posted May 05, 2011 10:25 PM            

Whenever there is a news cycle focused on a global newsworthy event, you are likely to find some really interesting action initiated in that window of opportunity.

One of them is the attempt by House Dem's to cut the free flow of cash subsidies and tax breaks to big oil.

A good look at the poker game wall street plays with gas prices in the last 10 years lends a few conclusions.

Ever since 9.11, ever since the war on terror was begun- oil has been the KENO of choice for speculators.

Guess where oil prices went this week with the announced death of OBL? Thats right- down-

So we all know about the billions made by EXXON and the like. EXXON had a 30 billion profit last year. Yet they still hold government tax breaks, thankfully someone is trying (again) to repeal that.

It is much easier to get some passed, harder to get repealed.

the amount swindled by oil companies and their agents in Congress? Big Oil is receiving $53 billion EVERY YEAR!

I also find it interesting that a true “conservative” would advocate my taxes be kept high so as to subsidize another taxpayer.

quote:

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The Hill's E2 Wire | Mar 2nd, 2011

House Democrats on Tuesday used debate on a short-term spending package to force a largely symbolic vote on ending tax breaks for major oil companies like Exxon and...

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posted May 06, 2011 11:05 AM            

Oil companies have spent hundreds of billions of their own money securing oil leases and more hundreds of billions...exploring, drilling and bringing oil and gas fields to production. In addition to that, the federal, state and city governments take more money in taxes from the sale of a gallon of gasoline than the oil company made....much more.

I'm always amazed to see there are still some who don't have a clue about business. Don't understand even the most basic concepts of business accounting and pricing concepts.

Every penny a business...any business has to charge against their gross profits MUST be passed along to consumers in the price charged for their products. That's it in a nutshell. And, it has to be this way for business..any business to stay in business.

So, all the costs of regulation, of accounting and reporting, all the costs of compliance, all the costs for taxes...all taxes, all wages and salaries, all rents or mortgage payments, all utilities, all transportation costs, all raw material costs...ALL are passed along to consumers in the prices of the products. It has to be this way and can be no other way.

When I see or hear someone screeching and shrieking for higher taxes on corporations or taking away a tax write off for exploration..in this case exploration for oil, I understand they are really saying..."heap yet more taxes on the backs of consumers" because that's who is going to be paying it.

posted May 06, 2011 03:37 PM            

This isn't difficult. Well, it's not difficult if they have a reliable government to deal with. A government which doesn't run off at the mouth every day threatening to RAISE their taxes. In that case, they may raise their estimates of taxes and build that into their pricing model..before the fact.

posted May 06, 2011 05:00 PM            

as you also point out, it will come out of our hides in the end whichever way it's paid for...so why spend the money paying federal workers to dole it out to them when they will get it at the pump? isn't that spending even MORE than the actual 4 billion?

but again, when they are having record profits how is it the gov's fault for not letting them drillbabydrill? they could well afford to drop the price and THEY HAVE.

apparently people were upset enough about the price that they actually did get out of their cars long enough to make it very clear we are NOT willing to be fleeced interminably. or was it the talk of investigations into gouging that scared them off? don't we all know that the price of gas is "as much as the suckers will put out"...ie when demand will be high the price goes up, and goes down again in a minute when demand will be (predictably) off, as after tourist seasons, holidays, etc...

so all the moaning and groaning about offshore drilling, alaska drilling, etc, is so much attempt to get the government to intervene...i thought that was the socialists' agenda?

So, all the costs of regulation, of accounting and reporting, all the costs of compliance, all the costs for taxes...all taxes, all wages and salaries, all rents or mortgage payments, all utilities, all transportation costs, all raw material costs...ALL are passed along to consumers in the prices of the products. It has to be this way and can be no other way.

of course we pay all their costs. the fact remains they are having RECORD PROFITS and it is OUR FAULT if we agree to pay them more than we can afford! not the federal policy's.

posted May 06, 2011 09:26 PM            

This is not rocket science katatonic.

posted May 07, 2011 06:31 AM            

Why do you think Deep Water (Trans ocean) was flying the flag of the Marshal Islands?? Why do you think they went from Houston to Cayman Islands to SWITZERLAND??

BP used a tax break for the oil industry to write off 70 percent of the rent for Deep water Horizon — a real money saver!! of more than $225,000 a day.

According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.

quote:

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And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by var-ious credits. These companies’ returns on those investments are often higher after taxes than before.

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Think for your self my man.

posted May 07, 2011 10:55 AM            

Oh wait, it was YOU who mentioned American Thinker.

Perhaps you should think for yourself instead of parroting the anti business nonsense from your bloviating economic dunce sources.

ALL business expenses, including taxes, cost of government regulation compliance and everything else is reflected in the price of goods sold. Period.

When I hear or see bloviating about raising taxes on business/corporations, I have to wonder if they don't understand they are advocating a "hidden" TAX on themselves.

I also notice that those rich few who are wailing for higher taxes on the rich avoid paying every penney of tax they can by deploying every tax deduction available to them.

Hell, if they really feel they're not paying enough in federal taxes, they should sit right down at their gold plated desks and write Uncle Sam a nice fat check.

posted May 07, 2011 12:14 PM            

in fact i heard the total came to several billion dollars...so is palin partly responsible for the high price of gas?

posted May 07, 2011 03:51 PM            

Generally, tax breaks and/or subsidies are ordered up for businesses to do something the government wants done. There are even subsidies for farmers to NOT DO something they are in business to DO. Such as not grow tobacco or to divert the growing of food crops to growing corn for ethanol.

