(can of worms alert) Globe hasn't warmed in the last 16 years 76

[beej67]

Worth a read. One significance of the article to me is the 'skeptic' isn't a loon, she's the head of the EAS department at Georgia Tech.

http://www.dailymail.co.uk/sciencet...-report-quietly-released--chart-prove-it.html



Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[zdas04]

I was going to step back and let this thread go where it would go, but that "subsidizing all fossil fuels" garbage just can't stand. All of these "subsidies" are specific language in the tax code to take the place of an energy policy. For example, congress passed something called the Section 179 tax credit to provide incentive for oil companies to spend hundreds of billions of dollars to develop unconventional gas resources. Without the Section 179 tax credits we would not have developed the technology required to produce CBM and Shale gas. Without CBM in 1995, natural gas prices would have been $8/MCF instead of $1/MCF. Without Shale Gas, you would certainly be paying over $30/MCF/day with 80% of it coming from LNG. But the tax code was effective for once and the industry risked the money to develop these very difficult plays.

Call it a subsidy if you want, but since your government has proven absolutely unable to craft a coherent energy policy, the only way they have to affect a change in direction is the tax code. That is where these incredibly complex "loopholes" come from. The industry did not ask for them. Without Section 179 we would have spent those hundreds of billions overseas and developed higher return prospects. The system of tax credits, exemptions, and abatements that are currently being vilified by the President have been the reason that we have moved toward energy independence (not far enough, but farther than I thought possible). Eliminate them all and some (non trivial) amount of industry investment will head for higher return projects in China, India, and Brazil. Shale gas in Europe looks pretty attractive.

Don't vilify the people who are following the letter and intent of the law. If you don't like the way that Congress has chosen to back door an energy policy, throw them out and get a Congress that can implement a non-tax infrastructure for and Energy Policy that leads to Energy Independence. If a company is "not paying taxes", then they are following the law and filing the deductions and credits that Congress intended them to file. No crimes. No games. Just following the rules that were in place when the decisions were made.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.

 

[Brad1979]

I get it. When the government taxes me and gives my money to fossil fuel companies, its for "development" and "independence" but if the government were to tax companies for carbon use, its "wealth redistribution" and "rape" against the citizens of our country. Makes perfect sense.

And I think it is pretty well understood that a subsidy is any assistance paid to a business or producer and can include both direct handouts but also tax breaks, rebates, etc. There's nothing wrong with my word choice there. And lets be honest here, fossil fuel companies don't just get tax breaks/deductions they get grants, low interest loans, favorable trade restrictions, etc.

And of course I'm well aware that fossil fuel prices would be way higher without the subsidies. My point of course wasn't that I necessarily want to get rid of all incentives but rather to point out that if you are going to insist that the government taxing carbon to the benefit of Goldman Sachs is socialism, then you should also insist that the government taxing me to the benefit of oil companies is also socialism. The reality, of course, is that neither of them are socialism.

 

[zdas04]

I don't condone or like the US tax system, I was simply explaining that our beloved Congress passed laws to provide incentives for companies to do certain actions. It is irresponsible for that same government to turn those companies into villains because they followed the law. If there really are any grants and/or low interest loans to oil companies I sure never included that data in any economics I ever ran in over 30 years in the industry, but maybe I missed them. My experience has been that payments to local, state, and federal governments was over 30% and sometimes as much as 50% of total gross revenue. That is after all this "corporate welfare". The last year I worked for someone else, BP's total tax bill was well over $2 billion AFTER taking advantage of every tax incentive they were due. Yeah you pay all kinds of taxes so the oil companies can skate.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.

 

[TomDOT]

David, I'm not sure where your numbers are coming from.

BP's gross revenue was $234 billion last year.

You're saying both that they paid "well over" $2 billion and 30-50%.

I guess that $70-$177 billion is still "well over" - but my impression from your post is that it was under $3 billion.

Did you mean gross income? ($34 Billion)

 

[zdas04]

I'm talking about 2002, the last full year I worked for them. I have the 2002 annual report open in front of me and the gross operating margin was $10.2 billion. Taxes were $4.2 billion (I remembered that they were over $ 2 billion, just not how much over and I didn't want to overstate them). My calculator says that that is over 40%. Return on capital employed (ROCE) was just over 20% like most years (if Apple ever fell from its current 47% to 20% ROCE it would be a crises and they'd fire everyone in management, but that is a mid-pack number for a major oil company, it takes a lot of capital to produce oil and gas).

