Oil Companies are Raping Us! Time for the Windfall Profits Tax!!!

[scott]

Just look at these absurd profit margins (represents profit as a % of total revenue)!!!

Data as of latest reported earnings as of 12/17/2007

Company, Ticker Symbol, Profit Margin

ExxonMobil, XOM, 11.59%
BP USA, BP, 7.25%
Chevron, CVX, 9.24%
Shell USA, RDS-B, 8.16%
Valero, VLO, 6.50%
Marathon Oil Corp, MRO, 7.93%
Frontier Oil Corp, FTO, 8.21%
Tesoro, TSO, 3.96%

Just look how they are raping us!!! Compare to such morally just companies, like these!

Google Inc, GOOG, 26.90%
Microsoft, MSFT, 27.51%
Apple Inc, AAPL, 12.92%
Coca-Cola, KO, 19.83%
McDonalds, MCD, 10.20%
Anheuser-Busch, BUD, 12.74%
Bank of America, BAC, 30.49%
AT&T, T, 10.29%
Citigroup, C, 21.56%
Goldman Sachs, GS, 25.84%

Its time to stop these Oil Barons from robbing us blind!!!




http://redstripedshirt.blogspot.com/2005/10/its-time-for-windfall-profits-tax.html

It’s Time for a Windfall Profits Tax!

As oil and gas prices have risen steadily over the last 2 years (and sharply following Hurricanes Katrina and Rita), there has been grumbling from the American public and their elected leaders over the profits being made my companies who operate in these sectors. Recently, Senator Bryon Dorgan (D-ND) introduced The Windfall Profits Rebate Act of 2005, which would impose a 50% excise tax on profits earned by companies from the sale of a barrel of oil for over $40.

I am going to ignore the simple facts that 1) a freely traded global market has dictated $40+ prices since the first half of 2004, high oil prices are not a recent phenomenon brought about by hurricanes, 2) the theoretical and empirical shortcomings of price controls ( which a windfall tax implicitly is) and 3) the basic principal of free market economics that periods of higher than normal profits are the result of supply/demand imbalances, and that higher than normal profits/prices are exactly what is required to bring supply and back into balance via increased investment and lower demand.

Ignoring these 3 things, I am going to go along with the notion that the profits earned by the companies supplying petroleum products to consumers are wrong, and that social justice demands a windfall tax.

But why stop at oil? If the profits earned by oil companies are an indication of evil business practice, I think we should go after all companies with large levels of profitability.

First, let’s take a look at a sample of oil companies and their relative profitability indicators.

http://photos1.blogger.com/blogger/7309/1288/400/102705%20graph%201.jpg

Now let’s compare them to the same indicators for a handful of other company who design, manufacture or distribute popular goods.

http://photos1.blogger.com/blogger/7309/1288/400/102705%20graph%202.jpg

Where is the outcry for a Windfall Tax on these companies, who on average have operated with margins three times those of oil companies? When you consider the fact that this has been an extremely profitable cycle for oil companies while steady yet rather tame for the rest of the economy – it further supports a Windfall Tax on these other companies. Oil companies are making more than they every have in any time in their history… and yet they still only make a third of what other companies rake in!

Meanwhile, while everyone thinks it’s shareholders of oil companies who are striking it right, the truth is that shareholders of these other companies see their stock valued relative to earnings at over 2 times that of oil companies. A dollar of earnings for an oil company is only worth $8.59 to the stock price, whereas a dollar of earnings to these other companies is worth $20.86.

If we are going to talk about Windfall Taxes, let’s not single out oil companies. Let’s also include those who allow us to Google up reviews about the latest Electronic Arts games to play on our Microsoft Xbox while listening to our Apple iPods while drinking a refreshing Coca-Cola to wash down our McDonalds Big Mac’s before we go out to buy a case of Budweiser paid for with our Bank of America debit card before we get thrown into jail for public intoxication and have to call our girlfriend’s to bail us out over a SBC telephone network.

It’s only fair.

[Wild Cobra]

Wow... Exxon broke 10%!

[LaMarcus Bryant]

I remember back in high school when I thought people who used google were gay.

[boutons_]

so tell us why dickhead is still giving the oilcos $15B annually in tax breaks and subsidies?

[scott]

so tell us why dickhead is still giving the oilcos $15B annually in tax breaks and subsidies?

I was unaware that "dickhead" wrote bills. There must have been a change in the way our government works while I was asleep.

boutons, you're a moron. I'd appreciate if you, xray, Yonivore, mookie and the countless other partisan idiots who populate this board would stay out of my threads.

[LaMarcus Bryant]

Scott you bring up a good point

i mean really

why DON'T people seek out windfall profits taxes against these other companies

I can't figure it out.

[Wild Cobra]

Scott you bring up a good point

i mean really

why DON'T people seek out windfall profits taxes against these other companies

I can't figure it out.
It's pure politics.

Liberals make the oil companies the bad guys because the oil prices are rising, and people are having a harder time paying oil related costs.

The propaganda buys votes for liberals.

People are little affected by the profits of Google and the likes, because they are relatively low cost consumer costs anyway.

The problem with the windfall taxes on oil, increasing their taxes, or reducing their tax breaks is all the same. It would amount to more cost at the pumps.

Any cost that affects all the oil companies will have no effect on competition. Therefore, any increased cost of doing business is past on to us consumers in higher gas prices.

I hope those wishing for such thins realize they are asking for higher gas prices too…

[scott]

People are having a hard time because oil prices are high... yet they seem to have no trouble buying iPods. If gas prices go any higher, folks may not be able to get a new plasma TV and will have to stick with their crappy old 57" widescreen REAR PROJECTION HDTV... and I think we all know how much THAT sucks.

[LaMarcus Bryant]

I own no ipod, no suv, or no plasma tv.

[boutons_]

""dickhead" wrote bills."

he hasn't been writing bills, but he's been dictating to the Congressional Repugs want he wants for the oil/coal industries. Do you really think he had NO hand in enriching the oilcos? That the Repugs were going against dickhead's wishes in 2001-2006?

dickhead's still secret 2001 National Energy Policy gave $15B to oilcos for "research". The other major element was "we invade and grab Iraq oil"

dickhead plus his Repug enablers from 2001 to 2006 got any damn thing he wanted, and still the energy bill with Repugs in minority last week still gave $Bs to the oilcos.

[Nbadan]

This comparison, while interesting, may be a bit misleading. The nature of energy companies selling large volumes of a commodity will tend to keep this ratio down even in a high profit/high cost environment because the total revenues in the denominator get so big. It would be interesting to see the same chart using return on total assets or some similar factor if you had access to that data as well..

