[promoted from the diaries by bs]
All bloviating about “Energy Independence” aside, the White House’s new budget proves that the main goal vis a vis the domestic energy industry is to maximize the extraction of tax dollars. The inevitable result will be the permanent crippling of the industry and the loss of millions of jobs. In the meantime, say goodbye to whatever shot at Energy Security that the U.S. ever had.
I’ve also heard a couple of times recently from high-ranking Dept of Interior officials (namely Sec. Ken Salazar and MMS official Chris Oynes) that the government is looking at royalty schemes that would increase its direct take in mineral revenue. Higher royalty rates generally make exploration less attractive from the oil company’s perspective.
Even if Our Energy Future is one of gumdrops, rainbow unicorns and Magic Windmills, it ain’t going to happen tomorrow, babe. Or in 10 years. The grownups in the room must realize that there is a role for fossil fuels (which, together with nukes and non-P.C. renewables account for 99.5% of current energy use), even if it is only to bridge the gap to that new future.
Ooops. There’s the problem. There are no grownups in the room.
From the Wall Street Journal (N.B. the headline is wrong):
The White House is sticking with [its] plans to eliminate $26 billion in tax breaks for oil and gas companies. Half of that would come from eliminating a tax break for domestic oil and gas production. Companies say the tax break keeps jobs in the U.S. [Actually, that's $31 billion - the WSJ did not include a $5 billion excise tax, which is still in the budget, and about which there is a troubling lack of specificity. - ed.]
“Oil and, to a large extent, gas are internationally traded commodities, and their prices are determined on the world market,” the White House said in justifying the tax plans. “As a result, domestic oil and gas production subsidies do not significantly reduce the prices that consumers pay for products such as gasoline and home heating oil, resulting primarily in higher returns to the oil industry.”
So, in other words, the Government of the United States is completely, totally indifferent whether Joe Consumer buys a barrel of oil from, say, me, or from Osama bin Laden’s uncle in Saudi Arabia. Also, it is the Government’s opinion that the dependence of the U.S. on foreign imports is not even a factor on OPEC policy or the world crude oil trading market.
It also says that the Government is oblivious to the role of natural gas in the nation’s economic picture. The tax breaks they take away from oil they take away from gas, too. Natural gas is 80% domestic (most of the balance comes from Canada); it’s abundant, cheap relative to oil, secure, and clean.
Here, from the Oil and Gas Journal, are the comments of a couple of industry representatives:
The new taxes and other provisions in the budget will make it more difficult to develop domestic energy, according to Independent Petroleum Association of America Pres. Barry Russell. “This budget does not recognize that in order to decrease our reliance on foreign oil, we need to increase our own American supplies of natural gas and oil. It also punishes American gas production, which could play a lead role in climate change discussions as our abundant, affordable, clean-burning energy source,” Russell said.
“From repealing existing tax provisions that encourage American production to new excise taxes on offshore production to new user fees that will go to pay for an already complex and costly permit process, this budget takes our natural resources and puts them further out of reach,” Russell said.
Natural Gas Supply Association Pres. R. Skip Horvath said Obama’s budget was bad news for American consumers and worse news for American jobs. “People don’t appreciate how big the gas industry is in this country. Four million Americans depend on domestic gas for their livelihoods, both those who work directly in the industry as well as those in second jobs, such as steel and concrete, and retailing,” he said.
He said that it was too soon to say definitively how many jobs would be lost, “but just a 10% decrease in direct natural gas jobs could wipe out the beneficial effects of a doubling of wind and solar jobs.
“Tax policies directly impact the decisions that are made regarding drilling, especially for smaller companies,” Horvath said. “More importantly, over 80% of the gas in the US is actually produced in this country. We are troubled that this administration has such a basic misunderstanding of how domestic gas markets will be impacted,” he said.
[emphasis added.]
H/T Artie
Neil Stevens
Steve Maley
Shell has given up on the Alaska OCS project
Achance (Diary) Friday, May 8th at 3:12PM EST (link)for now; that’s Alaska’s good news this week.
In Vino Veritas
Are you being sarcastic or straight here, Art?
civil truth (Diary) Friday, May 8th at 3:29PM EST (link)As I understand it, OCS refers to Outer Continental Shelf development.
Are you referring to Palin’s gas pipeline and saying here that the producers pulling out of OCS will sink the project before any more money is being flushed down the toilet? If so, then that would mean that you are being straight.
Or are you saying that the federal government is giving Alaska the shaft by making it unattractive for Shell and other energy producers to operate in the state? That would appear to be bad news.
Or are you saying that this will increase revenue to the state by lowering supply, thereby increase price? I suppose this would be good news if you get more back from the state than what you have to pay in higher fuel prices.