The $234 billion number you quoted must have been what the Brits call "turnover" or all cash in the door regardless of source. No one calls that "revenue", it is a pretty meaningless number by itself (i.e., if I have $234 come in and my bills are $240, then I might as well have had nothing come in because the business is not sustainable).

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.

 

[TomDOT]

http://www.marketwatch.com/investing/stock/bp/financials

First line. Sales/Revenue.

 

[cranky108]

Sort of ironic that disruptive tax breaks to oil companies are bad, but disruptive tax breaks to wind and solar companies are not.

While disruptive fossel fuel production is a problem for the GW people, disruptive energy production by solar and wind is a problem for utilities who are required to buy this unstable stuff.

I think the political term that is avoided here is Fasisuam (sp?), where the goverment dosen't own things, but attempts to control them none the less.

The clue to this is the goverments attempt to restrict coal sales to over seas (control and no GW motive).

 

[hydroman247]

Revenue and turnover can be used interchangeably IIRC.

 

[TGS4]

Most of the "tax subsidies" for oil and gas businesses are tax credits that each and every business can use - depreciation accounted as an expense against income, regular expenses against income, etc. Most western countries' tax code is so convoluted that to single out one industry as receiving a "subsidy" is a little off-the-mark. In that context, all industries receive subsidies. Furthermore, most oil and gas companies pay royalties. In Canada, these royalties may be as much as 25% of the GROSS revenue (not net, but gross). This is the payment from the oil company to the owner of the resource (the people in trust to the government) for the extraction of the resource. In some cases that expense does NOT receive preferential tax treatment (as it might in other industries)...

As zdas04 said - the calculus years ago was to offer additional tax incentives for specific development. It is likely fair to say that without these incentives, certain resources would not have been developed, and the overall tax revenue would be less than it is right now. So, no, there are no tax revenues going to oil companies - there is more overall tax revenue coming in because of some of these incentives. These were decisions that previous governments made based on overall revenue (the number that actually matters for governments) and not marginal tax rates.

Also, as zdas04 pointed out, these companies aren't dealing with chump change - even junior to mid-sized oil companies have billions of dollars to invest. That aggregate hundreds of billions of dollars (every year) is spent on equipment - bought around the world, and labour - split between engineering and field labour. Much of that field labour is union. Ever wonder why, despite the so-called "left" blathering on about AGW, you never hear from the unions? I'll tell you why - they know who pays the bills - and mostly they don't want to shoot themselves in the pocket-book. (BTW, I'm talking about the unions such as the Boilermakers, Pipefitters, Ironworkers, Electricians, Energy and Communications Workers, among others. Heck, even the Autoworkers know which side their bread is buttered on...).

 

[lacajun]

zdas04, I sure hope you're behind the effort to repeal the 17th Amendment to the US Constitution.

Pamela K. Quillin, P.E.
Quillin Engineering, LLC

 

[CajunCenturion]

Why would you want to repeal the 17th?

Good Luck
--------------
As a circle of light increases so does the circumference of darkness around it. - Albert Einstein

 

[zdas04]

I kind of understand the Tea Party's reasons for wanting to repeal the 17th amendment (increase the power of the state legislatures and begin to shift governance back to states, counties, and municipalities where the Framers of the Constutiution expected it to be), but that movement is so easy to discredit (the issues are far too subtle for a sound byte which is the total attention span of the U.S. electorate) that there is no way it gets traction. I'm not a founder or even a member of that movement.

David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.

 

[lacajun]

I'm not involved but I like the idea and think it's a good one. The US Senate should be responsible to the states and the higher chamber of Congress.

Pamela K. Quillin, P.E.
Quillin Engineering, LLC

 

[cranky108]

Repeal the "gift of greed that only big goverment could love".

We have all seen what has happened to the price of cars due to the mandates for better fuel mileage, safety, and less smog. I predict the same for every thing else that we add such mandates for.
The eventual outcome will be more homeless people, or more people on goverment assistince, because prices for basic things will be beyond there means.