[Nbadan]

Put simply, Oil companies use accounting tricks to keep profit margins low, while using the bogus excuse that they are increasing production...


Consider the following data, taken from the Exxon-Mobil 2004 annual report (http://www.exxonmobil.com/corporate/files/corporate/AR_2004.pdf). The company earned $26.1 billion in 2004 and reported capital and exploration expenditures of $14.9 billion. Looking casually at the two numbers, this might sound exactly like what we'd expect to find, namely, a company plowing a good deal of its profits back into the investments necessary to help increase future global oil and gasoline production. But when you look at the numbers more closely, it appears to be a surprisingly low level of investment spending.

For one thing, oil companies face a significant degree of depletion of existing oil fields and depreciation on previous capital investments, meaning huge investments are required just to maintain the status quo. Standard accounting conventions recognize this by subtracting depreciation and depletion as an operating expense, with the presumption being that the investment that would be necessary in order to maintain current production would be counted as a regular business expense rather than something one needs to pay for out of profits. In addition, Exxon sold off $2.8 billion in investments in 2004, which we would need to subtract if we wanted to calculate the net productive assets that the company added during 2004. Exxon also charged off $1.1 billion in dry-hole exploration as a cost before calculating profits, meaning that these funds didn't come out of the $26.1 billion profit, either. Finally, the notes to the annual report indicate that Exxon followed the accounting convention of including in capital expenditures a proportion of capital spending by interests in which Exxon holds equity, which again require no funds directly out of profits.

One way to keep track of all this is to look at the "Summary Statement of Cash Flows" in the annual report. We can calculate the cash Exxon had available to spend by starting with the $26.1 billion net income earned in 2004 and adding the $9.8 billion that Exxon imputed to depreciation and depletion expense, plus $4.7 billion in other items such as an increase in accounts payable (which, because the funds are net yet disbursed, means such items also add to cash in hand). These three magnitudes come to $40.6 billion, Exxon's calculation of the net cash provided by operating activities.

Exxon reported its 2004 actual cash expenditures for additions to property, plant, and equipment to be $12.0 billion, which, if we subtract the $2.8 billion sales of assets, implies $9.2 billion in net capital additions. This is actually less than the $9.8 billion depreciation and depletion figure, which one might interpret as meaning that virtually none of the tremendous 2004 profits were used to acquire net new assets. So what did Exxon do with all the rest of the money? Seven billion went to dividends, $9 billion to net stock buybacks, and an incredible $12.5 billion was just hoarded as cash.

Nor was Exxon alone in this behavior. For example, ChevronTexaco had 2004 net income of $13.3 billion, which it used to accumulate $5 billion in cash and buy back $2.1 billion of its stock.

http://www.theoildrum.com/uploads/top_oil_companies.gif

How are companies that behave in this way going to succeed in increasing oil production? The answer is, they aren't. The graph at the top, taken from the Oil Drum (http://www.theoildrum.com/story/2005/10/22/16565/298), displays production over the last 3-1/2 years for the top 10 publicly traded oil companies. Half of these giants have seen their production fall over this period.

And prices and profits have continued to surge in 2005. The table below summarizes how much profits and capital spending went up in the first three quarters of this year compared to the corresponding quarters last year for three of the companies that reported big profit gains this week. Only a modest fraction of the increase in profits for these companies is showing up so far as additional investment.
Change in profits and capital expenditures between first three quarters of 2004 and first 3 quarters of 2005 Company

So what's the story? Maybe the oil companies are hoarding the cash in preparation for big investments just down the road. But we really could have used those investments several years ago, not several years from now. Or perhaps companies see enough danger of an oil price collapse that they are unwilling to make investments that would only pay if oil prices remain high. But if that's the explanation, it's unclear why they don't take the sure profit and hedge that's available from using futures prices. Alternatively, some might say that the only remaining plays at this point are in the control of governments, not oil companies, with the incipient decline in production by the international majors another milestone on the path to peak oil.

I must confess that I find it puzzling why it would make sense in the current situation to hoard cash and buy back shares. If anyone has a good explanation, I'd be very interested to hear.

Link (http://www.econbrowser.com/archives/2005/10/oil_company_pro.html)

[scott]

This comparison, while interesting, may be a bit misleading. The nature of energy companies selling large volumes of a commodity will tend to keep this ratio down even in a high profit/high cost environment because the total revenues in the denominator get so big. It would be interesting to see the same chart using return on total assets or some similar factor if you had access to that data as well..

That's a nice attempt to spin the reason the ratio is lower, but in the end its plain and simple because it is less profitable to sell a dollar's worth of gasoline than it is to sell a dollar's worth of consumer goods.

As for Return on Assets, I don't have time for the full rundown now, but here's a sample for you.

Company, Ticker Symbol, Return on Assets
Valero, VLO, 12.33%
ExxonMobile, XOM, 15.85%
Google, GOOG, 15.21%
Microsoft, MSFT, 18.73%
Apple, AAPL, 14.54%

All of these are available on Yahoo Finance.

I can readdress this later, but Return on Assets is a not a good comparison either. An oil companies will usually be well below other industries as well, by virtue of the fact only they need billions of dollars of asset on their balance sheet. Only banks will be worse, they can typically expect ROAs from 0.5-2.0%, but again its because of the dynamics of how the business works. You could say Return on Equity would be a good measure, but even that is funky as it is highly subject to the extent by which the company is leveraged. (A bank being the most highly levered, so the difference between their ROA and their ROE is huge - so they generate the highest profit margins by putting in the least of their own money.)

In the end, it is simply a matter of oil having the highest startup cost of any industry in the world. When people are investing billions of dollars, they are going to expect a return. For several years, refineries were operating with low and sometimes negative margins, so refineries without significant scale or the resources to spend the billions required to upgrade were forced to close. This is a cyclical boom for the industry, and it is resulting in unprecidented levels of investment in the industry. A windfall profits tax would only serve to put an end to such investment. If that is the objective, then its a fine idea. But based on the comments I've read here its only the objective when other arguments fail to hold water.

[scott]

Put simply, Oil companies use accounting tricks to keep profit margins low, while using the bogus excuse that they are increasing production...



Link (http://www.econbrowser.com/archives/2005/10/oil_company_pro.html)

Gotta run to the office, but I can address this later too.

[JoeChalupa]

Without sounding like a kiss ass....Scott is by far one of the best posters, if not the best and he doesn't play the partisan card or the "dimm-o-crap", "liberal" or "conservative" card. Props. :tu

[Ignignokt]

kiss ass



Glad you checked in.

[clambake]

when do we start invading countries to steal their McDonalds?

