the federal government. Offshore, this royalty rate is typically 12.5 percent. In 1995, at a time when oil prices where under $20 per barrel, the Republican Congress passed the Deep Water Royalty Relief Act (DWRRA) which allowed for royalty free deepwater production in the Gulf of Mexico when prices were low, for leases issued between 1996 and 2000. The intent of this law was to encourage deepwater production by waiving royalties until prices rose above certain thresholds. However, the oil and gas company Kerr-McGee (now Anadarko) filed suit to challenge the Interior Department’s authority
under the poorly drafted 1995 law to end royalty free drilling when prices were high. The courts ultimately sided with Kerr-McGee’s interpretation of the law and the Supreme Court declined to hear the case.
As a result of the Court’s ruling, ExxonMobil, BP, Chevron, Shell, Conoco Phillips and many other companies are now drilling for free on public land offshore and will continue to do so for the life of these leases no matter how high oil prices climb. The Government Accountability Office (GAO) has estimated that the federal government and American taxpayers stand to lose up to $53 billion in foregone royalties over the next
25 years.17 Ranking Member Markey has authored legislation that would recover these royalties rightfully owed to the American people. The House has repeatedly passed Rep. Markey’s legislation, including as part of H.R. 3534 that passed the House on July 30, 2010, but the Senate has never taken action.
Here's a few facts from a congressional staff report:
"$1 Trillion in Profits and Still at the Trough"
Yes, that sounds like an unbiased, objective source of information. You mislead by suggesting this is some kind of sanctioned government work, when it clearly states it has not been adopted by the committee. Then again, it has been clear from your essay hosted elsewhere and your comments here that you aren't actually interested in an honest debate on any of this. You are pushing your agenda, facts be damned.
You would have much more credibility if you addressed lilith's points specifically. Banging at the objectivity of the linked report does not address any of the issues below.
1. The legislative intent of the DWRRA
2. The lower court interpretation the Kerr-McGee suit left on the books and why the supreme court declined to hear it
3. The accuracy of GAO estimates of lost govt. revenue
4. The problems with legislation meant to correct the language of the 1995 bill that passed one but not both houses of Congress.
I expect more than Beck or Limbaugh type replies from key posters at this site, your reply here was a real let down.
I expect more than Beck or Limbaugh type replies from key posters at this site, your reply here was a real let down.
If you knew that Lilith compared Nate and me to Nazis, then maybe you can understand my curt reply. I don't believe she deserves any sort of in-depth response on anything.
I did NOT compare you and Nate to Nazis. The exact quote is:
You know, you lecture people around here that they need to get better informed, they're being "useful idiots", etc. Perhaps you should take your own advice.
"Little Eichmanns" draws on Hannah Arendt's concept of the "banality of evil" - that people who are not inherently evil or racist or whatever - can indirectly support destructive or evil systems.
Let me reiterate in case your own lack of objectivity blinds you: I said RISK becoming Little Eichmanns and the term "Little Eichmanns" does NOT equate to Nazis.
I did NOT compare you and Nate to Nazis.
http://en.wikipedia.org/wiki/Little_Eichmanns
Little Eichmanns is a phrase used to describe the complicity of those who participate in destructive and immoral systems in a way that, although on an individual scale may seem indirect, when taken collectively would have an effect comparable to Nazi official Adolf Eichmann's role in The Holocaust.
Keep spinning. I think Godwin's Law applies here. It is an odious, disgusting comparison. Any thought of having a reasoned discussion with you on any of the points you made (as poorly as you made them and as badly as you misrepresented my position) disappeared when I read it.
Let me reiterate in case your own lack of objectivity blinds you: I said RISK becoming Little Eichmanns and the term "Little Eichmanns" does NOT equate to Nazis.
OK, I think I got it now. You weren't comparing me to a Nazi, you were just saying that Nate and I risked becoming like Eichmann, a guy who helped enable the Holocaust and who just happened to be a Nazi. That clears that up. Gosh is my face red.
If they get it for free, just where then, does the money for Alaska's oil dividend come from?
It has averaged a payout of $1500 per person for the last fifteen years.
http://en.wikipedia.org/wiki/Alaska_Permanent_Fund#Dividends_and_spending
Different states have different royalty rates, but the oil co's sure don't get it for free.
Yeah, where's my share? I thought this was a country, a nation. The only number I see is $36 billion. That is 10%. That sucks. Moreover, it'll only continue to get worse as prices rise.
State by state, good one.
If you want some of Alaska's oil revenue then you can always move there - it is a very nice place. You might want to leave the attitude behind though.
Unless the oil/minerals are on/under Federal land, then administering them, and taxing them, is a State jurisdiction, and each state can set and change the rules and royalty rates as they see fit.
I should point out your country is , actually a "union" of States, and seems to take respecting the states rights fairly seriously. If you don;t like that arrangement you can always try another country, because I doubt you'll get to change these arrangements - most States seem to like controlling their own mineral rights.
Talk about property rights, didn't the United State "purchase" Alaska? I think it did. I guess, that transaction doesn't count.
Maybe, the traditional view of mineral rights is antiquated. The age of plenty is over. Traditional "arrangements" may not be as tenable as they once were. Regarding oil, traditional arrangements have changed all around the world in recent years.
Yes, the US did buy Alaska, for the bargain price of $7.2m. However, Alaska was granted statehood in 1959 - which includes, as the same for other States, ownership of the mineral rights on all but Federal land - but maybe none of that counts in your eyes?
What Alaska has that many other states don't is a constitution that actually says the minerals belong to the public--since discovery of oil in the Cook Inlet region allowed statehood to progress its no great wonder the issue was addressed. This is very important in a state where only 1% of the land is privately held--which comes to near the same acreage as that federally held in Texas. Governments of one feather or another hold about 90% of state land, with that strangest of birds the Native Corporation holding the rest. When statehood was granted Alaska got a very sweet royalty split with the feds for minerals on/under fed land (about 65% of the state is fed owned). The gloves can come off when this is on the table.
The permanent fund dividend so many people get so confused about has gained a big chunk of its value in the stock market. The fund is managed independently of the legislature and governor--that is one reason why it has grown way faster than Alberta's fund has which was instituted around the same time.
Palin did give everyone a one time $1200 dividend--no one asked for it but then we certainly didn't give it back. Of course Palin actually couldn't do that herself, she could only sign the legislation, which of course she pushed for. It was related to the tax change that went into effect in 2007 I guess, but it had nothing to do with the constitutionally established permanent fund which has been growing since 1976.
The tax change that she pushed in isn't that onerous at the base rate level. Actually what happend was that in 2006 Alaska went from a flat tax on oil volume to a tax on profits (what great timing!). There was a bit of controvery when a big lobbyist, former VECO head (VECO was the largest oil field service company in the state that CH2M Hill bought out) and a bunch of bought legislators got busted for corruption. The next legislature looked at their work and decided a 25% base tax profit was warranted instead of the 22.5% one that had been levied by the tainted bunch.
No real game changer there, but the new tax included a progressive tax rate increase as profits increase--and one without top bracketting. That is what has to be addressed in some fashion--I believe the rate increases to something like 90% on the dollars earned above the $125/barrel mark. A rate like that just might encourage drilling elsewhere don't you think?
The Russian's controlled very little of the lands.
that's a whole different story, and hardly only applies to the Alaska deal. They were in the club of countries with embassies, no one else had any say in those dealings.
Superior weapon systems winnow resources from native peoples.
10 million barrels a day at $100 a barrel for 365 days. According to my math, that's $365 billion dollars a year.
Oh, and I meant to point out that you didn't even get that right. Total U.S. production is closer to 5 million barrels per day. So you aren't doing too well with your facts. I can understand why you thought the article was so bad. It runs contrary to everything you believe, but the problem isn't the article. It is that you are misinformed.
In fact, the govts role in this should be to maximise the return on oil production. Obviously if they charge private oil companies $1 a barrel for oil, a lot of oil will be produced but it wouldn't generate much revenue at only $1. Charging $500 a barrel would generate little revenue because very little oil would be produced. Somewhere between is a maximum. That should be the govts role, find the maximum, collect the money and disperse it equitably to the American people it represents.
This way when the price of oil went up, people couldn't complain because even thought they would pay more at the pump, they would also be getting more return from domestic production.
Right now, they just pay through the nose, and they don't get sh*t in return. Evidently, this is how Robert Rapier likes it, because he sees no problem with the current "system."
Evidently, this is how Robert Rapier likes it, because he sees no problem with the current "system."
Buy a clue:
http://www.consumerenergyreport.com/2008/04/27/an-open-letter-to-our-nex...
I think your suggestions micromanage and reinforce current popular misconceptions. Morevoer, one of your "suggestions" (tax break) completely ignores a substantial part of the population that pay no taxes anyhow. I guess they don't get their share. Genius.
Morevoer, one of your "suggestions" (tax break) completely ignores a substantial part of the population that pay no taxes anyhow.
Not true. I have gone into quite a bit of detail on how I would manage such a system in many essays I have written. It would involve tax credits for those who don't pay taxes.
