Democrat Martin Frost Effectively Concedes Governor Palin’s Analysis of the Oil Industry is Accurate

Conservatives4Palin ^ | April 30, 2011 | Ian Lazaran

[ScaniaBoy]

One of the most interesting points that Governor Palin brought up in her interview with Brett Baier last Friday was that Obama’s proposal to decrease or eliminate the $4 billion in subsidies for oil and gas companies would negatively impact independent oil producers and explorers rather than Big Oil. It was interesting because I haven’t heard any other high-profile Republican articulate that one of the reasons why we shouldn’t just go along with Obama’s proposal to end the oil subsidies is because independent and smaller oil companies, rather than Big Oil, will be hurt if these subsidies are taken away. Quite frankly, Brett Baier missed an opportunity to go deeper into this issue during his interview with the Governor as she may have just come up with the best argument our side can use to fight Obama’s proposal to take away the $4 billion in subsidies.

One of the reasons why other Republicans haven’t used Governor Palin’s argument is that they simply do not understand the oil and gas industry. They don’t have the same level of experience that Governor Palin does in dealing with oil companies and probably don’t comprehend that tax incentives and subsidies don’t impact all oil and gas companies the same way. Unlike Governor Palin, hacks like Romney and Pawlenty, con-men like Trump and Huckabee, and space cadets like Bachmann have been unable to explain how the oil industry works in a way that goes beyond trite and tired talking points.

Today, Democrat Martin Frost effectively conceded that Palin’s analysis of the oil industry was correct. Here’s the video courtesy of PalinTV (Go to original article to view video. ). Smart Republicans will start using the argument that Governor Palin introduced during her interview with Baier about the deleterious impact that eliminating such subsidies will have on independent oil and gas producers. Please help us spread the youtube video and this post as the liberal media and certain elements of the conservative media will try their best to ignore what we have presented.

[seowulf]

If the “subsidies” or tax breaks were eliminated, a new mechanism to protect small, independent oil exploration companies would need to be created.

I could see the small independents buying dry hole insurance or several small independents creating a dry hole risk pool where they own interest in each other and share the risk and the profit.

Of course this added cost would be passed on to the major oil producers when the known reserves were sold to them, and then on to us at the pump, but instead of being a government subsidy it would be private.

You never get something for nothing. I’m afraid even conservatives forget that sometimes.

[Mariner]

If one needs $4bil in subsidies to make it in the oil business...then one needs to find another business.

These subsidies should be eliminated today. There is no good reason to subsidize with taxpayer money the most profitable business in the history of man.

[ScaniaBoy]

Thanks for some really good comments. Still long to go to the 2012 election, but it is safe to say that energy will be a very important issue.

mvpel's point about "subsidy" versus "tax increase" is well taken. Language is important - and here conservatives very often play too nice with the leftists, who always try to make their language full of, no, not "sense" but "sensibility".

[Mariner]

"Whether that is the best thing to do in the present situation has to be analyzed, and one would have to study the entire proposal to be able to come to an informed decision - just as Gov Palin stated in her interview with Breier. "

No, it doesn't have to be analyzed. This is very very elementary Conservative 101.

No government subsidies for private endeavors, period.

Are you so blinded by your love of Palin that you can't see that?

[ScaniaBoy]

Check post #19 , #13 and #21.

[Mariner]

"The flat tax is the simplest and fairest solution to financing the government. "

It is neither of those.

A sales tax is both of those.

Tax only consumption.

[ScaniaBoy]

Re #26:

And I was so happy with a thread with mostly intelligent comments (my own with some obvious blemishes, of course).

Oh, well.... I'll go here instead, not that I would dare to suggest....

[Mariner]

"Check post #19 , #13 and #21."

I did, and they do not put forth a cogent argument for subsidies.

All business is able to write off losses from their income. Why is that not sufficient for independent oil producers?

[Rashputin]

"These subsidies should be eliminated today."

Given that the industry is structured around them existing, I think they should be announced as going away in two years, cut in half year one, ended at the end of year two.

Regards

[dmam2011]

I’d be interested in an hr long program with Palin covering the current oil crisis in America. I think her oil industry expertise, govt side, would shine a new light on a national stage.

[ScaniaBoy]

If subsidies they are? Once again I refer you to post #13.
This appears "slightly" more complicated than just pure subsidies.

[FreeReign]

These subsidies should be eliminated today. There is no good reason to subsidize with taxpayer money the most profitable business in the history of man.