[Aggie Hoopsfan]

""dickhead" wrote bills."

he hasn't been writing bills, but he's been dictating to the Congressional Repugs want he wants for the oil/coal industries. Do you really think he had NO hand in enriching the oilcos? That the Repugs were going against dickhead's wishes in 2001-2006?

dickhead's still secret 2001 National Energy Policy gave $15B to oilcos for "research". The other major element was "we invade and grab Iraq oil"

dickhead plus his Repug enablers from 2001 to 2006 got any damn thing he wanted, and still the energy bill with Repugs in minority last week still gave $Bs to the oilcos.

Demos have been in control for a year now, so what's their excuse, croutons?

Oh yeah, they are taking money from the oil companies too.

[boutons_]

Easy one, Dems' control is nowhere near the Repug control of Congress that dickhead benefited from in the 01-06 period, when Congress was nothing but a rubber stamp for the WH. dubya vetoed not a single bill in that period, which he has done several times to the Dems in the past year.

[Ignignokt]

I rip my post material from the bumpers of Mini Coopers.

[George Gervin's Afro]

Easy one, Dems' control is nowhere near the Repug control of Congress that dickhead benefited from in the 01-06 period, when Congress was nothing but a rubber stamp for the WH. dubya vetoed not a single bill in that period, which he has done several times to the Dems in the past year.


come on boutons it's fair to compare the 1 year the dems have been in control to the rubber stamp congress of 6 yrs.. apples to apples.. :rolleyes

[Ignignokt]

Is this the part where all the fake message board civil liberatarians become socialist.

[01Snake]

People are having a hard time because oil prices are high... yet they seem to have no trouble buying iPods. If gas prices go any higher, folks may not be able to get a new plasma TV and will have to stick with their crappy old 57" widescreen REAR PROJECTION HDTV... and I think we all know how much THAT sucks.

Bingo. Sadly, thats the thought process of a good chunk of this country.

[JoeChalupa]

People are having a hard time because oil prices are high... yet they seem to have no trouble buying iPods. If gas prices go any higher, folks may not be able to get a new plasma TV and will have to stick with their crappy old 57" widescreen REAR PROJECTION HDTV... and I think we all know how much THAT sucks.

I concur. People bitch about the price of gas yet they run into starbucks and lay down the bucks for a damn cup of coffee.

[01Snake]

I concur. People bitch about the price of gas yet they run into starbucks and lay down the bucks for a damn cup of coffee.

People simply don't mind spending money on stuff they want. Its the stuff they actually need that they don't like paying for.

[JoeChalupa]

People simply don't mind spending money on stuff they want. Its the stuff they actually need that they don't like paying for.

How true. :lmao No wonders hookers never go through a recession.

[Aggie Hoopsfan]

Easy one, Dems' control is nowhere near the Repug control of Congress that dickhead benefited from in the 01-06 period, when Congress was nothing but a rubber stamp for the WH. dubya vetoed not a single bill in that period, which he has done several times to the Dems in the past year.

Then why aren't the Demos screaming from the hilltops that Bush won't let them pass their reforms? Where are the Democratic presidential candidates vowing to take care of this travesty?

Again, it's because they are taking the money too. Remember the midterm elections? Pelosi swore the Demos were going to change everything and get shit done in D.C.. When in actually they just wanted to get their piece of the lobbyist pie and sell the American public down the road too.

[JoeChalupa]

Democrats need to stand up to the president. That is what the voters wanted during the last elections. They have not been able to get anything accomplished. Look for republicans to pick up some seats next time.
Damn it!!!!

[boutons_]

"Demos have been in control for a year now, so what's their excuse"

Here's nice little summary of how the Repugs/conservatives have been admittedly obstructionist since the Dems won control:

==============

Bill Scher

Record-Breaking Obstruction: How It Screwed You

Posted December 19, 2007 | 10:23 PM (EST)

Today is a day that will live in legislative infamy. Conservatives in the U.S. Senate set a modern day record for obstruction, forcing the 62nd cloture vote to move beyond a filibuster -- breaking the record for a two-year congressional session with a full year to spare.

To mark the day, Campaign for America's Future released a new report on the conservative "Block and Blame" strategy, detailing the year's cavalcade of obstruction. The report reminds us of Sen. Trent Lott's all-too-candid words from April, "The strategy of being obstructionist can work or fail ... and so far it's working for us."

It's certainly true, if not terribly insightful, that obstructionism can either work or fail.

When it works, it's because you obstructed things that voters didn't want in the first place -- like privatizing Social Security.

When it fails, it's because you obstructed things that voters want their government to do.

What have conservatives obstructed this year? Here's just a partial list:

-- Ending the disastrous occupation of Iraq.

-- Providing health insurance to millions more kids.

-- Empowering Medicare to negotiate for lower prescription drug prices.

-- Taking away handouts to Big Oil so we can invest in renewable energy.

-- Repealing the effective ban on embryonic stem cell research.

-- Investing more in health research.

-- Making it easier for workers to join unions.

-- Investing more in fighting poverty and training workers.

Is obstructing all of that popular legislation "working" for Republicans?

Here's the approval rating for congressional Republicans this month:

-- According to USA Today/Gallup: 26%.

-- According to ABC/W. Post: 32%

-- According to the Harris poll: 23%

Bravo, obstruction.

Yes, the rating for Democrats is not great either.

But it's higher than the Republicans in two of the three polls -- USA Today/Gallup says 30% and ABC/W. Post says 40%.

And considering that all of the above initiatives boast majority support from the public, clearly the frustration with Democrats is not what they're fighting for, but how hard they're fighting.

That doesn't translate into any additional support for the conservative obstructionists.

The only hope the obstructionists have is for the media to fail to inform the voters what is being obstructed.

And since we know we can't rely on the media to tell the full story, it's up to us to spread the word.

[scott]

Put simply, Oil companies use accounting tricks to keep profit margins low, while using the bogus excuse that they are increasing production...



Link (http://www.econbrowser.com/archives/2005/10/oil_company_pro.html)

Well, I went ahead and gave your article a pretty good read. Seems like there are three components to this post.

1) Your claim that Oil Companies are manipulating the numbers to make it appear that they have low profit margins
2) They are not increasing production as they claim via capital projects
3) The companies are hoarding cash instead of reinvesting it

I won't get into #1 for a couple of reasons, most notably the fact that these are standard accounting conventions. There are no "tricks" involved, unless you still find a waking up and finding that the sun has risen in the east a magical and unexplainable event.

In regards to #2. You can look at this a lot of ways, but in the end it is as the article states. They are spending tremendous sums of money just to maintain the status quo. This should come as no surprise. Drilling for oil is an expensive endevor, and its not like these crude resevoirs are being refilled by munchkins living in the earth's core - they are a depleting resource, and one we will eventually be virtually "out" of. We will likely never physically run out of oil, but the dynamics of supply and demand will price oil to where no longer is any demand before we actually run out.

