Idiot Economics

Town Hall ^ | Monday, August 11, 2008 | David Strom

[thackney]

I was led to believe (actually slammed for not accepting the premise of) that there were certain tax-based incentives/giveaways that were being given to the oil companies to offset the losses they were incurring from the times when oil was in the $8-10 a barrel range.

There were reduced royalty payments back in those days to entice oil production in the US. We were competing with the rest of the world for their business and had to stay competitive or lose even more jobs and oil production.

I believe that if that is the case, then we should cut out the give-aways, and replace them with reductions in taxes.

I'm inclined to believe a contract is a contract. We have raised some royalty rates now that oil prices are high. Will we be cutting those when the prices fall or only stick to our agreements when it benefits us.

Since you propose a net zero change, I think we would be better in the long run to honor our contracts. Oil companies take such into consideration when deciding investments and risk/reward comparisons.

[Delacon]

See this is why I love posting articles here on FR. I learn so much more than just what the articles I read convey to me. Great exchange between you and spacewarp.