May 02, 2011
About Those Oil Subsidies
By Randall Hoven

Everyone wants to end subsidies to oil companies, from President Obama to John Boehner and Paul Ryan. My question was "What subsidies?" Remarkably enough, CNN Money provided the answer.

It turns out that they are all tax "breaks." I even hesitate to call them "breaks" because some of them amount to little more than Congress defining accounting terms such as "capital equipment." And the total amount of earnings not collected in taxes (which liberals define as a "subsidy") is about $4 billion per year. Here is how that breaks down.

Domestic manufacturing tax deduction -- $1.7 B. This is a tax deduction given to every manufacturer in the US. Per CNN, it was "designed to keep factories in the United States." If that deduction were eliminated for oil companies only, it would mean singling out oil companies from all other manufacturers.

Percentage depletion allowance -- $1 B. Any industry can write down a portion of the cost of its capital equipment as part of the cost of doing business. Right now, oil in the ground is treated as capital equipment. Again, this "subsidy" amounts to how the cost of doing business is defined. All companies get it, not just oil companies.

Foreign tax credit -- $850 million. Companies get credit for taxes they pay to other countries. All companies get this "subsidy," not just oil companies. Should a company pay tax on tax? Should only oil companies pay tax on tax?

Intangible drilling costs -- $780 million. According to CNN, "[a]ll 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." Among these four tax "breaks," this smallest one was the only one that treated oil companies differently.

The above tax "breaks" explain how much tax revenue is not collected from all oil companies. How much is collected?

Exxon recently released its first quarter results for 2011. The number grabbing the headlines was Exxon's profit: $10.65 billion in a single quarter. The number not given quite as much exposure was the taxes it paid in that same quarter: $8 billion, or 42% of income before taxes.

And what does Exxon do with all that money it has left after paying $8 B in taxes? It put $7.8 billion into capital and exploration, as part of its plans "to invest between $33 billion and $37 billion per year over the next five years to develop new energy supplies."

In any other industry, that would be called "research and development." Exxon is plowing 73% of its after-tax profits back into R&D. Who would be better at spending $4 billion of energy companies' earnings in an attempt to provide our energy in the future: the energy companies or Obama's energy czar?

Do you know what oil company does get US subsidies, and not just tax "breaks"? Petrobras, Brazil's state-owned oil company. According to the Wall Street Journal,

The U.S. is going to lend billions of dollars to Brazil's state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil's Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil's planning minister confirmed that White House National Security Adviser James Jones met this month [August 2009] with Brazilian officials to talk about the loan.

Just to re-cap a few pertinent features of these "subsidies" to oil companies that Obama wants to cut.

•They are all tax "breaks," or earnings that oil companies get to keep, not money paid out from the US Treasury.
•The amount of earnings not collected in taxes is about $4.3 billion per year -- about 0.2% of this year's deficit and enough to fund about 10 hours of current US government spending.
•A full $3.55 billion of that amount (82%) is due to the way taxes are treated for all industries or manufacturers. To change these tax laws only for oil companies would require singling them out among all industries for special mistreatment. (I'm not a lawyer, but that sounds like a bill of attainder to me, something our Constitution forbids.)
•The only tax in which the oil industry seems to get special treatment compared to other industries is intangible drilling costs. The amount of that subsidy? That would be $0.78 billion per year -- enough to fund less than two hours of federal spending in 2011, and not even half the amount we are lending a foreign-owned and state-owned oil company for drilling offshore Brazil.
•Oil companies already pay tax rates of 40-50% of income. For one company, Exxon, in one quarter of one year, that amount was over $8 billion, or almost double the so-called tax "subsidy" for all oil companies for an entire year.

If you think oil companies enjoy some special privilege because of the money they throw around Washington, DC, consider that the Oil & Gas industry ranked only 19th in the amount of money contributed to politicians in the 2008 election cycle: $17.7 million. Who was number one? Lawyers, who contributed $126.9 million, or over seven times as much as the Oil & Gas industry. The Education lobby gave $37.4 million, more than twice as much as Oil & Gas.

You might not realize it, but private oil companies don't own much oil. Most oil in the ground, in fact 87% of the world's supply, is owned by state-owned companies, and most of that by OPEC countries and Russia. Exxon, for example, owns only 0.68% of worldwide oil reserves. Venezuela owns 7.34%, more than 10 times as much as Exxon. What Exxon does is explore, drill, transport, refine, and distribute. It makes its money by doing things, not by sitting on capital.

According to the DOE's Energy Information Administration, every time you fill up your gas tank, more of your money goes to taxes than goes to refining costs and profits combined.

Having said all that, go ahead and get rid of that special treatment of intangible drilling costs. Make oil companies write them down over the life of their investments, not just one year. Increase corporate taxes in the US, where corporate tax rates are already highest in the world. Collect enough money to fund the federal government for two hours.

posted May 07, 2011 08:52 PM            

by this math

Exxon recently released its first quarter results for 2011. The number grabbing the headlines was Exxon's profit: $10.65 billion in a single quarter. The number not given quite as much exposure was the taxes it paid in that same quarter: $8 billion, or 42% of income before taxes

posted May 09, 2011 11:16 AM            

I know it's no use attempting to talk business sense to you but companies and analysts of company bottom lines break down statistical information in lots of "different" ways.

For instance, there's internal and external calculations on the "cost of goods sold", a calculation of the cost of labor to sales, of taxes to sales, of before tax income, of debt and debt service to sales and/or income, of advertising costs to income..gross and net, "Cap Rate", of unit costs....among others.

All those reports are helpful in analyzing company operations. I know, because I've compiled those kinds of reports.

So katatonic, your argument is going nowhere!