Looking at it from the proper perspective, the incremental perspective, however tells us that spending money to maintain the status quo is indeed increasing production when you analyze at the margin. Spending no money and maintaining production of the past is not an option. Compared to the option of doing nothing, the money spent by companies is indeed increasing production. This isn't some oil company trick, this is just the application of the most basic economic analysis technique. You need to analyze things at the margin, or against their next best alternative. Either way, however, its semantics.

Item #3, that they are hoarding cash and chosing to pay their shareholders before investing in new production. Well... uh yeah, they are and it is their right to do so. After all, its their money. There are only so many investment options for a company to engage in and just because they have cash doesn't necessarily mean they have a project that is economically justifiable compared to the next best alternative.

The management of these companies are not employed in order to make the world a happier place, they are employed in order to return value to their shareholders (like all companies). Sure, these companies have more projects they COULD invest in, but they generate less of a return than things such as share buy-backs. If they began investing the money in projects that are sub-optimal, they wouldn't be employed very long. This applies outside of oil companies, obviously.

Of course, Dan, I know you already know these things. Your true colors of being nothing more than a whiner show when you post these things. Unfortunately such spin works on 95% of the populace who don't make the effort to think through them more logically. So in that regard, I guess you win.

[Holt's Cat]

Nevermind that petroleum through its products is an essential part of our everyday lives and those firms help to extract, produce, refine, and deliver those products to us efficiently and expeditiously. Then again, it wouldn't be America without someone bitching about the hand that feeds them.

[Holt's Cat]

Americans bitch about the firms that extract petroleum and bring it to market so that they can travel where they want to, when they want to, as well as enjoy the other myriad products derived from petroleum.

Americans bitch about the illegal immigrants who risk much to come to this country and work shit jobs for shit pay so that Americans don't have to.

Americans bitch about taxes being too high, bitch that the government isn't doing enough for them, and bitch that the government is spending too much.

Americans bitch that the country isn't what it used to be and that they are falling behind, yet are too lazy to get off the couch in front of their new HD flat panel big screen to do something about it.

[Wild Cobra]

What have conservatives obstructed this year? Here's just a partial list:

-- Ending the disastrous occupation of Iraq.

Wow... I didn't know we were dictating all the actions over there.



-- Providing health insurance to millions more kids.

The way the bill was written, it would have mostly moved children off private insurance to tax paid insurance. You find that good?



-- Empowering Medicare to negotiate for lower prescription drug prices.

I don't know the whole story here, but part of it deals with the US law. Other countries can get breaks because they cannot sue the same way we Americans can. Lawsuits, lawyers, etc. is why out healthcare costs are so high. What do you expect when some professions have to pay about $250,000 per year for malpractice insurance.



-- Taking away handouts to Big Oil so we can invest in renewable energy.

Handouts? I don't wee it that way with the amount of taxes they pay. You Marxists just don't think they pay enough.



-- Repealing the effective ban on embryonic stem cell research.

There is no ban of embryonic research. Get your facts strait please. It's just that federal dollars cannot fund the programs.



-- Investing more in health research.

The free market is the best way. Want to fix it. Two words: Tort Reform.

Please stop asking the g0overnemnt to spend more money it doesn't have without trying somthing that costs nothing first.



-- Making it easier for workers to join unions.

I didn't know it was hard. Besides, very few unions are good for hard working people. They reward the slackers, treating everyone equal when we all have different levels of aptitude, integrity, motivation, etc. I am one that unions hold back because the idiots get the same wages as I go, and it is exceptionally frustrating.



-- Investing more in fighting poverty and training workers.

There has been no gain on the war with poverty. I say eliminate most social welfare sorvice. Keep the short term help, and make career recipients find work, or dump them in the street.



Is obstructing all of that popular legislation "working" for Republicans?

There has been good legislation from the democrats?

Where?

[BonnerDynasty]

People are having a hard time because oil prices are high... yet they seem to have no trouble buying iPods. If gas prices go any higher, folks may not be able to get a new plasma TV and will have to stick with their crappy old 57" widescreen REAR PROJECTION HDTV... and I think we all know how much THAT sucks.

Exactly.

[BonnerDynasty]

"Demos have been in control for a year now, so what's their excuse"

Here's nice little summary of how the Repugs/conservatives have been admittedly obstructionist since the Dems won control:

==============

Bill Scher

Record-Breaking Obstruction: How It Screwed You

Posted December 19, 2007 | 10:23 PM (EST)

Today is a day that will live in legislative infamy. Conservatives in the U.S. Senate set a modern day record for obstruction, forcing the 62nd cloture vote to move beyond a filibuster -- breaking the record for a two-year congressional session with a full year to spare.

To mark the day, Campaign for America's Future released a new report on the conservative "Block and Blame" strategy, detailing the year's cavalcade of obstruction. The report reminds us of Sen. Trent Lott's all-too-candid words from April, "The strategy of being obstructionist can work or fail ... and so far it's working for us."

It's certainly true, if not terribly insightful, that obstructionism can either work or fail.

When it works, it's because you obstructed things that voters didn't want in the first place -- like privatizing Social Security.

When it fails, it's because you obstructed things that voters want their government to do.

What have conservatives obstructed this year? Here's just a partial list:

-- Ending the disastrous occupation of Iraq.

-- Providing health insurance to millions more kids.

-- Empowering Medicare to negotiate for lower prescription drug prices.

-- Taking away handouts to Big Oil so we can invest in renewable energy.

-- Repealing the effective ban on embryonic stem cell research.

-- Investing more in health research.

-- Making it easier for workers to join unions.

-- Investing more in fighting poverty and training workers.

Is obstructing all of that popular legislation "working" for Republicans?

Here's the approval rating for congressional Republicans this month:

-- According to USA Today/Gallup: 26%.

-- According to ABC/W. Post: 32%

-- According to the Harris poll: 23%

Bravo, obstruction.

Yes, the rating for Democrats is not great either.

But it's higher than the Republicans in two of the three polls -- USA Today/Gallup says 30% and ABC/W. Post says 40%.

And considering that all of the above initiatives boast majority support from the public, clearly the frustration with Democrats is not what they're fighting for, but how hard they're fighting.

That doesn't translate into any additional support for the conservative obstructionists.

The only hope the obstructionists have is for the media to fail to inform the voters what is being obstructed.

And since we know we can't rely on the media to tell the full story, it's up to us to spread the word.


:lol :lol :lol :lol :lol

[Duff McCartney]

That's all well and good...but from my POV it's very simple.