But I am seeing that you are a person not given to doing much research before forming your righteous opinions.
I'm just reading what you wrote. You wrote about tax breaks and you wrote "Stop buying their product."
I am reading what you wrote (the link and the post) and commenting on it. I can't speak to your other works.
I'm just reading what you wrote. You wrote about tax breaks and you wrote "Stop buying their product."
If you want to impact their profits, that's what you need to do. Take away the tax deductions and your gasoline bill will go up if anything. So if the purpose is to stop transferring money to the oil companies, the way to do it is cut back on your consumption.
I am reading what you wrote (the link and the post) and commenting on it. I can't speak to your other works.
No, you didn't even do that. At the link, I wrote "In order to offset the burden of these higher taxes, I propose a tax credit equivalent to the increased tax burden for the average American." So it's there, you just do shoddy research.
You also had written he sees no problem with the current "system." So you are drawing conclusions that are unsupported by what I wrote. If you are going to do that, then you should probably do a bit more research into my actual position before trying to project a straw man onto me.
Robert,
Thanks for supporting a reasoned argument (again). I'm riled at XOM et al no-end, but I have to suspect that your basic layout of the problem is probably fair and accurate.
I'm not tax and business savvy enough to be much of a judge, but the very basic point of how we're currently stuck buying a product that HAS more energy value than we've really been paying for all our lives, and now that price is starting to get precious as it tops out, yet we still 'need it'... leaves us few besides these middlemen to blame it all on. EDIT: (I'm not saying that this blame is entirely justified.. just that it's understandable)
Some have criticized your take-away of 'just buy less- or stop buying if you can', as if there wasn't also an imperative on us collectively to also create some policies to pull ourselves nationally out of this addiction.. but I don't suppose you're against that conclusion.. you just made your point at the most immediate level, and kept it simple. (And clearly, a concerted governmental effort to effect demand changes also has the obvious complications of getting any degree of a bipartisan consensus on this problem, which is essentially impossible these days)
The Oil trade is scalping very hot tickets to the 'End of the Oil Age' show, and everyone who's anyone HAS to get a seat. It's the perception of needing to be in that audience that is a bigger problem than those who have this sizzling commodity. I hope people are ready to walk home when the encores have petered out, cause Mom and Dad won't be picking us up.. and the scalpers will be long gone.
Well, the people I know, I admit they aren't rich, if I gave them three options:
1) stop buying (so much) gasoline
2) Get a check in the mail
3) Get a tax deduction (that would most likely benefit the wealthiest, because they have the highest brackets and they have the resources to take advantage of tax law)
I'm guessing they would take option 2.
The problem is, they aren't being given option 2. Not by anybody. Certainly not by people with advanced degrees that understand the industry's business model.
Oh, and the "Property Rights". "Property" is determined by the people. The people have every right to say that petroleum reserves in the US belong to everybody equally, and all should benefit from it's extraction as equally as feasible.
Oh, and the "Property Rights". "Property" is determined by the people. The people have every right to say that petroleum reserves in the US belong to everybody equally, and all should benefit from it's extraction as equally as feasible.
The problem is, they don't want to take the risks. They only want the rewards. This is a risky, volatile business. There is no free lunch. If you want a check in the mail, go invest in ExxonMobil and be prepared for the possibility of losing money.
What risk? For example, charge $2 per barrel of production and keep bumping it up until the total revenue starts to plateau. No risk there. Not complicated (conceptually).
How is charging risky? Start low, such that it couldn't possibly make or break any operation, get a handle on the econometrics, and start bumping it up. Every business in America does this.
What risk?
The risk is the project itself. You don't want to assume any of the risks of spending millions drilling a dry hole, you just want the rewards if that hole turns out to have oil in it. So we let companies go out and assume the risks, and those that survive we take as much from them as we can? I don't think you have really thought any of this out very much. if you want companies to take risks, the rewards have to be there. If you want to take the rewards from them, they won't take the risks (or will take them elsewhere). That is not my opinion; that is fact.
We will have to admit that commercial oil exploitation has been "privatize the profits, socialize the risks" taken to the extreme. The risk was not that an exploration company could go under, or have to lay off workers during lean times, or have its wells go dry. No, the risk was that collectively we would greedily extract the oil without treating it as a precious fuel that could and should have been used to better plan our way to a renewable future. If there was in fact any kind of strategy set in place by governments that would have prioritized crude oil for renewable fuel research before pure capitalistic concerns, we would have a better outcome. People could decry this as some sort of socialism, but it was a possible option that only someone like Jimmy Carter even remotely offered as a tentative trial balloon.
As it is now, we have socialized the risks to an extreme balance. Everyone, the public and the oil companies equally, will face the brunt of a declining supply future. Hard to argue this fact as that is how events have placed out, and there is no redo.
Well said.
It concerns me that apologists for oil companies on this site and blindly pro-corporate stances from POers just make it easier for people to say that 'PO theory' is a creation of big oil co's to distract people from the huge profits they are making from working people faced with ever-rising gas prices.
Of course, even more than people and governments, it is the living world that is taking the biggest risk and which absorbs the greatest damage from oil and other ff extraction and use.
Of course singling out oil companies isn't exactly fair here--farmland isn't particularly renewable, and we certainly privatized the profits and socialized the risk of turning farms into sprawling suburbs. Of course so many more stake holders were involved (if you don't count the sheer number of oil stock owners) that it looks to be a whole different deal but it really isn't. It is quite the web isn't it.
"if you want companies to take risks, the rewards have to be there."
Farming can be risky too. Suppose your parents buy a new combine. In addition to interest, insurance, local taxes and operating expenses, they can deduct for depreciation, maybe 20% of the machine's cost per year, maybe less, until the equipment is entirely depreciated. But if they got the deal that independent oil drillers get, they could deduct 15% of the gross from every bushel of soybeans or bale of cotton. If they take care of the equipment, they could make enough in tax savings to buy several new combines. Nice deal if they could get it, but they are in the wrong business.
Of course, any change in depreciation/depletion should apply only to new wells, to avoid Hugo Chavez implications. With oil likely to be above $100 most of the time, I don't think good prospects will be left in the ground too long. Oil was probably about a dollar per barrel when the depletion allowance was put in the tax code. And if most of the taxes get passed on to consumers, that's OK with me.
We have been sharing in the risk. In the case of the Intangible Drilling Costs deduction, we have been sharing in the risk for nearly a century - since 1916! The IDC subsidizes expenses such as labor, drilling rig time, and drilling fluids and chemicals. The idea here is to incentivize drilling of more wells by subsidizing expenses that cannot be salvaged should the well turn out to be dry.
Give us our bread and circus already!!
In that case I guess I'll just sit around at home waiting for a lot of checks from a lot of other businesses as well, right?
To be frank I really don't understand why you are out to attack the messenger, In this case Robert. If you want to pay less for gasoline don't use so much of it, that is something that is under your control. I suggest you start finding ways to exercise that control because unless most of the people who post or read and comment on this site are way out in left field, the price of oil and gasoline are probably going to continue increasing until demand finally falls bellow available supply.
In some sense, yes. But oil is the biggest boy on the block, so let's start there and work our way down. We can worry about gold, silver, copper, lithium, coal etc. soon thereafter.
As for not using so much gas, what makes you think I use a lot of it. The fact that I am pissed off that I am getting ripped off means that I drive a car? I don't.
I do know that my petroleum is being extracted from the ground at $365 billion a year pace and I do know that I ain't getting a thing for it. The price of oil could go to $1000 a barrel, and I still wouldn't be getting anything. Not cool.
At what price of oil would you start to think that maybe you should be getting a piece?
'Nice work if you can get it, (and if you get it tell me how)'..
That's why the NOC's are bigger than the IOC's today, and yet how much does the Saudi Street see the benefits? Nigerians?
Mossadegh put in his bid for Nationalized oil, and won himself a CIA coup.
I agree it isn't fair.. but mind who you're arm-wrestling with over that oil money. You might decide it's just easier and safer in the long run to collect some Sun.. get some PV and an Electric Scooter or something. No, it's NOT the whole answer, it's more like a Philosophical description for the Approach.
You can look around for your energy profits down in someone else's deepwater hole, or you can look up on your roof. A bit easier, since 'that's where the light is ..'
Whose is it, properly? Who put it there? Who owns the air? Who has the right to unbalance the atmosphere we all depend on?
Our collective ship will go down to the sound of increasingly shrill shouts of corporations and ideologues yelling, "I own the right to bash ever more and ever bigger holes in the hull because I own this part of the ship's bottom!"
Well mentioned. The stakeholders who would benefit by having it stay in the ground - some of them even human - are conspicuously out of the loop.
Framing the issue in terms of money flows allows it to fit into our prevailing narratives.... but let's bear in mind that they are not particularly lucid narratives.
I fully agree that XOM is no more culpable than those of use who demand to burn the stuff it excretes. But in the context of screwing up the future of a previously nice planet out of short-term self-indulgence, that's pretty durn culpable. To a good first approximation, we all seem willing to be exxons to stay inefficiently mobil.