It's a tax cut or tax break. If you wish to make an argument that the small independents shouldn't get a tax cut or tax break then have at it. But lets not refer to it as a subsidy and let's not refer to it as other people's money.

[Mariner]

I am not opposed to eliminating taxes on all producers.

I am opposed to tax CREDITS for producers.

[Pontiac]

A sales tax is both of those.

Tax only consumption.

With the exception that it makes the businessman an involuntary tax agent.

It increases the burdens/expenses of the businessman (government forms/reports and quarterly payments).

I have knowledge several businessmen that went to prison because their businesses fell on hard times and they missed sale tax payments to the state. If they were not involuntary tax agents of the state they simply would be bankrupt and not felons.

A second note on this subject is that employers should also not be tax collectors to their employees. Income tax should be collected directly from the individual and not be a payroll deduction. It should be a personal responsibility. This would have the added benefit of making the taxpaying public acutely aware at least annually of how much of their wealth the government is stealing from them to support the welfare state.

[unseen1]

only an idiot would call for a $4billion tax increase on oil drilling companies during $4.50/gal gasoline crisis.

Does you hatred for palin blind you to the fact you are calling for such a tax increase?

[PSYCHO-FREEP]

The Oil industry is the only Industry that pays a 48% tax rate on all profits. All other industries pay around 28% and are allowed far more write offs that the Oil Companies are. You are not only ignorant, you are wrongly opinionated about something you knew very little about.

[FreeReign]

I am not opposed to eliminating taxes on all producers. I am opposed to tax CREDITS for producers.

What do you think is the logical difference between a tax credit and a tax reduction?

Are you saying that the two are different because a tax credit is for some while a tax reduction is for "all"?

[FreeReign]

The Oil industry is the only Industry that pays a 48% tax rate on all profits. All other industries pay around 28% and are allowed far more write offs that the Oil Companies are.

Interesting.

[unseen1]

The tax breaks in question The Obama administration is targeting nine tax breaks, according to a paper from the left-leaning Center for American Progress. Four account for the lion's share of the money: Domestic manufacturing tax deduction: This is the largest single tax break, and would save over $1.7 billion a year if eliminated. The tax deduction, passed in 2004, is designed to keep factories in the United States. Companies that manufacture here can deduct 9% of their income from operations that are attributed to domestic production. But some question if that incentive is really appropriate for oil companies. "What are they going to do, move the oil field to the North Sea," said one staffer at the Center for American Progress said in an interview earlier this year. No, but higher costs in the United States may make them move the drill rigs to the North Sea or some other place. Eliminating the tax breaks "would actually discourage new energy projects and new hiring in one of the nation's most dependable job-creating industries," the American Petroleum Institute said in a statement at the time, noting the industry currently supports over 9 million jobs. The percentage depletion allowance: This lets oil companies deduct about 15% of the money generated from a well from its taxes. Eliminating it would save about $1 billion a year. The deduction essentially lets oil companies treat oil in the ground as capital equipment. For any industry, the value of that equipment can be written down each year. But critics say oil in the ground is not capital equipment, but a national resource that the oil companies are simply using for their own profit. The foreign tax credit: This provision gives companies a credit for any taxes they pay to other countries. Altering this tax credit would save about $850 million a year. Foreign governments can collect money from oil companies through royalties -- fees for depleting their national resources -- and income taxes. A royalty would be deducted as a cost of doing business, and would likely shave about 30% off a company's tax bill. Categorized as income tax, it is 100% deductible. Foreign governments long ago grew wise to the U.S. tax code. To reduce costs for everyone involved and attract business, they agreed to call some royalties income taxes, allowing oil companies to take the 100% deduction on a bigger slice of their bill. Intangible drilling costs: This lets the industry write off about $780 million a year for things like wages, fuel, repairs and hauling costs. All industries get to write off the costs of doing business, but they must take it over the life of an investment. The oil industry gets to take the drilling credit in the first year http://money.cnn.com/2011/04/26/news/economy/oil_tax_breaks_obama/index.htm notice all of these are tax credits or tax breaks. The federal gov gives no money to the oil companies at any time. They are not subsidies.

[deport]

I’d be interested in an hr long program with Palin covering the current oil crisis in America. I think her oil industry expertise, govt side, would shine a new light on a national stage.

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There is no doubt she comes from a very different perspective regarding the oil/gas industry than what is basic in the other 49 states. After all the State of Alaska or the Feds own the natural resources including subsurface minerals there and all the private citizen can own is the surface squatting rights. Many other states would be rolling in the cash if they owned the minerals like Alaska does.