Posted on 05/01/2011 6:31:28 AM PDT by 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.
The Oil companies are accused of getting “subsidies” when in reality, they are simply limited write-offs and must comply with certain stipulations to get them. To say otherwise is downright dishonest.
Master bone head still wouldn't understand.
It is not a subsidy in the classic sense. The IDC (Intangible Drilling Cost) write off is expensing the drilling cost like GM writes off the cost of the products that they purchase to make a car. In other words, it is a business expense that will not be able to be written off. GE, on the other hand, gets subsidies to make products that are not profitable. I don’t see the fairness in that. I also can say with certainty (since I work for a small Oil Company), that taking the IDC away will absolutely kill us small companies, and Exxon Mobil will not be hurt. Therefore, there will be less exploration and higher gas prices..
time to end all this social engineering and crony capitalism crap.
No, not at all.
A tax credit can be claimed by those who pay no tax...an outright payment by the treasury to a recipient.
See the Earned Income Tax Credit.
I'll say it again: I support the reduction, even the elimination of all taxes on oil producers. I am opposed to tax credits for any of them.
I am ALSO opposed to all Farm Subsidies. All of them. Of course I DO understand that implies STRIDENT health and safety regulation and inspection of imported foods. I also support tariffs on imported food.
Upon further research it's apparent the Obama admin is not proposing to eliminate ANY of the credits. They are proposing to eliminate only tax deductions.
So, like the true commies they are, they will continue payments out and increase revenue in.
It's Orwellian how they are approaching this.
And the GOP has nobody who can articulate this?
Can you substantiate that claim?
Perhaps you're counting the fees paid to the government for the oil itself rather than just the tax rate?
Just a question please.
Sales tax where; Federal, State, County, Parish, Districts, Cities, or other
made-up entity?
The taxes I pay at the gas pump on a gallon of gas are in 10+ increments(Fed, State County. City, district ,etc.).
Every politician gets their grubby hands on the spigot!
One other question, why should any business, private or public, be an agent of/for any government, to collect taxes?
Thanks. G
So far I have seen nothing mentioned in the media that I would call “subsidies” or tax credits for the oil companies. What they have so far proposed has to do with how quickly money spent on assets are depreciated (depleted in the oil business), something all businesses do (whether epensed or depreciated). All things being equal (oil prices, production, operating expenses, etc) the taxes paid to the government over an asset’s life is the same under these cases, only the timing changes when it gets paid to the government (in this case the government wants the money sooner). In fact, a case can be made that the government and consumers will actually be hurt by this because lengthening depletion times results in reduced rates of returns on investments resulting in once marginal wells not being drilled. This means less royalties paid to landowners (whether the government or private individuals), less taxes paid on the oil production, and fewer people hired.
1) Percentage depletion versus cost depletion. The proposals want to make all oil companies use cost depletion which is what all large oil companies must do. As mentioned before, this results in longer depletion times for small producers which typically drill for smaller production wells, does not increase government revenues over an asset’s life, and reduces rates of returns. Under certain circumstances percentage depletion can result in more than 100% of an asset being depleted over a number of years which I think is a legitimate criticism. I doubt this would result in more than $100 million dollars over a 20 year period.
2) Intangible drilling costs. Currently, up to 70% of a well drilled can be expensed and 30% depreciated over 5 years. The proposal is to depreciate 100% of the costs over 5 years. Again, no additional tax money goes to the government, just the timing of it being paid. This impacts small companies more than the larger companies because the larger companies tend to have more money spent on infastructure to produce the oil, things such as platforms, pipelines, barges, etc. (all these items are depreciated over long periods of time). The reason so much of a well is expensed upfront rather than depreciated is because the only long lived asset resulting is the wellbore casing, tubing, and christmas tree.
Charles Krauthammer Tells Bill O’Reilly Sarah Palin Must Expand Policy Knowledge
http://www.freerepublic.com/focus/news/2642800/posts
“Krauthammer said they’ve “contributed enormously” and that “the animus to her is unprecedented,” he also allowed that “she is not practiced in policy” and that the infamous Katie Couric interview was “not a ‘gotcha’ interview.” According to Krauthammer, Palin’s growth in mastering policy issues will shape her fate:
“Again, you have to remember that President Obama, and I’m going to say this with all due respect to the office of the Presidency, he doesn’t know what he’s doing when it comes to energy.”
Actually, Governor, he doesn’t know much about anything.
Palin in ‘12!
Deduction of IDC is not a subsidy. It is a COST DEDUCTTION.
Why not repeal the steel expense deductions from the auto industry?
The absolute BEST reason is that it offers the potential to get rid of the "progressive" income tax which is inherently contrary to the concept of equality under the law.
The second best reason is that it taxes consumption and rewards savings and investment...thus increasing the capital basis of the economy.
Whatever you tax, you get less of it.
That said I do understand the objection. I just consider the sales tax the least onerous burden to liberty and least economically damaging than any of the other alternatives to funding the largess of the commies in DC.
I would LOVE to hear her say that in a debate with Obozo. His staff would be whispering in his earpiece in a panic to try to refute the truth.
Once again thanks to all who participated in this thread (so far). I’ve learnt more about Obama’s “oil taxes” than I could ever hope to glean from the MSM.
PING because i have to share this with about 1000 people who don’t understand how intelligent she is instead believing the picture the media painted. Awesome piece.
I would agree with you IF the definition of subsidy did not include tax breaks. Paying less taxes on wealth created is not a subsidy. The government loses nothing, it just steals less.
On the other hand, green energy grants to unprofitable entities are subsidies as are any number of grants, loans and funds directed toward the supposed 'investments; that the marxist promotes which really is nothing more than wealth destruction...
Serious candidate? One with more than two years experience in elected office?
Sarah Palin
Bobby Jindal
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