Here's a meme, a wordlet: LIITG. Leave It In The Ground. (and the very similar & more satisfying LIITFG). Pass it on. Carbon sequestration the old-fashioned way; don't dig it up and light it.
And while we're at it, what's the deal with corporate personhood? I have no particular animus against XOM, but it would look good smoldering in the sunlight with a stake through it's heart along with all the other immortal amoral superbeings we have vested with rights. The notion of corporations having the absolute right to pump cash into influencing elections (or do MOST of the stuff they now do) makes less sense than giving squirrels the right to vote.
Good article RR... points well-made, but dohboi's comment triggered my eco-tourette's. Best.
umass - maybe you're from a communist country originally but here in the US mineral rights are owned by either individuals or by the govt. The "people" have no more rights of ownership of oil/NG produced from a landowners property than they own a share of the crops farmed off that same land. Or the cattle grazing there. Or the right to use the pool in your back yard.
In case the subject is completely alien, oil/NG/mineral rights are no different than land ownership. They are bought and sold just like any piece of real estate. All the minerals/oil/NG produced from federal leases belong collectively to the public (they get around $12-15 billiob/year these days) but that's all. Your statement is one of the most amazing I've seen on TOD in a long time. I'm guessing you might think our mineral rights are similar to most other countries where all minerals belong to the crown. Not even close here in the US.
That's a bit of a red herring. Mineral rights rules are very similar in e.g. Canada as in the US. The only difference is that mineral rights don't commonly automatically vest with surface rights, they must be explicitly purchased separately from the Crown if wanted, else they remain with the Crown separate from surface rights. As does all land / surface rights as well, if no-one wants it enough to purchase it. It makes a lot of sense in many ways, since the US system basically amounts to a lottery system, e.g. if person A's grandfather bought a plot of land 100 years ago solely for the value of the surface rights, and person B's grandfather did the same one county away, should 'A' be considered to have earned a huge wealth when oil is later discovered under his grandfather's plot, placing his wealth far above that of 'B' where no commercial oil was found? Why exactly?
[Edit added] Ok, I see what you mean. Most places in the world don't work that way.
I didn't assume it at all. What I did assume is that I am getting screwed by these very same laws that you seem to adore.
The American people are getting screwed. The age of scarcity is underlining that fact.
Slavery was an American institution as well. Maybe it wasn't allowed in communist countries, but it sure was allowed here. People ownership was no different than land ownership ...etc. etc.
What I hear is, "Get screwed, or go to a communist country." Sorry, I'm not a wuss that just lays down for bullies to walk all over. That's how I view big oil and big finance and big just about anybody, big bullies.
In all fairness, if you've read Rockman much, I think he reserves his adoration for a good kneeslapper and a dose of Bluebell Ice Cream (Whatever that is.. I'm in Ben&Jerry Commie Country up here..)
Your outrage may be understandable, but slamming these guys here is unnecessary and counterproductive.
Big Biz ARE bullies.. but if we're getting 'screwed', how does STOP BUYING GAS not screw them back? Yes, your or my individual attempts might be invisible to them.. but that's not the point. Everyone who joins in and figures that out is free of that tether, and we don't have to pay that piper any more..
As Eddie Murphy said in Trading Places, "I think the way you hurt a rich person, is to make them poor." (.. or at least unsubscribe from their scheme!)
I Scream, you scream we all scream for Ice Cream!
Have some ice cream.. a critical element to living the good life! (Avoid all the Petroleum Flavors though, if you must)
A college-era girlfriend of mine once opined that most of the world's problems were caused by a shortage of ice cream. She may not have been correct about the cause, but she pointed out that most of the world's problem areas are places that have little or no ice cream.
I have had a greater appreciation of the calming power of ice cream ever since!
Hear, hear!!
US mineral rights are owned by either individuals or by the govt
Well I believe a big part of what may be at issue here is really who owns the government. Alaska was very lucky to come along so late and have resources on its mind when its constitution was written.
Of course when following such directives, most people will heavily weight for maximum benefit of its people to the people who are living and breathing at the same time they are ?- ) Still it is the only state constitution that addresses the subject, I believe.
2) Get a check in the mail
The problem is, they aren't being given option 2.
You already are getting a check. Every time an oil company pays a lease fee to the Federal government, or pays royalties on production or pays taxes to the Feds or any state government, “you” (the collective you) are receiving a check from them. We all are. Just because it isn’t individually addressed to your name doesn’t mean you and all the rest of us aren’t being compensated. Now you can argue whether your representatives in government are using that money in a way that maximizes the benefits you and your fellow citizens are receiving; you can argue that the money should be redirected away from government bureaucrats who allocate the funds on the public’s behalf and instead send it directly to the people to spend individually as they please; you can argue if it’s possible to increase overall level of compensation the government takes in from the oil industry without causing undesirable consequences elsewhere, but you can’t argue that you (the collective you) aren’t being compensated at all for the production of the oil that is publicly owned. That is simply factually incorrect. The MMS (now BOEMRE) is the 2nd biggest source of revenue after the IRS, and all of that money eventually goes to "you".
Jeez, Robert, you can't even give the darn clue away for free? You want people to buy them?! LOL!
Sorry, I couldn't resist, I think I'll stay out this >;^)
What are the taxes on buying a clue?
Don't worry, if you are a big enough corporation, they are subsidies handsomely!
R^2's passionate defense of oil industry subsidies estimates $4.3B USD annual while neglecting to mention that the top 10 oil companies(aka Big Oil) made $38.1B USD in profits in the first quarter 2011 alone and profits in the preceding decade over $1T USD.
http://money.cnn.com/2011/04/29/news/companies/big-oil-gas-price-respons...
He contends that those who seek to reduce those subsidies are motivated by targetted revenge because they are mainly using tax strategies that exist in other, less profitable industries.
Here he echos the 'class envy' meme favored by conservatives.
The fact is that corporations and individuals should be taxed on the ability to pay, not on the basis of bogus 'tax fairness'.
And subsidies amount to a tax cut for those entitled to receive them at the expense of the rest of us.
The government needs money and the rich are harmed less than the poor by collecting taxes.
Call it the 'rich man's burden'. They owe a debt to the nation that made their profits possible.
Even a Fair/Flat tax system would end up helping the rich because
they can make profits from investments much more easily than people who lack money.
If Big Oil ends up making $150B USD in 2011 and also received $4.3
B in subsidies while crushing US consumers who pay a large share of their disposable income for oil products and oil
price-sensitive food, that injures the USA.
If you really believe in Peak Oil, then high oil prices and high oil company profits are here to stay and the US consumer will never see relief. The least Big Oil can do is pay more taxes on their taxes to lessen the tax burden on the majority of Americans.
It's not class envy, it's tax justice.
R^2's passionate defense of oil industry subsidies...
Let's set the record straight. This is not a defense. It is an explanation of what these 'subsidies' actually amount to, because I don't think in most cases people realize we are talking about tax deductions that are not limited to the oil industry. As I point out, the biggest category is also a deduction for the ethanol industry, yet it is never called an ethanol subsidy.
estimates $4.3B USD annual while neglecting to mention that the top 10 oil companies(aka Big Oil) made $38.1B USD in profits in the first quarter 2011 alone and profits in the preceding decade over $1T USD.
Have they paid no taxes then? How do their tax deductions compare to their taxes paid? I am sure you know that the industry is one of the most heavily taxed, and that $4 billion is a drop in the bucket compared to the taxes they paid.
The fact is that corporations and individuals should be taxed on the ability to pay, not on the basis of bogus 'tax fairness'.
Yes, the Hugo Chavez model. How has that worked out for him? In fact, individuals and corporations should be taxed to maximize tax revenues. Despite the earlier poster being terribly misinformed about oil companies not paying for oil, I agree with him on this point: Set the tax code up to bring in maximum revenue. The problem is, just because a company has the ability to pay doesn't mean they won't seek alternatives that reduce their tax liability. That is why companies left Venezuela. They had the ability; they just had better options for their capital.
Hence, the question that should be asked is the one I did ask: Not can they pay, but what is the impact of changing the tax code? That is really what's important, but the question angry people don't stop to consider.
I agree with him on this point: Set the tax code up to bring in maximum revenue.
Working that out is a real wrestling match--this legislative session Alaska has been working on that hard and heavy, and I'm betting they will be at again next session. Honest, hardworking and informed people can come to quite different conclusions what tax code structure will maximize revenue--and plenty of less than honest people with dogs in the hunt will be doing their best to keep the picture cloudy.
But at least money for the people is on the discussion table. That was my primary problem with this post, it never opened up the discussion to include all options.
The fact is, there is no national dialogue on how the massive wealth of our oil reserves should be reaped. That is wrong. Moreover, this fear-mongering that any change will be like "Hugo Chavez" and scare away all the oil producers and lose millions of jobs, is unacceptable.
There are other models out there that work better for the people. Discussion of adopting some aspects of those models is not happening. That is wrong. There's too much money, and too many poor people for it not to be a moral issue.