So do you really mean good news or bad new?
The greatest evil…is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern. -C.S. Lewis
http://www.gmsplace.com/
No, C_T, no snark or sarcasm,
Achance (Diary) Friday, May 8th at 10:36PM EST (link)Shell has backed off its plans to develop the Outer Continental Shelf off NW Alaska; too much opposition from Greenies and the North Slope Borough. The NSB and the State of Alaska are really only an issue of how much money the State and thus the Borough would get since it is a federal province; that could have been handled, but as I’ve said repeatedly, all the Polar Bear and marine mammal crap from the Greenies was first and formost to stop oil development off the Alaska coasts.
Doesn’t have any real effect on the vaporware gas pipeline, and I was being sarcastic about it being good news; we really need more oil production or they’re going to shut down and disassemble the Trans-Alaska Pipeline. That would be the Greenies fondest dream because they’ve never forgotten nor forgiven losing the approval by Spiro Agnew’s vote in ’72.
In Vino Veritas
Art, the MMS held up on new GoM drilling permits...
Steve Maley (Diary) Friday, May 8th at 10:56PM EST (link)…for a brief time this week.
They’re back to granting them now, but gunshy.
The blogger formerly known as ‘Vladimir’.
fortunately this is a self correcting problem
kyle8 (Diary) Friday, May 8th at 3:23PM EST (link)we will soon be seeing both higher unemployment, general inflation, and at the same time, the return to the kind of energy prices we saw last summer.
It will be harder and harder to blame it all on Bush and the eevil Republicans.
We have to get our act together as a movement and offer some real alternatives because very soon, there will be a lot of people with buyers remorse.
“Nothing works like freedom, Nothing succeeds like liberty”
Kyle
exactly, and I wonder how a true Manchurian candidate
Mike gamecock DeVine (Diary) Friday, May 8th at 3:54PM EST (link)that won the White House would be worse than this DemLib we have there now?
Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson
GC, what makes you think BHO isn't a true Manchurian candidate? nt
Achance (Diary) Friday, May 8th at 10:37PM EST (link)In Vino Veritas
Doesn't BHO better resemble Angela Lansbury's husband rather than
Mike gamecock DeVine (Diary) Saturday, May 9th at 7:13AM EST (link)Lawrence Harvey?
Was McCain Lawrence Harvey that never got deprogrammed from the Queen of Hearts? Is Michelle, Angela? Who sill play Frank Sinatra?
Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” – Andrew Jackson
Oil prices are going back up....
nod90 (Diary) Friday, May 8th at 8:54PM EST (link)…when the world economy recovers.
At the bottom of the last recession, in 2001, prices were under $20. The world economy is much worse today but prices never went much under $40. They are $50-ish at present.
Republicans must make sure that Obama gets the credit when gas prices go back up. Cap and trade will make things even worse.
He is refusing to produce the $500 billion worth of oil which lies under ANWR, and he is probably going to block offshore drilling.
$58 & change today. nt
Steve Maley (Diary) Friday, May 8th at 8:58PM EST (link)The blogger formerly known as ‘Vladimir’.
Here is where I get furious with Republicans
Bob_Frazier (Diary) Friday, May 8th at 4:05PM EST (link)Here is where I get furious with Republicans. We know there are green “extremists” out there, but there are a lot of Americans, and that includes the Northeast and California, who will be furious over this, if they know about it. Republicans need to be condemning things like this, and not just now, but over and over again. We need to talk about this, over and over and over again.
Yet we will still have people say we need to change our stand on abortion, so called homosexual marriage, etc. to get these (enter group here) to vote for us.
This is a huge winning issue. One of many coming our way. But we need a teaching tour, not a listening tour. If the press will not get our message out, our elected leaders need to get the message out. Connect this to the coming rising fuel prices, since it will play a huge part. Stay on message.
Its not rocket science. What this president and this congress is doing is dangerous and insane. This comes very close to treason.
Will any Republican elected officials do anything??????
Sounds like
izoneguy (Diary) Friday, May 8th at 4:20PM EST (link)the case for Texas succussion grows ever stronger.
The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.
$100 Billion Energy Bill
jackbenimble (Diary) Friday, May 8th at 4:50PM EST (link)I remember when the Republican Congress a few years ago passed a $100 billion dollar energy bill that went about 60% as tax breaks to oil and gas and about 40% as subsidies to gasahol subsidies.
I am in the oil and gas business in Wyoming and I benefitted from those tax giveaways but I was furious about that bill because it was just another example of Republican runaway spending and undue K-Street influence peddling. I was angry about it for the same reasons that I was furious about huge ag bills, highway bills, etc, etc. It was irresponsible, an abuse of the tax code by special interests and it bordered on corruption and it was an abandonment of conservative principle and good governance.