I've visited the Google website probably about once in the past year....I drive a car to go to work/school almost everyday. I don't need to go to Google and find a damn map....I do need to go to school and work...I don't give a crap about Google having great profits...I don't need Google.

But the entire world revolves around oil...with the current state of technology anyone who denies themselves oil are fools. I'm not a fool...and if I could I would ride a bike to work and school..but I can't. The reality is the world makes it impossible to do anything without a car. And the oil companies exploit that reality...very badly.

[scott]

That's all well and good...but from my POV it's very simple.

I've visited the Google website probably about once in the past year....I drive a car to go to work/school almost everyday. I don't need to go to Google and find a damn map....I do need to go to school and work...I don't give a crap about Google having great profits...I don't need Google.

But the entire world revolves around oil...with the current state of technology anyone who denies themselves oil are fools. I'm not a fool...and if I could I would ride a bike to work and school..but I can't. The reality is the world makes it impossible to do anything without a car. And the oil companies exploit that reality...very badly.

Just so I am clear on your point, Duff, you are saying that because oil companies provide something you NEED and Google just provides some luxury WANT, oil companies should get less of a return on the billions of dollars they spend to provide you this thing that you need?

Stated differently, you propose that the market should be distorted so that providing "wants" generates high returns while providing "necessities" should be done in an almost charitable sort of way?

I wonder would that would do to the incentives for where people and companies will invest their funds... hmmm... I can build an oil refinery and earn no return or I can invest in a company that makes penis pumps and make a 500% return... hmmmm... where should I put my money?

[MannyIsGod]

Why can't you take a bike to work or school? Impossible my ass.

[Aggie Hoopsfan]

-- Ending the disastrous occupation of Iraq.

You and anti-war demos are right. We should withdraw immediately and let them all kill each other over there. Then we could be on the hook for a couple million dead thanks to genocide.



-- Providing health insurance to millions more kids.


All the Republicans blocked was taking something that was more or less privately funded and shifting the tax burden onto the American public. Personally I'm thankful for that.



-- Empowering Medicare to negotiate for lower prescription drug prices.


It's not about empowerment. Tort reform is what needed, but all your punk ass Democratic lawyer types don't want to see tort reform enacted.



-- Taking away handouts to Big Oil so we can invest in renewable energy.


Yet it's perfectly okay for Demos in Congress to subsidize ethanol production and subsequently increase the cost of all agriculture products due to the strain on our farming system to produce said ethanol.



-- Repealing the effective ban on embryonic stem cell research.


Embryonic stem cell research wasn't banned, just government funding for it.



-- Investing more in health research.


There's a shit load of money invested in health research. The problem is a lot has to go to cover legal expenses. You want more money in health research? Support tort reform.



-- Making it easier for workers to join unions.


Did you not pay attention to what happened with the auto workers? Unions are bad. All that happens with unions is those in power get rich, production and efficiency decreases, and the slackers at their jobs hide behind the skirt of the union while doing a piss poor job at their job.

Do a good job and you don't have to worry about the union covering your ass.

Oh wait, you want to see every company crash and burn like GM thanks to being enslaved to pension funds for union folk. Fucking wake up croutons.



-- Investing more in fighting poverty and training workers.


How does one fight poverty? There are plenty of job programs for those that want it. The problem is you have a segment of society that wants to free load and have everything handed to it, and no amount of training or work programs is going to change that.

You've got too many folks who would rather pop out another kid and live off welfare, WIC, etc. than get off their ass and earn a decent wage.





-- According to USA Today/Gallup: 26%.

-- According to ABC/W. Post: 32%

-- According to the Harris poll: 23%

Where's the Democraptic numbers at? Be fair, croutons.

[cherylsteele]

-- Making it easier for workers to join unions.
Unions were useful in the early 1900's up until the 70's or so. It was a different time and atmosphere. Companies were making huge profits and paying workers nearly nothing, on top of that working conditions were horrid, hours were long, many manufacturing jobs were especially dangerous (coal miners, iron/steel workers, etc.). At that time they were the right thing to do, they actually cared more about the worker. Now unions have become corporations themselves, and have become just what they organizing against when they began.

[Aggie Hoopsfan]

Unions were useful in the early 1900's up until the 70's or so. It was a different time and atmosphere. Companies were making huge profits and paying workers nearly nothing, on top of that working conditions were horrid, hours were long, many manufacturing jobs were especially dangerous (coal miners, iron/steel workers, etc.). At that time they were the right thing to do, they actually cared more about the worker. Now unions have become corporations themselves, and have become just what they organizing against when they began.

Bush and Repubs are against unions, therefore they are great[/uninformed twit, aka boutons]

[Nbadan]

Your claim that Oil Companies are manipulating the numbers to make it appear that they have low profit margins

That's funny...Then who's profits are those sitting in those Cayman Island accounts so that they don't have to be declared and taxed in the U.S.? Of course, Oil companies fix the books, they've been doing it for so long it doesn't even bat the Federal investigatory eye-brow anymore...

[Nbadan]

The management of these companies are not employed in order to make the world a happier place.

..and so it comes down to the weakness of Globalization...business is not 'in business' to make the world a better place, it's certainly not 'in business' to make this world a more friendlier place, and it's certainly also not 'in business' to make this world a more equitable place..nothing spells that out better than the current consumption rates of gas and oil.....less than 5% percent of people on this planet consume 40% of the gas produced world-wide - us...per capita, we consume the most produced food, the most durable products, the most cars and trucks, the most...the most...the most....

....Globalization wasn't supposed to be about 12-13-14 year old kids working 12-13-14 hour days in Asian sweat-shop so that Timmy back in America or Great Britain could have a little-bit less expensive present under the tree on Christmas..Globalization wasn't supposed to be about shuttering factories in American cities because they could not compete with sweat-shops in China or Mexico that pay as little as 40 cents per hour....Globalization wasn't supposed to be about sending Alaskan oil, so vital to the strategic importance of our own country if you listened hard enough to those eager to dig in ANWR...to Japan....while we are forced to purchase oil from dictatorships in Saudi Arabia, the UAE, and Iran....

...somewhere along the line, Globalization got fucked up....and you wanna know why? You really want to know why? Because business is not 'in business' to make this a better world......

[scott]

That's funny...Then who's profits are those sitting in those Cayman Island accounts so that they don't have to be declared and taxed in the U.S.? Of course, Oil companies fix the books, they've been doing it for so long it doesn't even bat the Federal investigatory eye-brow anymore...

When you begin stooping to conspiracy theories and accusations such as this, I know you are pretty much out of things to say. Thanks for participating.