But at least money for the people is on the discussion table. That was my primary problem with this post, it never opened up the discussion to include all options.
What do you think taxes are, if not money for the people? And when oil prices go up, they pay more taxes. Sounds like you would prefer something akin to communism, but that system didn't work out all that well.
Moreover, this fear-mongering that any change will be like "Hugo Chavez" and scare away all the oil producers and lose millions of jobs, is unacceptable.
Sounds like more of your straw men. I am explaining how the world really works. We do have actual case studies of some of the things you suggest, which are identical to what Hugo Chavez has implemented. And we can see exactly how that has worked out.
The Alaska model has worked, so indeed we can do better than nothing. Yeah we saw how that worked out, people got checks in the mail for hundreds of dollars.
So where's my check? Last year Alaskans got $1200 each. That would help take the bite out of higher gasoline prices now wouldn't it?
But, I don't deserve it. That would crash the whole system. They've done that before. That's like Hugo Chavez. I should buy Exxon-Mobile stock. Blah blah blah.
Alaskans deserve it. Alaskans don't crash the whole system. Alaska isn't Hugo Chavez. Alaskans don't need to own Exxon-Mobile stock.
http://en.wikipedia.org/wiki/Alaska_Permanent_Fund
Just think, you could be getting a check too.
umass - just to make sure: you do know the money being distributed to the folks from AL isn't coming from oil revenues directly, don't you? I would think so since you posted the link. Besides oil revenue the fund is built with other revenue sources the state receives. If the state you lived in had built such a fund you would be receiving a check also. But they spent all their income and didn't put together such a rainy fund like AL (and Texas to a smaller extent). But speaking about Texas the folks in AL weren't the only ones benefiting from state owned minerals. Texas has received many $billion in royalties from our publicly owned minerals. In fact, at one time, the entire state college systemm was funded 100% by this revenue source. But unfortunately PO caught up to Texas long ago and those days are just a pleasant memory now.
umass - just to make sure: you do know the money being distributed to the folks from AL isn't coming from oil revenues directly, don't you?
Umass doesn't seem to know much of anything. He is just angry, and one of my points is that this whole discussion is being driven by angry, uninformed people. He started out by declaring that the article is garbage, and then proceeded to fill everyone in on 'facts such as oil companies don't actually pay for the oil they are extracting and that they pay little taxes. Nothing quite like the combination of ignorance and righteous indignation. Of course that describes quite a few of our political leaders as well.
True robert. But umass seemed so far from the reality that tossing out some simple verifyable facts might get him leaning in the right direction. Of course he'll probably never get anywhere close to our positions but what bothers me about such folks is that he may have a bigger audience than you which would repeat his misunderstanding. I don't really care if he ever agrees with you on anything...just wanted to get him working in the same universe as the rest of us.
Coincidence? I think not! So how much is his % of the profits you're making on this post, huh? >;^)
umass - just to make sure: you do know the money being distributed to the folks from AL isn't coming from oil revenues directly, don't you
Alabama has a fund too cool.
Alaska is AK ?- ) of course if you say you are from AK and half the people think you are from Arkansas AR, at least Arizona is off by itself AZ
Really not that many states start with A compared to M or N but the abbreviations for the A states as often confused, maybe because the A s combined population is so low--the M states though also confusing seem a bit more internalized at least to me well except for Maine ME and then I'd probably confuse Mississippi MS with Missouri if the big MO wasn't drilled in so deep, don't know why I keep track of MN for Minnisota, as I have to think twice of MI Michigan even though I liver their a couple years...of course that MI could be for...
thought a few extra circles were warranted in this discussion ROCK?- )
Sure, and it could even be as big as most anyone could ever want. Just have the Feds cut every citizen a million-dollar check, then impose a million-dollar tax surcharge. In one pocket and out the other. LOL.
Whatever tax you put in place will just increase the price of gas in the U.S. There is no giant pool economic rents in the oil business.
So you can raise extraction taxes 10x, and get a check in the mail, but every good and service is going to go up in the process. Everything you consume, including services is influenced strongly by the price of oil.
I suppose the poor could see a net a benefit in a theoretical sense, but the upheaval from the economy having to reorient to much more expensive gas prices could create many years of hardship for only a small gain.
You could also see a situation where it isn't cost effective to employ lower-tier workers due to not making up for the value add capture of the tax. This is a problem in places like Sweden where in most parts of the country you really can't pay someone to for example bag your groceries because fixed employment costs are too high. Gas prices are a form of employment tax since they raise employee costs.
Luke - Just a simple illustration of how that wrestling match can go worn. Some years ago a clever civil servant in Austin, Texas decided to raise the fee for personalized car plates from $25 to $75. Great idea to raise a little revenue for the state. One problem: the next year they collected $300,000 less for the plates. Turns out even Texas vanity at $75 was too much for folks to pay.
And this was a very simple model compared to the oil patch tax code. I just recalled a couple of decades ago Wyioming got clever and raised the state coal production tax to nearly the price the coal was selling for. One result: a coal fired plant in Texas started shipping coal in from S. Africa because it was cheaper. Not sure if WY lost net reveue or not. But I'm told recently they've learned their lesson some time back and aren't quit as greedy these days.
The model doesn't quite apply when we are discussing a fixed amount depleting resource, as opposed to a time-dependent service like vanity plates. Likely fair to say that if they don't sell the coal at that price this year, they will eventually, and the higher price / recovery will eventually accrue to the state.
This is my problem. Why should an industry profit off of scarcity. The whole capitalism thing is BS when you factor in scarcity. You cannot stimulate production and lower prices back down with momentary high prices. You only stimulate higher prices with high prices in the depletion scenario.
Thus you have a cartel taking a little too much cream from the top. I do not blame oil. If I had access to everyones pocketbook (legally) I would take there money also. Big oil is just doing what they are doing because they wrote the laws over the years. They are entitled until mom and pop and joe sixpack learn where they are sending their money.
The other problem is the longish term goal of heavy profit taking. Exxon will never produce more net oil that is has in the past. They can only "seem" to grow if they charge more. Usually high profits signal growth. In this case, high profits are signaling the opposite -- contraction of the industry.
"Why should an industry profit off of scarcity."
Nicely put. It all ends up being quite unsavory, like price gouging to make a lot of money from desperate people during a crisis.
Ultimately, as people begin to see it this way, they will demand a change in the basic system. But there are powerful forces both distracting them from this understanding and opposing any move to a different system.
Oct - Don't you and dohboi profit off of scarcity? You work for a living I assume. And you get paid a salary based on what your company needs to pay you to get you to work for them. If you were the only person available to do your job you would make $X/yr. If there were a thousand unemployeed folks standing in line to get you job wouldn't you get that $X/yr, would you? Obviously not. So your salary is dependent upon supply. And if supply of workers like you were tight would you not accept the offer from the company and insist they pay you less because you "don't want to profit from scarcity"? If you were selling your home in a big demand market would you sell it for less than your neighbor's house because you "didn't want to profit from scarcty"? As I mentioned earlier I don't recall anyone voluntarially contributing to oil companies back when oil fell to $10/bbl in 1986 and hundreds of companies and hundreds of thousands oil patch workers lost their jobs. Isn't it just as unfair to benefit from a surplus as it is a scarcity if it cause some folks finacial pain? Careful how you answer...if any of your energy is coming from NG today you're benefiting from a surplus in the market that has many companies selling below cost for their NG. And has put m,any companies out of business as well as several dozen folks I know personaly who lost their jobs when NG prices collapsed.
Kinda depends on what end of the breadline you're standing, eh? LOL
I don't work much. I read Oildrum. LOL.
Well, our arguments are becoming oddly disconnected with the falling price of oil. Have you any notion about that?
Scarcity is kind of weird with oil -- what is the replacement. Someone could replace me. Maybe Chinese teachers will flood my university and I will be asked to take $5k a year (chuckle).
I guess the end goal is to drive the markets to efficiency -- to dull the pain. Wouldnt reinvested taxes from excess oil profits help make that transition less severe?
Good answer. Scarcity for oil has more to do with historical trends than absolute values. The world has come to expect ever more oil, and that is now not happening. This is a new situation for the world.
Linguistics PhDs are the most over produced and least employed of any PhD in the humanities and have been for decades, so no, I'm afraid I'm not particularly scarce compared to the demand.
Not to say I'm not part of the problem, or anything.
I generally expect to join the ranks of the permanently unemployed at any minute, and then I really won't be part of a scarce population/commodity.
I elaborated on our tax situation a bit upthread in reply to Paul Nash--it can take me a while to run through the comments when I'm bothering to reply and trying to keep my facts straight--lots of Googled tabs up.
It is a tricky situation and as Robert Rapier does mention--a stable resource taxing structure is very important to outfits parsing out scarce capital for long term projects. I really do think our marginal tax rate needs a cap as do most of the legislators--they just weren't going to get railroaded into it.
We've a pretty hard working bunch in Juneau right now--nothing like the bunch who reportedly even had 'Corrupt Bastards Club' hats made who passed the initial 2006 oil tax legislation. I'd rather everyone lets it digest a while and then gets back and hammers out something that has a chance of being the best long term revenue generator.