There were a lot of good reforms that could have gone into that energy bill like making it easier to build power lines and drill offshore and drill onshore and build nukes and the list go on. But at the end of the day all it really was was a huge spending bill which was part of the then current Republican strategy to maintain their power in Congress through bribery. It was disgusting!
To the extent, that those are the tax breaks being reversed, I could care less.
“I repudiate the idea of voting for a Democrat
You should know better, Jack B. Nimble.
Steve Maley (Diary) Friday, May 8th at 5:03PM EST (link)The tax breaks that are being reversed are not one-time “gimme” sops for certain companies.
They’re targeting the expensing of intangible drilling costs, which has been part of the tax code since 1913.
They’re targeting percentage depletion, which all extractive industries benefit from, and have since 1926.
They’re taking away the “passive loss” exception for oil & gas working interests – putting it on a par with cattle raising, like a hobby. (Nobody drills dry holes on purpose.)
We’re talking about a $31 billion hit over 8 years. Even if you don’t agree with every provision, the effect of all this will make exploration and development a lot less economically attractive.
The blogger formerly known as ‘Vladimir’.
Call me crazy
Maggie_in_Indiana (Diary) Friday, May 8th at 4:54PM EST (link)but after all the grandstanding ,finger wagging and lip service about the environment and how we are destroying the planet,most folks are not any more concerned than they are about split ends,dandelions,and lumpy gravy.
But one party seized on the idea and the squishies from the other jumped aboard to do nothing more than control big businesses,tax the living day light out of whoever has the money and the means to make the hoax have life. Energy companies and all their affiliates. Of course the users of that energy are going to take it the toughest so they must be courted,appeased,and given sympathy so they’ll resist less and look else where for someone to blame for their higher costs.
I think all the users of the energy are beginning to catch on.
Maggie in Indiana
Maggie that is because liberals always deal this way with belief issues.
kyle8 (Diary) Friday, May 8th at 5:29PM EST (link)they know that there is only a relatively small group of environmentalist true believers. So they act like they are also believers.
Just in the same way that the Clinton’s, and the Obama’s are big Church goers, but support every anti christian idea there is.
Liberals get apoplectic about any conservative mentioning God, but Clinton could go to church with a bible the size of a coffee table under his arm and even quote scripture, and they were ok with it because they knew he didn’t really believe it.
That is the nature of that cynical, horrible party.
“Nothing works like freedom, Nothing succeeds like liberty”
Kyle
555! nt
Vegas_Rick (Diary) Friday, May 8th at 5:49PM EST (link)“God is great, beer is good and people are crazy.”- Billy Currington
“Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan ‘press on’ has solved and always will solve the problems of the human race.” Calvin Coolidge.
There is no such thing as alternative energy
10ksnooker (Diary) Friday, May 8th at 7:12PM EST (link)Anybody who believes burning ethanol is less CO2 producing than gasoline is smoking something and it will soon explode. Do you think the corn plants itself.
It’s another of the giabt scams to ration energy and control freedom.
there is some evidence that given the problems
kyle8 (Diary) Friday, May 8th at 7:23PM EST (link)planting, watering,fertilizing, harvesting, trucking, and refining, it actually takes more energy to create ethanol from corn than it produces.
“Nothing works like freedom, Nothing succeeds like liberty”
Kyle
Calling corn a renewable resource...
vettepilot (Diary) Friday, May 8th at 10:29PM EST (link)is questionable… There are reasons farmers don’t plant corn every year, and it’s not because of government subsidies. Corn is incredibly hard on soil which is why you see corn fields become soybean or hay fields. This whole idea of ethanol as a partial replacement for oil is incredibly short-sighted. Not only does linking a food staple to a fuel source cause havoc with the markets, it risks the return of another dust bowl…
And in the interest of offering solutions...
vettepilot (Diary) Friday, May 8th at 10:33PM EST (link)I believe we should really be looking into sugar beets instead of corn as a fuel source. Not only could this alleviate the risk of another dust bowl, but it could actually help solve some of our illegal immigration problems by creating a sustainable industry south of the border.
how dare you make sense sir!
kyle8 (Diary) Sunday, May 10th at 8:45AM EST (link)After all this is government policy we are talking about.
“Nothing works like freedom, Nothing succeeds like liberty”
Kyle
Notice the tight control of the language
persiflage Friday, May 8th at 7:51PM EST (link)and manipulative “framing” of the issue. To the b***ards in control, getting a fractional break on the millions (billions?) in taxes that the energy company pays is the equivalent of a government “subsidy”. Doublespeak is their M.O.
If I pay an effective federal tax of twenty percent on my income this year, but the tax law is changed and next year I only pay nineteen percent of my income in federal taxes, I have not become the beneficiary of a government subsidy! I have still paid nineteen percent of my income to the government!