Taxes don't help, because they just increase the price of the goods being purchased. Which will accelerate the above process.

Now maybe it's just me, but I don't like that outcome. On the other hand, a total repeal of many of these laws is not a good solution either.
However, if the states decide there own course, some will work out better than others. And then we will see better ideas to better correct the problems.

Make the states compete, and may the best set of laws win.

 

[beej67]

Any changes to how federal representatives are selected should make lobbying more difficult, not easier. With direct elections, we at least have the ability to 'throw the bums out,' which wouldn't be the case with a repeal of the 17th amendment. One of the funniest things about the movement to repeal the 17th, is that it would make it more difficult for the Tea Party or other fringe groups to be represented. It's a political entrenchment scheme, not the other way around. Just one of several ways the existing powers have infiltrated the Tea Party and bent it towards their own goals.

But again, totally off topic.

Anyone found a model that shows global warming stopping by the U.S. unilaterally implementing carbon trading yet? Figured I'd check.

Hydrology, Drainage Analysis, Flood Studies, and Complex Stormwater Litigation for Atlanta and the South East -

http://www.campbellcivil.com

 

[zdas04]

There is a very simple solution to the complexity of the tax code--most of the complexity is in corporate taxes, so repeal corporate taxes. Altogether. Don't take them to zero because then they would still need corporate tax departments. The outcome would be:
[ul]
[li]Companies would have 20-30% more cash[/li]
[li]Since companies really don't have much use for mistresses, nose candy, or other expensive vices that people are subject to, their uses of this "windfall" are:[/li]
[ul circle][li]Pay dividends (which are fully taxable to individuals, dividends paid to companies restart this loop)[/li]
[li]Increase capital spending (which employs all kinds of folks)[/li]
[li]Increase staff (or salaries of existing staff)[/li]
[li]Reduce prices[/li]
[li]Invest it in places like the stock market or buying stuff[/li][/ul]
[/ul]

I have a hard time seeing how any of that would be bad. When you look at the multiplier effect of money spent in the economy, the net result to government income is an increase if you leave that money in the private sector, and everyone can stop whining about "corporate welfare" or "tax loopholes". Without something that radical you are never going to get an improvement in government financial performance.

When I was an under graduate I took an Econometrics class that had a class project of tracing a chunk of money into and out of a business with and without corporate income taxes. We had to trace the money through many hypothetical hands until the impacts were under $1/transaction. End result was government revenue almost doubled by eliminating the taxes. It also removed a huge lever that the government uses to influence corporate behavior (how many people would be developing corn-to-ethanol facilities without tax incentives? The government seems to think that ethanol is a good thing so they would lose a significant motivator)


David Simpson, PE
MuleShoe Engineering

"Belief" is the acceptance of an hypotheses in the absence of data.
"Prejudice" is having an opinion not supported by the preponderance of the data.
"Knowledge" is only found through the accumulation and analysis of data.

 

[rb1957]

david,

as sensible as that sounds it'll never fly ...
government is giving a hand-out to the businesses by giving them a tax holiday ! ...
personal taxes will have to increase to cover the difference will be the rest of the story (wrongly as your analysis predicts).

possbily they could roll out something for samll cap businesses (like mine), then maybe i'd buy a starbucks every so often ?

 

[cranky108]

As long as we are on the topic of taxes, someone once told me; if we increase taxes on something, we will have less of it. However, if we subsitise something we have more of it. So in that vain, we should tax what we want less of, and subsitise what we want more of.

We should tax unemployment, and joblessness. People will find ways around this tax by creating useless jobs.
We should tax non-voters. I doubt the non-voters will vote agenst it.
We should tax cars that are not well maintained (burned out headlights etc.).
We should tax voter poling, and political ads.

 

[rb1957]

hence we're subsidising windmills and eco-conferences (in exotic locations) and taxing nukes (in someone else's backyard)

 

[DRWeig]

We should tax voter poling, and political ads.

I think I have seen the promised land through cranky's inspired vision.

If we stuck our two US presidential candidates with a 35 percent tax on their campaign war chests, we could provide free medical care to a mid-size city for eternity.

Best to you,

Goober Dave

Haven't see the forum policies? Do so now: Forum Policies