For tax year 2009, Exxon paid $0B USD US income tax, $15B USD in taxes worldwide.
http://blogs.forbes.com/energysource/2010/04/07/exxon-says-it-does-pay-u...
In the first quarter of 2011, Exxon says it paid $3.1B USD in all US taxes( not just income taxes) when it generated 10.7$B USD in profits.
http://money.cnn.com/2011/04/29/news/companies/big-oil-gas-price-respons...
http://money.cnn.com/2011/05/04/news/companies/exxon_oil_taxes/index.htm
Tracking taxes is like nailing jello to a tree, however it is clear that Exxon is extremely profitable and consumers are hurting. If the maze-like tax code benefits them other taxes
can be imposed to redress the imbalance, though at the risk of perceived unfairness( we're all equal, right?).
It's fun to laugh at Hugo Chavez but look at Statoil.
In the whole year 2010 they paid ~$100B NOK or ~$20B USD in Norway taxes
with an aftertax profit of $131B NOK or ~$26B USD.
OTH, in 2011 last quarter Exxon paid $3.1B USD in all US taxes on $10.3B of profit.
http://www.statoil.com/AnnualReport2010/en/financialperformance/Positive...
Clearly Statoil is paying a lot more tax than Exxon.
Also here's a list of the biggest oil companies from 2008 with Exxon being No.3 after Aramco and National Iranian and ahead of PDVSA, China's CNCP,BP, Shell, Conoco and Chevron.
You needn't cry for the IOCs.
http://www.energyintel.com/documentdetail.asp?document_id=648479
Thanks for digging up the info on Statoil.
Clearly Statoil is paying a lot more tax than Exxon.
You are comparing apples and oranges. Statoil has a virtual monopoly on production in Norway. They don't have to compete with anyone. Not only does ExxonMobil not have a monopoly in the U.S., most of their operations aren't even located here. But you know who can compete against ExxonMobil in the U.S.? Statoil.
You have never taken the time to understand what I am actually saying anyway, which is normal for you. Personally, I don't care if you triple their taxes. But don't do it to them preferentially, and don't do something to them that you aren't going to also do to foreign competitors operating here. The first is a case of fairness; why is it fair for ExxonMobil to pay even more taxes than the more profitable Apple? The second is a case of seeing even more of your domestic oil industry vanish to overseas competitors.
But people are mad, and mad people aren't logical. They will just act, and in 10 years wonder why we are even more dependent on Saudi and paying $10 a gallon to them for gasoline. You may be paying $10 no matter what, but I would like to see us maximize what stays in this country.
Further, you are well aware that I have advocated raising gas taxes and refunding that money back to consumers through tax credits. That addresses the actual root problem by encouraging a shift to alternatives. None of the proposals that are floated above will do anything to help wean us off oil, but they will shift where we get that oil to a greater reliance on imports.
By the way, ExxonMobil is going to be part of a blogger call on Monday. It is at 4 a.m. my time in Hawaii, but I am going to submit some questions. Is there something you would like to ask them? I am going to try to get to the heart of what they really pay in income taxes (not sales taxes, payroll taxes, etc.)
Thanks for offering to submit questions, R^2.
Are they going to relocate the headquarters to Dubai a la Haliburton? (snarky)
What is their plan for helping US consumers with gasoline prices over the next 6 months?
Will they be installing more E85 pumps at their gas stations to help owners of E85 vehicles as the goal is that half of new vehicles made in 2012 with be FF?
Do they have any plans for Colorado oil shale development(they are big on Piceance gas)?
When will they stop funding GW deniers think tanks-they gave $1.5M last year to Atlas Economic Research, Pacific ER ,Media ER, Heritage, Heartland, etc.? (only slightly ad hom)
http://climateprogress.org/2010/07/20/exxonmobil-funds-global-warming-de...
(No, I don't expect them to volunteer to pay more taxes to the government which they own, that would be silly.)
maj - You might get your wish. I've heard rumors for some time that ExxonMobil was working on a plan to relocate a number of their companies out of the US. Supposedly they would keep the refineries here since they tend to not make much profit per se. I can't say I believe the rumors but if it did happen folks could stop complaining about how much taxes XOM is or isn't paying. Since they would no longer be a US corporation there wouldn't be anything to complain about: they wouldn't owe anything to the feds...just like Shell Oil International, or Petrobras, or Total, or Aramaco, or the Canadian companies who are the largest exporters of oil to the US, etc, ect.
But the good news: the feds could still tax the owners of ExxonMobil for the dividends they receive. Of course the owners would be the millions of Americans who have some of their retirement monies tied up in funds holding XOM stock as wells as other small investors. And in the end isn't that who we really want to hit with bigger tax burdens: the owners of XOM...the millions of American middle income families including a big chunk of union members. It's only fair, ya know.
XOM is an excellent stock but you have to own the stock to benefit from it.
XOM has recently been buying back stock instead of issuing it, so few people will benefit from its profitability and instead of making large energy investments. Perhaps there are no new oil discoveries to invest in, thus confirming Peak Oil which they strenuously deny.
http://www.marketwatch.com/story/exxon-mobil-buying-back-5-billion-in-st...
Capital gain 15% tax is pocket change and the income tax on ordinary dividends is small for typical middle class Americans because they have a puny nest egg, mostly in depreciating real estate. Their median US net worth at retirement is a ~$200,000 to live off of for the rest of their lives.
Only the top 10% of households have
sufficient funds, about $1.5 million dollars, to retire at 80% of preretirement levels for a 25 year life expectancy; roughly $1.5M/25 yrs = $60k per year, hardly a fortune even for a millionaire.
http://www.freemoneyfinance.com/2006/11/median_net_wort.html
Fewer americans have fancy pensions and those that do are upper income earners with 'golden parachutes'(like former managers with oil companies).
Only 17% of Fortune 100 corporations now offer defined pension plans.
http://www.ocregister.com/news/plans-78811-ocprint-plan-companies.html
Ballyhooed 401k plans, the successor to defined pensions, proved to be a complete bust in the 2008 crash.
http://www.usatoday.com/money/perfi/retirement/2009-05-21-traditional-pe...
Maybe 'millions of middle Americans' own a microscopic share of XOM (and maybe you own a several hundred $k of XOM) but it's not the same thing.
Size matters.
The fact that there are clear winners and losers doesn't suggest
the game is fair, rather the opposite.
Nicely put.
Robert Rapier said:
Ahem. Let's have a look at the Norwegian Petroleum directorate's online list of fields in production. Browsing the list of fields you will see the name Statoil a lot, but there are plenty examples like these:
Exhibit one: Balder
Exhibit two: Jotun
... and lots of other oil companies, both in the operator and licensee roles.
Statoil does NOT have a virtual monopoly in Norway, and ExxonMobil can compete against Statoil in Norway.
Statoil does NOT have a virtual monopoly in Norway, and ExxonMobil can compete against Statoil in Norway.
Statoil History
Sorry for late reply; been a long-weekend away from the computer.
With all due respect, I must reiterate that calling Statoil's position in Norway a "virtual monopoly" is factually incorrect, and must be seen as hyperbole on part of your source. Foreign and non-state-owned norwegian companies can, and do, operate in Norway, and have from the very beginning. For instance, it was Phillips Petroleum that found Ekofisk in 1969.
There was a time when Statoil enjoyed a hugely advantaged position, yes. In 1972 it was decided that the State should be a 50% participant in each production license. Statoil was established to fulfill that role. (Semi-state company Hydro also participated on behalf of the State, to a lesser degree). But a priviledged position is not a monopoly, and
(Norway’s oil history in 5 minutes, Norwegian Ministry of Petroleum and Energy; my emphasis)
EXACTLY.
The tax code makes distinctions between small independent producers and bigger companies. To qualify as an independent a company must have less than 1,000 barrels per day net production.
Only independents (and royalty owners) get the benefit of percentage depletion. Majors lost that advantage in 1975. Removing depletion from the tax code would primarily harm the owners of stripper production, low volume wells that in aggregate account for 500,000 bpd.
Only independents get the full benefit of the IDC provision. IIRC majors get 70% the first year, the rest is capitalized.
Bottom line, the president's tax plan is targeted at Big Oil in order to sell it to the public and to the Congress, who are oblivious to the role of the independent producer. The burden will fall, not on Big Oil, but on the small companies who currently drill 93% of domestic wells, and who rely on the benefits the tax code provides for capital formation. It will make us more dependent on imports and will cause oil prices to rise.
The 1,000 bpd of net production limit was my understanding too. As noted up the thread, it is ironic that, having kept energy consumption taxes so low for so long, the primary discussion is how to punish the producers--when we should be focused on curtailing consumption--but as also noted up the thread, the US oil & gas industry basically painted a big fat target on its back:
http://www.theoildrum.com/node/7866#comment-799661
Good points.