[scott]

..and so it comes down to the weakness of Globalization...business is not 'in business' to make the world a better place, it's certainly not 'in business' to make this world a more friendlier place, and it's certainly also not 'in business' to make this world a more equitable place..nothing spells that out better than the current consumption rates of gas and oil.....less than 5% percent of people on this planet consume 40% of the gas produced world-wide - us...per capita, we consume the most produced food, the most durable products, the most cars and trucks, the most...the most...the most....

....Globalization wasn't supposed to be about 12-13-14 year old kids working 12-13-14 hour days in Asian sweat-shop so that Timmy back in America or Great Britain could have a little-bit less expensive present under the tree on Christmas..Globalization wasn't supposed to be about shuttering factories in American cities because they could not compete with sweat-shops in China or Mexico that pay as little as 40 cents per hour....Globalization wasn't supposed to be about sending Alaskan oil, so vital to the strategic importance of our own country if you listened hard enough to those eager to dig in ANWR...to Japan....while we are forced to purchase oil from dictatorships in Saudi Arabia, the UAE, and Iran....

...somewhere along the line, Globalization got fucked up....and you wanna know why? You really want to know why? Because business is not 'in business' to make this a better world......

A nice diatribe, and a convincing one if you ever thought globalization was supposed to be about any of those things. Globalization is about one thing and one thing only, maximizing total economic social welfare. Sending Alaskan oil to Japan while sending Saudi oil to Texas may not sound like it makes sense if you are completely ignorant as to the workings of hydroprocessing chemistry and basic knowledge of the shipping industry. It is done not because we love the Saudi's, it is because it is what makes most economic sense. The oil is a better fit at the refineries it gets send to (recall, not all oil is created equal), the delivered costs of the oil (cost of oil + cost of transporting it to the refinery) makes most sense, etc.

What made you think business was ever about making the world a fuzzier, happier place? A primary axiom of human nature is that people respond to incentives. Business being in business to turn a profit isn't the result of a masterminded scheme of evil oil barons, it is the natural result of millenia of human beings simple responding to incentives.

You may long for the land Raphael Hythloday spun a yard about. A secular, communist city-state governed by reason where people act unselfishly in order maximize the well being of others. But even More, Marx and Engels knew that Utopia was aptly named in that it could never exist in a world of inherently selfish men.

There are no problems with globalization, there are merely problems with individuals like you trying to evaluate it outside of the framework of reality. Trying to posit a place where people are not guided by their own self interested and where incentives are not required to induce action. It is nice and honorable to hold some Utopian ideals, but it is the man who fails to adapt them to the reality of human nature and the world around us who is the biggest fool of them all: the fool who has been so caught up by the promise of delusion that he can no longer seperate said delusion from the real world.

In the end, Dan, your latest example is a shining one on how you are no different from he who denies evolution, or global warming, or the notion that police state-like powers abroad weaken civil liberties at home, etc. You deny the basic tenent of business, which like it or not is what shapes every part of human life. The concept is no different on Park Avenue than it is in some small village in the remote reaches of the vast Chinese wilderness.

Your problem is not with business, or globalization, it is with human nature. This is an unfortunate problem to have, because millions of years of evolution and 6+ billion minds won't easily have their respective natural emotional and intellectual states changed.

[smeagol]

That's all well and good...but from my POV it's very simple.

I've visited the Google website probably about once in the past year....I drive a car to go to work/school almost everyday. I don't need to go to Google and find a damn map....I do need to go to school and work...I don't give a crap about Google having great profits...I don't need Google.

But the entire world revolves around oil...with the current state of technology anyone who denies themselves oil are fools. I'm not a fool...and if I could I would ride a bike to work and school..but I can't. The reality is the world makes it impossible to do anything without a car. And the oil companies exploit that reality...very badly.
Have you paid your debts yet?

[smeagol]

Dan, that has to hurt . . .

[Wild Cobra]

Unions were useful in the early 1900's up until the 70's or so. It was a different time and atmosphere. Companies were making huge profits and paying workers nearly nothing, on top of that working conditions were horrid, hours were long, many manufacturing jobs were especially dangerous (coal miners, iron/steel workers, etc.). At that time they were the right thing to do, they actually cared more about the worker. Now unions have become corporations themselves, and have become just what they organizing against when they began.
Well said. Unions are as corrupt, or more so than the employers they supposable protect their people from.

[smeagol]

Well said. Unions are as corrupt, or more so than the employers they supposable protect their people from.
You wanna see corrupt unions . . . come on down (to Argie-town)

[Nbadan]

When you begin stooping to conspiracy theories and accusations such as this, I know you are pretty much out of things to say. Thanks for participating.


Yeah, it's all one big conspiracy theory....

:rolleyes


WASHINGTON, D.C. – On Oct. 17, the U.S. Department of Energy (DOE) awarded an $849,670 grant to a subsidiary of the oil drilling company Noble Corporation, whose incorporation in the Cayman Islands enables it to avoid paying some of its U.S. income taxes. But Noble Corp.’s official headquarters is in Sugar Land, Texas – the home district of U.S. Rep. Tom DeLay. Public Citizen today issued a Freedom of Information Act (FOIA) request to the DOE to determine whether DeLay or any other member of Congress interceded in the grant-making process on behalf of Noble Corp.

Public Citizen.org (http://www.citizen.org/pressroom/release.cfm?ID=2069)


U.S. oil and gas companies have at least 882 subsidiaries located in oil-free tax havens such as the Cayman Islands, Bermuda, and even the tiny European principality of Liechtenstein, a Center for Public Integrity investigation has found. Further, the investigation revealed that at least a half dozen U.S. oil and gas companies have actually re-incorporated in tax haven countries.

Global Policy (http://www.globalpolicy.org/nations/launder/regions/2004/0716gimmeshelter.htm)


As investigators from 60 Minutes discovered, Halliburton has used an offshore subsidiary incorporated in the Cayman Islands (where the company has no oil and gas construction or engineering operations) to trade with Iran, a country that the Bush administration has described as part of an "axis of evil, arming to threaten the peace of the world."2

Halliburton Watch (http://www.halliburtonwatch.org/about_hal/iran.html)


Halliburton spokeswoman Wendy Hall said the company had not broken the law because all of the work in the South Pars gas field would be done by non-Americans employed by a subsidiary registered in the Cayman Islands.

"We are in the service business, not the foreign-policy business," she said. "We have followed and will continue to follow applicable laws."

Washington Post (http://www.washingtonpost.com/wp-dyn/articles/A58298-2005Feb2.html)

I thought you really wanted to deal in reality Scott, but if you want to keep playing these games, I'm game....

