Senate Bill S.940 re: Closing Big Oil Loopholes

Micah: Thank you for taking the time and putting forth the effort to provide so much information re: the subsidies and loopholes provided to "Big Oil". There is no question that the various local, state, and federal government agencies take-in more per gallon of gas and heating oil than do the Oil Companies. Still, there is no denying the fact that year after year, the largest Oil Companies achieve record profits at the expense of the consumers of the world. Your statement re: class warfare and fear-mongering being used as a distraction technique is also very true as is the statement about the problem of high government spending requiring ever-increasing tax revenue. The subsidies and loopholes made available to “Big Oil” along with the fines levied against "Big Oil" (as evidenced during the recent B.P. Gulf disaster) are examples of the "Carrot and Stick" methodology used by our government to control various entities . . . not just "Big Oil". Wouldn't it be great if the U.S. citizen and taxpayer could use a similar carrot and stick technique against the ever more powerful Federal Government? The problem is that the stick we have to wield is akin to a toothpick and the government keeps whittling away at that! Bob

The “tax breaks” congress is referring to is called “depreciation” not a grant, or just "not paying taxes", like GE...no, they don’t want oil companies depreciating their wells. Depletion is an accounting concept used most often in mining, timber, petroleum, or other similar industries. The depletion deduction allows an owner or operator to account for the reduction of a product’s reserves. Depletion is similar to depreciation in that, it is a cost recovery system for accounting and tax reporting. For tax purposes, there are two types of depletion; cost depletion and percentage depletion. For mineral property, you generally must use the method that gives you the larger deduction. For standing timber, you must use cost depletion. That tax break is used by many, many manufacturers and other businesses. IMHO, would have a real effect on business thoughts on future expansion and hiring and more. What about borrowed Chinese dollars paid to fund six-figure union pensions and healthcare, it that called “moral depletion” or “crony capitalism”? Here’s a look at some subsidies in President Obama’s 2012 Fiscal Year budget: -$126 million for wind--$340 million for bio fuels--$457 million for solar--$452 million clean coal--$800 million for nuclear. http://tinyurl.com/6l9b4d6 //What If Oil Producers Actually Received Subsidies Like Wind Energy Producers? With the current debate over ending oil producers’ subsidies (for small poorly funded wildcatters for example), the question arises as to what subsidies do the producers actually get. It is a surprisingly complicated question. Wind producers also get subsidies that take complex forms—investment tax credits, production tax credits, mandates, property tax exemptions, etc. But the major federal subsidy for wind producers is the option to take a 30 percent investment tax credit or to receive a 2.2 cents per kilowatt-hour production tax credit. “2.2 cents” doesn’t seem like much, but, depending on the time of year, it falls somewhere between 25 percent and 100 percent of the wholesale price of electricity. Forty percent if frequently used as the average. So, what would an oil-production subsidy look like if it were the same magnitude? Deepwater drilling rigs can cost over $400,000 per day. With other costs, a rough per-well figure would be $100,000,000 per well. If an oil company could get the same 30 percent investment tax credit as wind producers, the government would write the company a $30,000,000 check for each well completed. For the lower cost, shallow-water wells, the government would write a check closer to $3,000,000 for every well drilled. What may be eye-opening for many is to look at what all impacts the price of a gallon of gas? The federal and state taxes are way beyond the profit margin for the energy industry, as is the profit margin for most industries, like Pepsi Cola and Ivory soap, even milk. Big sales make for big numbers, but look at profit margin percentages for real facts. With so much corn going to energy production instead of animal feed, food is going to continue to climb regardless of gas prices, and that is going to get real serious. Class warfare and fear-mongering is a distraction technique by some really bad people. High government spending requiring more tax revenue is the problem folks.