It’s almost as if they WANT to discourage domestic energy exploration, development and production.
“A republic, if you can keep it…” – B. Franklin
Now you're catching on.
Steve Maley (Diary) Friday, May 8th at 9:04PM EST (link)“It’s almost as if they WANT to discourage domestic energy exploration, development and production.”
Persactly. Higher traditional energy prices are needed to make alternatives
competitivemake sense economicallywithin range for eco-nuts like Ed Begley.We’ve already proven we’ll pay $4/gallon & only squawk a little. To a true statist, with gasoline prices at $2, that means there’s $2/gallon of perfectly good tax $$ going to waste.
The blogger formerly known as ‘Vladimir’.
Except there is really no alternative to...
nod90 (Diary) Friday, May 8th at 9:32PM EST (link)….gasoline and diesel for transportation. The combination of high energy density and low cost is unbeatable.
There’s really no policy here. The Obama energy policy is to pander to the eco-nuts.
This tax increase will simply make us more dependent on foreign oil
nod90 (Diary) Friday, May 8th at 8:41PM EST (link)It also means that more oil company money will be invested in Angola, Nigeria and Brazil and less in the United States. It will also destroy American jobs.
For natural gas I think that things will be different. The administration is wrong about natural gas being internationally traded. To ship natural gas across oceans it must be liquefied and moved by tanker. Liquefied natural gas (LNG) only accounts for 1-2% of US demand.
While there is a some pipeline trade between US and Canada, North America is essentially an island with very weak connections to gas markets in other parts of the world. This means that higher costs will simply be passed on to customers. People will pay more for heating and electricity.
And it also means more pollution worldwide
izoneguy (Diary) Friday, May 8th at 8:47PM EST (link)The eco-nazis are making the planet more polluted not less. Parts of the world will be uninhatible and you can thank the environmentalists for that.
The point cannot be made often enough: Modern liberalism, as embodied in the Obama presidency, is the defender of the status quo. And the status quo is a road to economic ruin. Political forces cannot redistribute the wealth that the economic system does not produce.
The long-term plan is expropriation
civil truth (Diary) Friday, May 8th at 9:37PM EST (link)First they make development economically unprofitable or outlaw it.
Then when gas and oil prices rise, they blame the companies for profiteering and market manipulation for failing to engage in energy exploration with their holdings.
This then becomes grounds for expropriating the developments. Then, in order to actually develop these holdings, they will need to form a state corporation, which will most easily come from nationalzing the companies or extorting them to work the fields at gunpoint.
Once the government owns the gas and oil, they can proceed to rape the environment to generate cash to continue to buy off enough of the populace, just like every other despotic enegy state.
The greatest evil…is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed, and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voice. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the offices of a thoroughly nasty business concern. -C.S. Lewis
http://www.gmsplace.com/
Its both the farms and oil/gas, as in
paulincolo (Diary) Saturday, May 9th at 12:53AM EST (link)today:
(Reuters) – Venezuela’s President Hugo Chavez has seized control of a major gas project belonging to a U.S. firm and a range of assets from local service companies as he tightened his grip on the energy sector.
The announcement is the latest step in a nationalization drive that includes takeovers of foreign-owned farm assets.
Enslavement
avgamerican (Diary) Saturday, May 9th at 12:47AM EST (link)Americans have now enslaved themselves to a government that will destroy their way of life. In an interview this week glenn Beck spoke with a professor in Spain who has been studying the green movement there. This professor said that his studies have shown 2 conventional industry jobs lost for every 1 green job created. Spain has a 17% unemployment rate. Glenn Beck stated in response to this revelation that any government who continues to pursue this green policy investment given these results is either “dumb” or “want to enslave the population.” I wonder what Americans will do when jobs start going away in place of the green movement and gasoline hits 7$ a gallon?
Crude almost hit $60 today, and is headed higher
jonreagan (Diary) Saturday, May 9th at 1:26AM EST (link)as the dollar continues to lose ground. BO will respond with the following:
1) he’ll begin wailing about those evil speculators (you know, the same ones who drove the price of crude down to the $30′s last winter….). This is turning into a Nixonian style paranoia with Obama: whether it’s Chrysler bondholders, or oil traders, or whomever—all evil in the world is due to “speculators.”
2) it’s a fair guess he’ll panic if oil goes past $70, and begin releasing oil from the Strategic Reserve. In his own head, this will be his way of showing “the speculators” who’s boss.
As a previous comment noted, Venezuela has siezed the assets of an oilfield services provider, Williams Co. I guess Hugo took the measure of Obama a couple of weeks ago, and like the rest of us, saw a big wuss.