[Nbadan]

A nice diatribe, and a convincing one if you ever thought globalization was supposed to be about any of those things. Globalization is about one thing and one thing only, maximizing total economic social welfare. Sending Alaskan oil to Japan while sending Saudi oil to Texas may not sound like it makes sense if you are completely ignorant as to the workings of hydroprocessing chemistry and basic knowledge of the shipping industry. It is done not because we love the Saudi's, it is because it is what makes most economic sense. The oil is a better fit at the refineries it gets send to (recall, not all oil is created equal), the delivered costs of the oil (cost of oil + cost of transporting it to the refinery) makes most sense, etc.

http://bestuff.com/images/images_of_stuff/210x600/la-la-la-im-not-listening-83523.jpg

.....and what kind of oil would they get out of ANWR Scott?

I thought the whole wing-nut idea behind drilling in ANWR was oil independence from the commies in Venezuela and the fascists in the Middle East...

[Nbadan]

There are no problems with globalization, there are merely problems with individuals like you trying to evaluate it outside of the framework of reality. Trying to posit a place where people are not guided by their own self interested and where incentives are not required to induce action. It is nice and honorable to hold some Utopian ideals, but it is the man who fails to adapt them to the reality of human nature and the world around us who is the biggest fool of them all: the fool who has been so caught up by the promise of delusion that he can no longer separate said delusion from the real world.

Yes, and what kind of fool does it take to believe that free-markets are capable of regulating and governing themselves?

[scott]

Yeah, it's all one big conspiracy theory....

:rolleyes



Public Citizen.org (http://www.citizen.org/pressroom/release.cfm?ID=2069)



Global Policy (http://www.globalpolicy.org/nations/launder/regions/2004/0716gimmeshelter.htm)



Halliburton Watch (http://www.halliburtonwatch.org/about_hal/iran.html)



Washington Post (http://www.washingtonpost.com/wp-dyn/articles/A58298-2005Feb2.html)

I thought you really wanted to deal in reality Scott, but if you want to keep playing these games, I'm game....

Dan, your original statement was this:


Then who's profits are those sitting in those Cayman Island accounts so that they don't have to be declared and taxed in the U.S.?

Profits assigned to a subsidiary located in a foreign country still get rolled up into the profits for the company as a whole. They may be taking advantage of the opportunity to reduce their tax liability, and we can argue whether the existence of such loopholes are just in a theoretical sense (and its not like they are only available to oil companies) - but you are making a conclusion with unrelated facts. It's not like ExxonMobile is funneling their profits to some tiny bank in the Caymens.

Looking at ExxonMobile, Chevron, Valero, and Tesoro (4 companies I arbitrarily picked, we can look at others if you like), here are their effective tax rates paid (Income Tax Expense divided by EBT) over the last 3 reported fiscal years (this is global income tax expense, keep in mind, not necessarily US federal income taxes paid since these companies have international operations):

Comany, FY2006, 2005, 2004

Exxon: 41.4%, 39.2%, 38.6%
Chevron: 46.4%, 44.0%, 36.6%
Valero: 33.3%, 32.1%, 33.4%
Tesoro: 37.7%, 39.0%, 39.9%

And for comparison, here is what some of America's fuzzy and friendly companies paid in effective tax rates for their last 3 fiscal years:

Apple: 30.2%, 29.4%, 26.4%
Google: 23.3%, 31.6%, 38.7%

Source: Yahoo! Finance

So... you were saying?

[scott]

http://bestuff.com/images/images_of_stuff/210x600/la-la-la-im-not-listening-83523.jpg

.....and what kind of oil would they get out of ANWR Scott?



They'd get a variety of oil, I haven't seen specific assays of what crude would hypothetically be tapped into (since it has yet to be tapped into), but currently Alaskan oil goes to California and then the balance typically heads east. The same is expected to be true of a lot of western Canada production coming on line.

Here is a very simple assay list (all I could find online - companies keep their own assay databases which are very proprietary and very expensive to maintain).

http://www.hpiconsultants.com/crude_assay/viewlist.htm

Alaskan North Slope is what you see consumed in California, though it is begining to decline in production. You can see the remainder of Alaskan crude (I'm not familiar with those grades, per se) are lighter and sweeter, a profile that doesn't fit with coastal refineries in the US which are geared towards heavier and more sour crudes. You will see light sweet get imported to the US Gulf Coast, but that is because we have the infrastructure to pipeline it to the middle of the country where refineries are set up to run it.



I thought the whole wing-nut idea behind drilling in ANWR was oil independence from the commies in Venezuela and the fascists in the Middle East...

That might be the BS story that politicians run past us, but the truth is that Alaska is not able, either physically or economical, to replace the foreign crude we consume. "Oil independence" is a cute phrase made up by politicians to get the uneducated fired up about their various energy plans (and it is perpetrated by both the left and the right). So long as this is an oil economy, we will use foreign oil.

[scott]

Yes, and what kind of fool does it take to believe that free-markets are capable of regulating and governing themselves?

The free markets do that every day.

If the free market were left unchecked, the price of oil and its byproducts would keep rising, the demand for alternatives would dictate the incentive to create such alternatives, and eventually we'd move away from an oil economy. It's market disruptions created by politicians (which, most of the time backfire) that creates problems.

Your problem is you continually try to equate corporate corruption with free markets. Corruption is not a capitalist problem, it is a human problem (witness such corruption throughout history in all forms of societal structures). Laws exist to provide disincentives to corruption, it is up to men to ensure laws are just and enforced. Where they are not we end up with you calling for some increased form of socialism in our economy, which is about as smart as trying to fix the "oil problem" by placing price ceilings.

[smeagol]

Dan is a guy who argues that the towers were brought down by the US government with a controlled demolition.

That is the kind of guy you are going against . . .

[Nbadan]

Dan is a guy who argues that the towers were brought down by the US government with a controlled demolition.

That is the kind of guy you are going against . . .


When have I ever argued this?

:wakeup

[Nbadan]

Thanks Scott!! We'll revisit this thread after Christmas!

:toast

[scott]

Thanks Scott!! We'll revisit this thread after Christmas!

:toast

Have a good one!

[xrayzebra]

That might be the BS story that politicians run past us, but the truth is that Alaska is not able, either physically or economical, to replace the foreign crude we consume. "Oil independence" is a cute phrase made up by politicians to get the uneducated fired up about their various energy plans (and it is perpetrated by both the left and the right). So long as this is an oil economy, we will use foreign oil.

I have another question in regards to oil. If we were
to open all the coastal regions to oil exploration, would
we become self-sufficient. I understand we would. I
am talking "all". Florida, California and East coast.

