Posted on 04/27/2006 11:21:18 AM PDT by John Geyer
Edited on 04/27/2006 11:47:26 AM PDT by Admin Moderator. [history]
I would assume that ethanol, being produced by fermenting American grown corn into a useable fuel, would make gas cheaper, not more expensive. Instead of making the price of gas rise, I would believe that it would fall because we are using a renewable, home grown form of fuel. I guess I'm an idiot for not understanding the reasons behind this, but I ask for someone with more experience to explain it for me. I was telling my father how ethanol would make gas cheaper, and now I feel like a complete moron. Help me understand.
How much corn do you think is imported into the US?
The benefit is an advantage in a competitive market. Ethanol competes with gasoline which has the taxes. They are given an economic advantage that market that other conventional and unconventional processes do not have.
Thank you for the clarification. I seem to remember watching a show many years ago about pipelines, and thats what they said. Maybe they were talking about something else.
Apparently, you either don't understand the point, or you're just being purposefully obstinate.
In any case, ethanol receives no subsidy. Rather, it receives preferential tax treatment, which could be said to have an effect similar to that of a subsidy.
That is financial assistance. That is a subsidy. And it appears to me, you are the one being purposefully obstinate.
Would you agree that the oil depletion allowance was also in the nature of financial assistance then?
FWIW I suspect that not just the btu content is at play but the fact that you also "carry" fuel - the weight being a factor - more btu's/lb less tare.
Yes it was. It encouraged oil companies to play games with the accounting by vertically integrating. If a company owned the wells, processed the crude oil, and sold gasoline and other products to final consumers, it could control the price it charged its own units for the oil.
This was a bad law and it was good to have it end in 1974. Afterwards many oil companies got rid of their downstream retailers.
I'm being accurate. For some reason, you insist on playing loose with the language.
Answer this: If a schoolyard bully takes the lunch money from four kids including yours every day for a month, is it financial assistance to your kid if he decides to stop taking it from yours? Is the bully subsidizing your kid's lunch by letting him keep his lunch money?
Even without regard to spending for military protection, continuing tax payer subsidies to the oil industry are behemoth. Of course, Exxon can't be expected to pick up the tab for its president's $400,000,000 retirement package all by itself.
That is not a fair comparision. But if we change it to a private school that everyone pays to attend, but one kid gets in free, that is financial assistance.
I thought, and may be wrong, that percentage depletion applied to the owners of the land, not an oil producer leasing the land.
Foreign Tax Credit
Foreign Tax Credit is not an oil company subsidy. Any company or individual that makes money in foreign country and pays taxes on income, deducts that tax from tax they pay here. Just like State income tax is deducted from Federal.
deduction of Intangible Oil Drilling & Development Costs
All business deduct costs of doing business. Taxes are paid on profit, not gross. Unless you are in oil & gas business, then you also pay royalties on the gross.
Petroleum Research and Development Program,...Enhanced Oil Recovery Credit
These are programs that increase the production of US resources. The net to the government is more royalties and taxes, not less.
subsidies to the oil industry are behemoth
I believe (and cannot prove it) that dollar paid for dollar earned, the oil & gas industry pays more to federal government than any other industry. The amount of money in royalties, property taxes, corporate taxes, income taxes by this industry is huge. I am not complaining about that mind you.
spending for military protection
Just how many aircraft carriers will we do away with if we produce all our own fuel? I doubt any. But I complete support us doing all we can to avoid foreign imports. We should drill ANWR, Bristol Bay, OCS and all our coasts. We should develop Nuclear power more fully. Our coal, oil sands and oil shale should be fully developed.
Please explain. How does the bully analogy fall short?
The Foreign Tax Credit allows integrated oil companies to shift earnings back and forth between their domestic and off shore operations. Your comparison confuses a state tax deduction with a foreign tax credit.
In every other business, development costs must be capitalized, not deducted. Again, a direct tax subsidy.
Tax credits which are received by one competitor , but not by another were claimed by you to be a subsidy. Why is this not true when the recipient is an oil company?
For starters, the tax applies to all other vehicle fuel, not paid by just a couple drivers on the road.
I've made no such claim. ANY tax break is a subsidy.
Just Remember:
Rube Goldberg was an Engineer.
I love Rube Goldberg devices.
Bless you.
What an excellent and informative thread you started, John Geyer. Thank you, and thank you to all FReepers who have contributed their knowledge and expertise on this subject. A day is never wasted when one learns something new. :)
Fine. If it'll make you happy, let's say the bully steals lunch money from EVERY kid in the fourth grade except his friends. He doesn't give them any money; he just doesn't take it from them.
So, are you really going to say the bully is subsidizing his friends' lunches because he takes everyone else's lunch money?
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