But really we have to dramatically lower consumption and 'production' of fossil fuels in every way we can.
dohboi - I suppose we're back to hoping this latest oil price run up gets folks seeing the reality of the situation and began to serious do as you suggest. But given the rhetoric flowing out of both sides I remain as pessimistic as ever. If anything else I see the mood more reactionary than ever before: all we have to do is burn all the tree huggers at the stake and drill, baby, drill or prosecute all these speculators and tax the hell out of ExxonMobil. With these being the dominate answers to PO it's difficult to see any meaningful change coming.
Well said Rockman - the more extreme the opposing positions become, the harder it is to get a sensible result - not that government has a stellar reputation for sensible results in the first place.
One of the things we have to accept, as I see it is that no matter how much we reduce consumption, buy whatever means, production will go on regardless - unless, perhaps, it reached the point of the US being self -sufficient. I can see no sensible (that word again) resolution to the argument about leaving stuff in the ground for future generations v getting it out now so that we don;t buy more from OPEC. Actually the only solution is to get off oil altogether, but there is no sensible way to do that either.
So, I predict that things will pretty much go on as they are - the country is kinda like a whitewater rafting crew. If you don't paddle at all, you have no control over where you are going, and if you all paddle together and in the same direction, you have some amount of control - you can avoid the rocks (rockmans?) but you still can't go against the current. Chances of getting everyone to paddle together, in the same direction are pretty slim.
I think it will take some nation threatening event, like a real war, to do that. And regrettably, that scenario has the possibility of being a self fulfilling one.
"I remain as pessimistic as ever."
I see your pessimism and raise you a doomstead.
It is really bad. Almost surely irre-f'n-trevably bad. But that should not keep us from saying what it is that needs to be done, even tho no one is going to actually do it.
Now I've got to go get plastered, since that is definitely something that needs to be done right now.
dohboi - In another life time a buddy told me about getting a sudden and amazing sense of peace: he knew and accepted he was about to die and just that quickly felt a "coolness" throughout his body. I'll never forget that term he used. Turned out he was wrong about dying that day and quickly returned to a state of "I'm scared sh*tless". LOL. I might develop a similar "coolness" about PO but I've got a 12 yo daughter and it's difficult to not feel scared sh*tless on her account from time to time.
I don't hardly ever twist off (oil patch term for getting plastered) anymore...just can't handle the morning after these days. But I do find a nightcap of B&B does help take the edge off and I sleep well.
I was exaggerating a bit about the plastered thing--three beers with friends at a joint I bicycled about five miles to get to and five miles back. The exercise and cool air did plenty to sober me up by the time I got back home. Thanks for the laugh re the anecdote about your friend.
Americans live a level of comfort and security, of hope for the future, that the rest of the world invies and seeks to duplicate. We have become a great nation on the backs of a high level of energy self-sufficiency since 1856. Independent oil and natural gas producers have played a significant role in that self sufficency. It irritates the hell out of me that uneducated, narrow minded people in this country are led to believe (mostly by liberal politicians and the biased media) that oil and gas companies need to be punished. Punished for what? For success, for fueling the greatest industrialized nation in the world, for fueling our military and the defense of our country that keeps us safe? The term "subsidy" implies to me a gift, like a check a farmer might recieve from the government for NOT planting a crop, and is markedly different from a tax incentive to, for instance, re-invest profits from oil and natural gas production back into expensive holes in the ground where the probability for success is often less than one in seven.
Take away depletion allowance and IDC write offs and America will punish independents, not Exxon or Shell. Big oil by current tax law cannot take many of the same tax deductions (incentives, not subsidies) that independents do. This is political crapola, little else. Big oil already pays taxes to the federal government at the effective rate of over 45% of earned income anyway, more than any other industry in the country! Increase their taxes and America will run them plumb off, out of the GOM forever, their deep water drill ships and massive floaters in tow. Its already happening, big time.
By the way people, WE own Exxon, Americans do; American labor unions, teacher pension plans, grandma and grandpa own Exxon. The stock goes up, we sell it; dividends go up, we like it.
I though all you folks at TOD believed we are running out of oil? If we are (and I agree) we should be eliminating ALL taxes to big oil, little oil, anybody having anything to do with oil down to the back hoe operators that dig the flow line ditches, we should be doing everything we can to keep these guys working and happy, making money, 24/7. Why punish Exxon for 10 billion dollar profits when essentially we NEED for them to be making as much money as they can to keep us in the oil that we are desperately going to need in the next 5 years. Ten billion dollars a quarter, so what? Thats chicken feed. The next oil field Exxon or BP or Shell needs to find to keep us stuck in traffic on the 405 will be in 10,000 feet of water and will take 100 billion dollars to develop and get to market. Punishing oil and natural gas producers, big or small, is shooting ourselves in the foot. Good grief. We ought to be celebrating these kinds of profits, not whining about them.
Keep turning to the right, Big Blue, we need ya!!
Ohhhh...Mikey...you're going to burn in hell for that rant. Granted it will be a liberal's version of hell and you'll probably be in good company. LOL. Not that I disagree with any of your points but I suspect you know you're preaching to either the choir or the deaf. I'm sure you feel better for it (I do but don't tell nobody). True story: long ago while at Mobil Oil they had us fill out a questionnaire because they had so many folks quitting. I'll never forget one question. To greatly paraphrase: You bust your butt at Mobil and all you can expect as a reward is a pat on the back. It made me feel like such a smuck: I've been busting my butt trying to earn a pat on the back. Now they imply I'm an idiot for having such lowly aspirations. LOL.
Long ago I accepted the public perception that we were "dirty lying bastards". Granted it's a tad difficult to argue against that view when folks at BP screw up like they did. Or when any number of con men cheat money out of unsophisticated investors who should never have been investing in drilling projects in the first place. So no...I don't try to convince people otherwise. I do like giving the more open minded types we find on TOD some factual data they can verify on their own with hopes of their developing a more balanced view. But I don't tend to waste much time on the far left wackos or the far right wackos for the same reason I don't try to teach pigs how to whistle: it frustrates me and irritates the hell out of them. LOL.
Oil folks aren't that bad really -- just closer to E. coli -- than a good solid liberal. But I think the nuanced idea here is that maybe some fraction of this peak oil profits thing can be used to shore up promising programs.
We can debate the programs but maybe in certain cases efficiency R&D or education might be nice areas to fund slightly more. Currently there is a big drain on the public sector and some of the drain is moving to energy companies -- no doubt about it. But I train future oil jocks in PChem and so Oil should be thankful and perhaps instead of me paying oil execs extra they should keep my pay balanced with the value I create.
But whatever. I am not materialistic about it. I am just thinking about investments.
Oct - "just closer to E. coli". I really like that. And it's true: sometimes we get up your butt and give you the runs. But I'm not sure about seeing Big Oil throwing more money at "efficiency R&D" (if I'm understanding you correctly.) Over the last 25 years I've seen Big Oil slide quickly away for oil field research and today has all but abandoned it. Now it's the service companies leading innovation. After all, they are the one's selling the tools to explore and produce oil/NG...not Big Oil.
Or when any number of con men cheat money out of unsophisticated investors who should never have been investing in drilling projects in the first place.
Come on ROCK if they are dumb enough to get swindled they shouldn't have had money to invest in the first place. All that regulation and tax crap just keeps too many weak sisters around to eat the pie ?- )
If we are (and I agree) we should be eliminating ALL taxes to big oil, little oil, anybody having anything to do with oil down to the back hoe operators that dig the flow line ditches, we should be doing everything we can to keep these guys working and happy, making money, 24/7.
Better yet we should just eliminate all taxes since everyone has something to do with oil even if its only buying stuff it helped get to the shelves in one fashion or another--then if I can get together enough armed guys I'll just take your frigging oil field and build a bigger army with the extra money that gets me and take the field next door. Dang that's kind of how EOM got so big except they were smart enough to leave the taxes in place so they could have somebody else pay for and do the fighting and pick up the cost of keeping law in order so they could expanding their business. Yeah lets just eliminate ALL taxes and see where that takes us.
The next oil field Exxon or BP or Shell needs to find to keep us stuck in traffic on the 405 will be in 10,000 feet of water and will take 100 billion dollars to develop and get to market. Punishing oil and natural gas producers, big or small, is shooting ourselves in the foot. Good grief. We ought to be celebrating these kinds of profits, not whining about them.
I think you got most of the pieces to the riduculous puzzle in there-enjoy those fumes on the 405.
Seriously, Robert, you're very good at analysis of subjects you understand, but throwaway comments like that reveal both stubborn bias and deep ignorance of history, sociology, politics and economics (on the grand scale). Not that similar bias and ignorance aren't the norm here, as elsewhere.
Also it seems pretty clear to me (and not only to me) that capitalism isn't working out very well, either.
Perhaps it depends upon one's perspective?
I must rise to the defense of Robert Rapier. In addition to his particular areas of expertise, he has broad knowledge.
Note that Robert does not work for a major oil company at this time. He is doing research in biofuels, which are going to be part of our future.
Robert may well have broad knowledge. Indeed, reading much of his work suggests that to be the case.
