Been researchin’ these big “subsidies” my leftista buddies claim I get as an oilman.
They claim I get billions, and yet I sure as hell haven’t seen it impact the “special” taxes I pay above and beyond other manufacturers… taxes not on profit but off the top, which make low margin production effectively taxed at above 50% BEFORE income tax. In any case, I found a website that outlines, in outraged tones, the largesse I receive as a thieving oilman.
http://www.citizen.org/cmep/energy_enviro_nuclear/electricity/energybill/2005/articles.cfm?ID=13980
It claims I get $6 billion in corporate welfare from the period 2005 to 2015.
A cool net billion comes from Congress letting me depreciate Geology and Geophysics over a faster amount of time. So this is neat. Congress set up the ridiculous and arbitrary“Capitalization” schedule for G&G in the first place, which should have been expensed all along, and when they alter the cap schedule downwards, I now get “corporate welfare”. Let me tell you how this works. You spend a boatload in G&G on the front-end. If it is a dry hole, you write it off. Of course, it could take you several years to drill it, all along having to depreciate this largely intangible cost. If you drill a crappy well, you can’t write off your G&G, it just sticks there hammering you forever. Smart guys began selling their deals where all the cost is allocated to land over a short period anyway.
Some net 400 mil comes from allowing refiners to expense, rather than capitalize, improvements to their refineries if it increases output capacity by 5% or more. Ohhh. Outrageous.
A cool net billion allowing us to depreciate Natural Gas pipelines at a faster rate. Fat Bastards. Screw ‘em. Just kidding. It just bothers me when Uncle Sam chooses to take less from me, or adjust the schedule he picks my pocket, especially when it does not compare favorably anyway with other industries, it is characterized as a “give away” .
Ooooo. A scary huge one. One that “allows” companies to pay “in kind” rather than with cash. All the talks I heard were about how the Feds WANTED its production in kind to avoid royalty reporting problems.
Waiving Royalties in Deep Water GOM. I guess it is an incentive to get them to do it. In general, I think the Feds should stay away from incentives like this in all industries. However, it is dwarfed a thousand fold by the actual Federal giveaways (NOT royalty abatement!) to wind, solar, etc.
Ditto
Ditto for Gas Hydrate expansion. If alt energy is worthy of Federal Support, the Gas Hydrates should sure as hell be in the mix.
A 44% kickback of Federal royalties to states that won’t allow drilling in Federal Waters off their coasts. How is THIS corporate welfare to the big bad oil bidness?
OK.
Now let’s compare this to the recent Bipartisan Farm Bill (as outlined in the May 24th, 2008 issue of the Economist).
5 years, $307 Billion dollars. Right off the top, it is half the term, and 50 times the size of the O&G “corporate welfare”
“Through a complicated system of government underwritten insurance, counter-cyclical assistance, disaster aid, and legacy payments (payments, for God’s sake, NOT “faster freaking depreciation”), the five year, $307 billion bill lavishes cash on wealthy farm households, the main restriction on collecting it being a means test that applies to couples making more than $1.5 million per year. And even that can be avoided by employing a reasonably competent accountant”.
“Shockingly, the bill’s authors tied future subsidy payments (see, THIS is a subsidy, a goddamn check in hand) to today’s record commodity prices!” I mean, this is outrageous. Kind of like setting price guarantees for oil and gas producers to kick in at market prices below $125 a barrel and $15 an MCF, where in reality they are set to…. Oh, I forgot. We DON’T HAVE PRICE GUARANTEES!
This Bipartisan Bill got urban support by tying food stamps to it, Mitch McConnell got tax breaks for his
Oh well. I have nothing against my farmer brethren who have perfected the art of Snout Control over the Federal Slop Bucket, (these farm lobbyists are masters… king fu masters… but unlike Tiger style or Crane style, they are practitioners of the deadly Hog style) but I don’t want to hear another G**D**** word about Corporate Welfare to the oil and gas business. When anyone brings it up… Slap them hard across the face and tell them to Wake the Hell Up.
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