Oil and Gas Subsidies

[red-beard]

So, on another forum, someone threw out the tired "Oil and Gas subsidies" red herring again. I asked them to give me a link to somethig showing them.

She gave me Earth Track | Earth Track is your primary source for understanding and monitoring environmentally-harmful subsidies.

Here is my response

Picking the first article, it had no list of subsidies.

August Oil Subsidy Roundup | Earth Track

Picking another link inside that article lead to this link

http://greenscissors.com/wp-content/uploads/2011/08/Green_Scissors_2011.pdf

Reading through this, it takes getting to page 9 before a list of subsidies.

The largest is LIFO accounting at $29B over 5 years. Of course, reading the foot notes it shows that the $29B is for ALL INDUSTRIES not just fossil fuel. So the article exaggerating the subsidies.

#2 is similar, except again it is a general accounting rule that applies even to solar industries

#3 is a cost of doing business and is deductible

#4 is nothing more than inventory reduction allowance the same as all industries are allowed.

Removing the top 4 reduces the articles $61B over 5 years down by $48B. This leaves $13B of which I can already see that over 1/2 is again standard aacounting rules which apply to all industries.

The only one that seems to fit is "Oil Royalty Relief" at $4B over 5 years.

Here is a description: Deep Water Royalty Relief Act - Wikipedia, the free encyclopedia

At $800M per year. I certainly agree we can afford to get rid of this.

[ODDJOB UNO]

on my recent trip down the road of "NO HOPE and BLEAKNESS"-I-80................cheyenne,wyoming all the way to rock springs ,wy. all WE SAW was oil and gas wells. new ones or exploratory. only 2.5 million people crammed into a very very large state.


the signs we saw for these wells was "brought to you by haliburton".

[sammyg2]

Many moons ago, the gubmint wanted to sell some deep water leases so tey couldf get the $$$ and also the huge royalties from the oil they produced, if they produced at all.

The oil companies checked out the leases and saaid no thank you. they were too deep, to expensive, and too risky. Not worth the huge inventment.

The gubmint said please.... pretty please... .with sugar on top. We need your money.
the oil companies said nope, too much $$$ and too much risk.

The gubmint said, how about if we let you write off the cost of a bad well at a faster rate, and how about if we promise to only take 10% of the oil it produces if it comes in instead of 14 or 15%?
They took a product that they could not sell and they marked it down, put it on sale.

The oil companies said hmmmmm, maybe.

But them the gubmint turned around and said wait, we're not gonna give any of those incentives to the big guys like BP, exxonmobil, etc.

Only the small independent oil companies can get the incentives.
So the independent companies, mom and pops basically, bought the undesirable leases and drilled.

If they hit oil the gubmint get's their share. Regardless the gubmint gets the $$$ for the leases.
And if the oil company spent a whole bunch of millions to drill and it turned out dry, they could write off the loss in fewer years than normal.

That's the "subsidy".
All it means is that the gubmint doesn't take as much money as usual. They don't GIVE the oil companies anything.

Besides that, the gubmint entered into a legal binding contract for those leases, kinda hard to change their mind and change the contract now.

[RWebb]

highways are an oil subsidy - think about it

[sammyg2]

Originally Posted by ODDJOB UNO

on my recent trip down the road of "NO HOPE and BLEAKNESS"-I-80................cheyenne,wyoming all the way to rock springs ,wy. all WE SAW was oil and gas wells. new ones or exploratory. only 2.5 million people crammed into a very very large state.


the signs we saw for these wells was "brought to you by haliburton".

Halliburton is among other things a drilling company. A very large drilling company. If you have land with mineral rights and want to drill for oil, you contract a company like haliburton to drill for you.

Typically you pay them a pre-determined fee per foot of depth, but in some cases people promise them a percentage of whatever the well produces.
Haliburton doesn't OWN all those wells you saw, they just provide a service.

[sammyg2]

Originally Posted by RWebb

highways are an oil subsidy - think about it

No they are not, YOU think about it.
you've made that same statement over and over but it just is not true.


70% of the cost of maintenance and construction of the national highway system IS PAID FOR by gasoline and diesel excise taxes.
Kind of hard to claim that the highway system subsidizes the oil industry when EXACTLY THE OPPOSITE IS TRUE.

The interstate highway was first and foremost a tool developed for military purposes. Eisenhower got the idea from hitler who built the autobon so he could move military equipment and supplies quickly.

The highway system was also used as a form of worknig welfare, giving people jobs like FDR's socailist new deal.
it also helped the US auto industry.

The highway system was meant to improve the economy through improving the efficiency of interstate commerce and improve the standard of living of the US citizens.

The Interstate Highway System had been lobbied for by major U.S. automobile manufacturers and championed by President Dwight D. Eisenhower, who was influenced by his experiences as a young Army officer crossing the country in the 1919 Army Convoy on the Lincoln Highway, the first road across America.

Initial federal planning for a nationwide highway system began in 1921 when the Bureau of Public Roads asked the Army to provide a list of roads it considered necessary for national defense. This resulted in the Pershing Map.[3] Later that decade, highways such as the New York parkway system were built as part of local or state highway systems.

As automobile traffic increased, planners saw a need for such an interconnected national system to supplement the existing, largely non-freeway, United States Numbered Highway system. By the late 1930s, planning had expanded to a system of new superhighways.

In 1938, President Franklin D. Roosevelt gave Thomas MacDonald, chief at the Bureau of Public Roads, a hand-drawn map of the U.S. marked with eight superhighway corridors for study.[3] In 1939, Bureau of Public Roads Division of Information chief Herbert S. Fairbank wrote a report entitled Toll Roads and Free Roads, "the first formal description of what became the interstate highway system," and in 1944 the similarly themed Interregional Highways.[4][5]

Eisenhower gained an appreciation of the German Autobahn network as a necessary component of a national defense system while he was serving as Supreme Commander of the Allied forces in Europe during World War II.[6] He recognized that the proposed system would also provide key ground transport routes for military supplies and troop deployments in case of an emergency or foreign invasion.


Assisting in the planning was Charles Erwin Wilson, who was still head of General Motors when President Eisenhower selected him as Secretary of Defense in January 1953.

In the contiguous United States, Interstate Highways are funded federally with money shared among the states. The H Interstates in Hawaii and the "paper" Interstates in Alaska and Puerto Rico are funded in the same way.

About 70% of the construction and maintenance costs of highways in the U.S. are covered through user fees (net of collection costs), primarily fuel taxes collected by the federal government and state and local governments, and to a much lesser extent tolls collected on toll roads and bridges. The 1956 Highway Trust Fund, established by the Highway Revenue Act, mandated a three-cent-per-gallon tax, soon increased to 4.5 cents.

The rest of the costs are borne by general fund receipts, bond issues, and designated property and other taxes. The federal contribution is overwhelmingly from motor vehicle and fuel taxes (93.5% in 2007).


Interstate Highway System - Wikipedia, the free encyclopedia

[RWebb]

that would still leave 30%

besides the figures I hear are only 50%, not 70 -- that is for the federal system

don't forget to add in the 150,000 substandard bridges in the US that will have to be fixed

you're right - it REALLY helped the US auto industry -- and the oil industry; one reason they worked hard to destroy intra-city mass transit in the early 1900's