Notwithstanding the above, his comment about "failed communism" reveals both bias and profound ignorance--on that subject.
It's curious that Communist regimes have consistently had to use force to keep their citizens from fleeing the country.
westexas, you are one of my all-time favorites here, and ELM is one of the most important theories we have for forecasting our FF future, however, this comment is just another example of the ignorance I was talking about.
* Has it ever occurred to you that a permanent war (conducted by governments owned and operated by capitalists) to destroy the economies of states attempting to follow alternate paths might have had something to do with living conditions in those countries?
* Do you think that the urge to emigrate might have been enhanced by the fact that the capitalist world actively seduced (remember Radio Free Europe, etc.?) and solicited "defectors"--and welcomed them with open arms? In contrast, how many developed nations, today, would provide a similar alternative for, e.g., poor, unemployed Americans seeking a better life?
* Calling a government communist doesn't make it so, any more than calling our government "democratic" makes that claim true. The economic model actually implemented in, for instance, the Soviet Union, was much more like state capitalism.
The list goes on and on and on...
Honestly, I blame the narrowness and bias of our educational, government and media institutions for the fact that it is even necessary to have conversations like this with ostensibly well-educated people.
"communist", "socialist", "xxxxxx-ist" type characterisations tend to boil down to facile, quasi-intellectual euphemisms for "I disapprove."
They are certainly used that way--as epithets rather than simply names for socio-economic-political systems.
However, everything about the way we run our lives and conduct our interactions with our fellow humans arises from the rules and assumptions associated with the system(s) that shape our understanding of the world and dictate the rules we live by. One might think that it makes sense to explore the options, critically.
One would be naive to think that such exploration would be welcomed in the US.
Only in a few places in the developed world (in my experience, the US, Australia, Canada on some days, etc.) is there a near-unanimous belief that laissez faire capitalism is the unchallengeable natural order of things. Now, there are many more places where the capitalists more or less rule the roost, but few where it is heresy even to question the true faith.
I realize that you have quite a challenge trying to rationalize the fact that communist states routinely had to use force to keep their citizens from fleeing a communist paradise. Could you explain again how the non-communist countries were responsible, when East German border guards routinely shot their own citizens who were trying to escape? Perhaps the shooters were victims of dastardly capitalist mind control experiments?
The travel restrictions just work differently:
"Why Americans pretend to be Canadian"
http://www.timesonline.co.uk/tol/news/world/article400327.ece
"Physiscal/verbal hostility cause they think you are American"
http://www.canuckabroad.com/forums/physiscal-verbal-hostility-cause-they...
I'm a wee bit puzzled. Alleged Anti-American attitudes, which I have not experienced in three trips to Europe since 2007, have some kind of bearing on East German border guards shooting their own citizens, who were trying to escape a communist paradise?
westexas, that was unresponsive and downright silly: intellectually, very unimpressive.
Sorry, like the poor souls who were gunned down trying to escape a communist paradise, I guess I'm just too dumb to realize why kind of advantages the Soviet, East German, North Korean, Cuban, Pol Pot, et al regimes offered their citizens.
Dunning-Kruger manifests in nearly-infinite variations.
I would like to add, that the people who have been throwing around terms like "communism" and "Chavez" strike me as being a bit totalitarian. They show intolerance for different ideas by demeaning and stigmatising both the new ideas and the people that have them. And they seek to banish those who have them by saying "go somewhere else if you don't like the way it is now".
I thought the ideas proposed in the above post were both misleading and misguided. I thought the ideas sucked and I still do. I think the idea of boycotting oil is unrealistic and inefffective given that it is a globally traded commodity. I think that using oil more efficiently only serves to raise the ceiling on the price because it is that much more valuable per gallon. I think the hybrid cars will do nothing to stem the amount of oil produced, they will only cause more cars to be on the road, and therefore cause more roads to be built, more strip malls , more forest fragmentation and more of all the other ancillary environmental damage done by motor vehicle culture.
I could go on.
Please do go on. You represent viewpoints that are under-represented here.
Be aware, however, that you will be expected to "show your data" and defend your arguments, especially when your underlying assumptions are at odds with those of "traditional TODsterism." And that's a good thing.
Here's an idea. Instead of a minimum gas mileage, how about a maximum gas mileage?
For example, if every car could only get 10 mpg max, then a lot of people would be priced out of owning a car. Fewer people would have cars and there would be more need for transportation alternatives.
Seem bizarre? Consider the fact that not everybody has a private jet. Even if they could afford to buy a jet, they still couldn't afford the fuel. So, they don't have jets, they use transportation alternatives to jets.
Of course, their are many reasons to object to such a plan, but there are more merits than you would initially think. The fact that nobody has even considered such a proposal means that they aren't really opening their minds up to possibilities, and more likely they aren't truly thinking through the implications of the policy choices currently available.
Now consider all the positive effects that having each person get a check for mined resources would bring, such as more awareness about resources. Some people would avoid using gas and spend the money on other things. The price of gas would go up, maybe less would be produced, but then again that much more would be saved for later and give a higher price in the future.
Think these things through for yourself. Because if you don't, there are plenty of people at marketing firms and in boardrooms that would be happy to provide your thinking for you.
Ok, at least that's an idea, and I'll give you credit for putting forward one that I have not seen before, and for stating it in a non-combative way.
It sounds a bit like a modern equivalent of the 18th and 19th century - where only some could afford to own a horse - though at least in the C19th they had a train system to use - we don;t have that anymore.
Actually, London's infamous "congestion charge" was along those lines. the masses couldn't afford it, so they didn't drive, and those who could afford it had the roads to them,selves, at least, at first. Problem is that the masses are paying for the maint of those roads used by a few.
And there's the main problem, it would need some alternative for those who have been priced out of cars, and that alternative would need to be provided by gov, who have a history of favouring those with more means, rather than those with less.
I do think that if the US carmakers had their way - no CAFE standards - we might well be at your 10mpg today. All that would have been needed was import controls on those pesky Euro and Japanese small cars, so all that was left was the big ones, which were their most profitable, and we would have been pretty close.
Only problem was fuel was cheap, so many had them who couldn't afford to.
I am not sure about the resources payment in the era of deprivation. The masses are restricted from something they used to have, and get token compensation in return? yes, they would use it for other things, but if they are still living in car dependent suburbia, (as most do) life is not very pleasant. The only thing worse than suburban hell, is suburban hell without a car.
The plan could work in Euro cities as is it is quite possible to live nicely car -free there. here it would need a massive makeover - and who would pay for that? - not the shrinking number of car drivers.
There is a very devious way for the government to track how fast and how far people get between two places. They can use cell phone records and tax those people through the nose that repeatedly get between two points too quickly. Big brother is watching you, whether you like it or not.
I am not necessarily advocating this but it can be done and the statistics of human mobility are very easy to analyze, as I describe in The Oil ConunDrum. These are power law curves and the fat tails of such distributions will show significant fuel usage even though lots of people don't move from location-to-location that quickly. It is really a devious plan, and would effectively rile up the corporatist wing of the political right.
In the UK the entire motorway network is now fitted with CCTV with number plate recognition. Every time you drive past one of the cameras, the number, time and location are tracked on a centralised police database. The data is stored for 12 months.
On some motorways these cameras are clearly labelled and you are warned that they are tracking your speed. They are an excellent safety feature on accident blackspots because NOBODY breaks the speed limit.
If you want to avoid being followed, you had better fit false plates... and leave your mobile at home. Half of all smartphones have built in GPS tracking. Most quietly log this data where the people that need to know can find it. You are tracked to a few metres.
Huge amounts of internet traffic is monitored by UK and US counter intelligence. deep packet sniffing. Mobile phone calls are monitored for keywords in many languages using voice recognition.
You ARE being watched.
[edit]
and of course cars now have black box recorders, under the driver's or front passenger seat. I do not know exactly what they record, but speed would certainly be one parameter. Many cars have GPS integrated into their systems...
Right. And everyone who gets on an airliner has their personal identity on record with a log of source and destination. These are supposedly corporate private, but all the government needs to do is make an executive decision to get at all these.
And vice versa.. there are streams of data all over the place, and yet even in that is a key weakness. It gets so that things outside the databases in some sense 'no longer exist' to the data analyst.
There are ways of hiding in plain sight, relegated to 'noise, outliers, irrelevant, or corrupt data.'
"You're in Organized Crime?"
"We're not really that organized.."
They wouldn't care if a few people got around the system.
I guess I'm thinking more about how such a system looks for it's own blindspots, or doesn't. Like the labor statistics, when they drop those unemployed who stopped looking after X months.. Of course, that would be a fairly well-known example, so not such a blind-spot after all, but there are things you won't see if you're not aware you should even be looking for them.
You may well be right that boycotting is unrealistic, and using oil more efficiently will only raise the ceiling price.
But so far, the only idea that you have offered is that you should get a slice of the oil pie - effectively - you want to be part of big oil.
That doesn't sound like much of solution to anything - it's actually an argument for the status quo of oil dependence - is that really your agenda?
I think you'll find that many of us here agree with most of that. You might find that we are as a group more open minded and realistic than you may be willing to give us credit for. To be honest so far you've come across as strident and argumentative against mostly straw men and bordering on ad hominem attacks against Robert. If you have something to say by all means say it but you could try toning it down a bit and doing a better job of backing up your arguments with something a bit more substantive than "I want my check from the oil companies because it's my oil".
Not too many here are big on the idea that we can continue with BAU for long. The times they are a changin...
Here, here.
Bless you! And thank you for your tenacity in this thread. I didn't have the heart for it and published my response elsewhere.
I didn't have the heart for it and published my response elsewhere.
Yes, you have criticised it and Nate Hagens elsewhere, and only posted here once the thread is old and dead.
If you have counterpoints then put them up here for everyone to see and scrutinise, that is what RR, and Umass and everyone else here has done - this is an open discussion forum after all.
You have ducked all that and then posted only after the dust has settled - if you are not willing to join the debate on equal terms, that suggests you don;t really believe in what you are saying, or have some agenda you are trying to hide.
Yes, you have criticised it and Nate Hagens elsewhere, and only posted here once the thread is old and dead.
She thoroughly misrepresented my own position, and compared us to Nazis. That's really all I needed to see to know that she is simply one more irrational person trying to chime in on this debate, and we have plenty of those already.
Happy to oblige. Here is the link.
Here is the reality of gasoline and food prices. Gallup economic data:
http://www.gallup.com/poll/147416/Consumer-Spending-Flat-April.aspx
Looks like consumer spending is flat in the US for like 3 years.
Exxon may make money on scarce resources all day long, but the rest of the consumer areas should tank. Everyone at the brick and mortar stores will be looking to Exxon to make more oil. "Come on guys. The economy needs the oil. You got the high prices. Now what are ya doing?" That is how the public views Exxon. They are exactly mimicking a cartel. So what does Exxon expect. They will be taxed. They either need to explain the situation or take the public flogging. Cause you cannot get the free money without producing the goods.
Just more food for thought on why the public thinks oil companies are dishonest.
Hard to reconcile the situation without open honest communication about the oil problem.
Interesting stats. Gail has long maintained that as we spend more on food and fuel we spend less on everything else. I wonder how much fo the decrease though is not just because we are spending more on f & F, but also that many have lower/no paying jobs, and a general desire to hold onto any $ they may have? A phone interview system seems a bit suspect here, as people may over report in good times and under report in bad. Would be interesting to see an equivalent Mastercard survey.
That said, clearly higher energy prices are taking their pound of flesh, but I will still maintain it is bit unfair to blame it all on XOM, or the other oil majors (and certainly not the oil minors).
Consider that XOM's total, worldwide production is 2.4mbd - that is all of 12.7% of US consumption - and not even all of their oil comes here.
So to blame the company that produces just one-eighth of the country's consumption, for gouging "everyone" is a bit unfair. KSA sets the world price, and we can blame them for gouging - not that they care any.
It should be no surprise that XOM makes a big profit off producing some, and only some, of what is the most demanded physical product in human history.
If we are going to institute windfall taxes, are we going to do the same to Google, Apple, Microsoft, Goldman Sachs (OK bad example) etc? Are we prepared for these companies to walk if we do so? They could probably relocate easier than XOM.
XOM doesn't control; the oil market, they are just along for the ride. And as long as we demand that ride, we will have to pay the fare, whatever it is.
Oct - Just curious: what exactly do you think XOM is being dishonest about? Maybe you think they are lying about that big revenue and aren't making that much? LOL. Also, in our chat the other day I didn't catch your little straw man effort: "scarce oil". Maybe I missed the story: which gas stations had no fuel to sell? Who had their electric utilities cut off because the plant ran out of oil/NG? And "mimicking a cartel"? Shirley you're going for humor with that one. So you're accusing XOM of not producing all the oil they are capable of? And your evidence for this is what?
Why the public thinks oil companies are dishonest? IMHO because of two reasons. First, ignorance of the physical reality of a finite resource,. And second, because they want to blame anyone (oil companies, tree huggers, politicians) for the situation which they themselves produced. I also get the impression you think the oil companies should be out there yelling at folks about PO. Once again I'm forced to remind you that we ain't your mommy. You expect the CEO of any public company to speculate some doubt about the potential lack of future viability in his company? Why would any oil company be expected to do so if the govt, THE PUBLIC'S MOMMY, isn't doing it? And shouldn't we expect the public to be adults and educate themselves about PO. It's not exactly like no one has been warning them. So let me see if I get your implication correctly: XOM is leading the public on by professing there's plenty of oil in our future so the public feels better about the current high prices and the profits the oil companies are making? The logic I think you're proposing doesn't seem to work IMHO.
Not to gang up on our beloved ROCKMAN too much but,
Obama's been pretty clear about the limited amount of US reserves and Big Oil supports cornucopian think-tankers like CERA, groveling stooges like Joe Barton(apologizing to BP last year) and commercials staring Brooke Alexander riding in an elevator. I also think Big Gas has been 'wildcatting' shale gas in an environmentally dangerous manner while taking potshots at EPA.
They are lousy corporate citizens, corporations having been deemed citizens by the conservative SCOTUS.
I've advocated nationalization of the energy companies for a while now, especially as they've done a pretty awful job of
investing their profits in a transition away from fossil fuels or at least into CCS. While there is a considerable danger that politicians would turn a national energy company into a cesspool of corruption, it could be effective as a well-managed non-profit putting more resources into clean technology and EOR of existing fields as well as shifting to renewables all of which energy companies are fighting against tooth and nail.
At current prices, recoverable US resources(270 Gt coal, 60Gb oil, 1200 Tcf of NG) represents in the range +$40T? USD. Not a lot of profit left to be made.
Once our inheritence is gone we're screwed.
It can't be left up to greedy and unscrupulous 'developers'.
Hey...no problem. As a geologist I've been ganged up by engineers for 36 years...my scars will protect me. OK maj...been waiting for someone to bring up "nationalizing the oil companies".
So TAG...YOU'RE IT. LOL. So now you get to explain how this would be done. First, explain how you would compensate all the shareholders (including all those millions of folks with retirement accounts in public oil stocks) for taking away trillions of $'s of assets away from them. You can also began by explaining how you compensate the 7,000 non-public companies in the oil patch. BTW: does your plan also include taking control of production owned by foreign companies (including NOC's)? That's enough to get you started. Also, since I assume I'll be working for the feds now can I expect the same retirement and medical benefits govt employees get? Me and the millions of oil patch workers the govt will be dependent upon to keep things running would like to know.
Not long ago the US nationalized a bunch of banks and the car companies($.7T USD) so I don't see it as impossible.
Remember ARAMCO was originally a Chevron(Socal/Texaco) and Exxon(Esso) who got bought out over 7 years. Statoil is only 2/3rds owned by Norway.
Or we could tax them into bankruptcy and take them over.
Exxon has total assets of $330 B USD so I'd guess that the whole US oil industry represents maybe $2-3T USD.
Yes, you could expect the same retirement and medical as US gov't employees, but do you really want to drop down to their level?
I'm not really a fan of nationalising industries, but I am a fan of doing what if thought experiments, so I'm interested to see where this could go.
First question - nationalise just the majors, or whole industry - Pemex style?
2nd, What do you then do about the overseas operations currently owned by XOM etc. Should the USNOC be operating in outer mongolia or Ivory Coast or wherever? If it does, then you have a responsibillity to protect these govt workers that you don;t really have today for the company workers
3rd. Who does the oil importing - is that still USNOC - giving it a monopoly over the nations oil supply, distribution and retail?
4th. given that this won;t make any real difference to retail fuel prices, what benefits are the people getting?
Given the country steadfastly refuses to nationalise its health care system, wher you have companies making rampant profits from helpless consumers, I don;t see why it would do so for oil, or what it would really achieve - but I am happy to be shown otherwise.
All well and good Paul/maj. But the basic question still hasn't been answered: is the US govt going to pay the $trillions in fair market value for all those private and public companies? And again remember that the vast majority of this asset is not owned by billionares. The majority of XOM equity is owned by US retirement funds and other funds invested by small shareholders. It's good to remember that when Hugo took those fields away from the American companies the loss went to the American shareholders of those companies...the American people. Might wipe away some of the smiles from the auto union memebers if they knew what Hugo stole out of their retirement funds. Can't guess how much but I'm sure they lost something.
Well, it's a beautiful day in Portland Maine, supposed to reach 70.. so in a fit of happy irony, I'll go walk my tuchus downtown and go pay up that Car Registration at city hall.
Very eager to get that Velo-trike running.. but for now, I'll cool my heels in an ICE-cart for a while longer. Could be an interesting summer!
Thanks RR!
Bob
You getting one? I'm jealous! Let us know the details!
So far I'm building it out of saved Bottle-caps and the equiv.
No, I'm doing a simple Proto-type, and hoping to do the fairing like a Kayak, Lightweight Sealed Cloth&Wood constr..
But our roads and paths are not really ready for this yet.. so my impetus has been a little stunted..