I know that China is now drilling within rock throwing
distance of our shores in Florida. In Cuba waters.
And the deep water rigs are busy in the Gulf of Mexico.
I also recall reading something about a new pipeline
to bring the Gulf oil into the U.S. If I recall correctly
this pipeline was suppose bring in something like
3 million barrels a day.

Scott, I think we are going to be using oil as our
primary energy source for decades to come. There really
just isn't any alternative that is viable.

About oil companies reaping all these profits, I wonder
where dan was at when oil was selling for 2-3 dollars
a barrel. The main reason our oil exploration came to
a dead stop.

[scott]

I have another question in regards to oil. If we were
to open all the coastal regions to oil exploration, would
we become self-sufficient. I understand we would. I
am talking "all". Florida, California and East coast.

I know that China is now drilling within rock throwing
distance of our shores in Florida. In Cuba waters.
And the deep water rigs are busy in the Gulf of Mexico.
I also recall reading something about a new pipeline
to bring the Gulf oil into the U.S. If I recall correctly
this pipeline was suppose bring in something like
3 million barrels a day.

Scott, I think we are going to be using oil as our
primary energy source for decades to come. There really
just isn't any alternative that is viable.



Some basic info needed to dig into this question.

The World consumes 83 million barrels of oil per day. That is 30 billion barrels a year. Of that, the US consumes nearly 21 million barrels per day. That is 7.7 billion barrels a year. On the high end, I've seen our estimated oil reserves at 30 billion barrels. So, only about 4 years worth of demand. Even if some massive discoveries were found on our coastal shores (not likely) to double our reserves, we are still only talking 8 years of demand.

The other thing to consider is that just because it is there in the ground doesn't mean you can it out on demand. A few years ago a major discovery was found in the Gulf (anywhere from 5-15 billion barrels), but it is likely only going to be able to produce at most 0.8-1.2 million barrels a day.

What America does have a lot of is oil shale (more than anyone in the world, in fact). It is estimated we have approximately 800 billion barrels of oil equivilent in shale, enough to supply the US for over 100 years. However, it is extremely expensive to convert shale to oil, and there are much cheaper alternatives (Cananda and Venezuela, for example, can extract from their oil sands and half the price or less). So, theoretically we could be "oil independent" that way, but only if you like paying $200/barrel of oil. But why would any company do so when you can get it from Canada and half the price? What company in their right mind would invest the billions of dollars to do so when they could invest in Canada and get higher returns?

I don't know where you heard we could be independent if we just allowed drilling. Sounds like a Republican party talking point, which anyone in the know can easily debunk (as done so here).

As for there not being any viable alternatives, I would argue that the alternative energy source that will take over our economy has yet to be developed. But give it time, high prices provide incentive to develop alternatives. I may be aggressive in my estimate, but I think in 10-15 years this country's energy environment will look completely different. Some breakthrough will occur that will completely revolutionize the way we power our lives and our economy.

[boutons_]

The US has 100s of years of coal, but the cheap coal is mostly gone. The remaining coal is both dangerous and expensive to extract. And of course the coal-fired generator builders absolutely refuse to build clean generators. There's a demo clean generator going up in Ohio, but it's mostly with fed tax $, not private $. Of course, if it works, the private companies will benefit.

"oil sands", another bullshit scheme to increase production. Here's an Brit article on BP's attack on Alberta oil sands.


"The Biggest Environmental Crime in History"
By Cahal Milmo
The Independent UK

Monday 10 December 2007
This Canadian wilderness is set to be invaded by BP in an oil exploration project dubbed "The biggest environmental crime in history."

BP, the British oil giant that pledged to move "Beyond Petroleum" by finding cleaner ways to produce fossil fuels, is being accused of abandoning its "green sheen" by investing nearly £1.5bn to extract oil from the Canadian wilderness using methods which environmentalists say are part of the "biggest global warming crime" in history.

The multinational oil and gas producer, which last year made a profit of £11bn, is facing a head-on confrontation with the green lobby in the pristine forests of North America after Greenpeace pledged a direct action campaign against BP following its decision to reverse a long-standing policy and invest heavily in extracting so-called "oil sands" that lie beneath the Canadian province of Alberta and form the world's second-largest proven oil reserves after Saudi Arabia.

Producing crude oil from the tar sands - a heavy mixture of bitumen, water, sand and clay - found beneath more than 54,000 square miles of prime forest in northern Alberta - an area the size of England and Wales combined - generates up to four times more carbon dioxide, the principal global warming gas, than conventional drilling. The booming oil sands industry will produce 100 million tonnes of CO2 (equivalent to a fifth of the UK's entire annual emissions) a year by 2012, ensuring that Canada will miss its emission targets under the Kyoto treaty, according to environmentalist activists.

The oil rush is also scarring a wilderness landscape: millions of tonnes of plant life and top soil is scooped away in vast open-pit mines and millions of litres of water are diverted from rivers - up to five barrels of water are needed to produce a single barrel of crude and the process requires huge amounts of natural gas. The industry, which now includes all the major oil multinationals, including the Anglo-Dutch Shell and American combine Exxon-Mobil, boasts that it takes two tonnes of the raw sands to produce a single barrel of oil. BP insists it will use a less damaging extraction method, but it accepts that its investment will increase its carbon footprint.

Mike Hudema, the climate and energy campaigner for Greenpeace in Canada, told The Independent: "BP has done a very good job in recent years of promoting its green objectives. By jumping into tar sands extraction it is taking part in the biggest global warming crime ever seen and BP's green sheen is gone.

"It takes about 29kg of CO2 to produce a barrel of oil conventionally. That figure can be as much 125kg for tar sands oil. It also has the potential to kill off or damage the vast forest wilderness, greater than the size of England and Wales, which forms part of the world's biggest carbon sinks. For BP to be involved in this trade not only flies in the face of their rhetoric but in the era of climate change it should not be being developed at all. You cannot call yourself 'Beyond Petroleum' and involve yourself in tar sands extraction." Mr Hudema said Greenpeace was planning a direct action campaign against BP, which could disrupt its activities as its starts construction work in Alberta next year.

The company had shied away from involvement oil sands, until recently regarded as economically unviable and environmentally unpleasant. Lord Browne of Madingley, who was BP's chief executive until May, sold its remaining Canadian tar sands interests in 1999 and declared as recently as 2004 that there were "tons of opportunities" beyond the sector. But as oil prices hover around the $100-per-barrel mark, Lord Browne's successor, Tony Hayward, announced that BP has entered a joint venture with Husky Energy, owned by the Hong Kong based billionaire Li Ka-Shing, to develop a tar sands facility which will be capable of producing 200,000 barrels of crude a day by 2020. In return for a half share of Husky's Sunrise field in the Athabasca region of Alberta, the epicentre of the tar sands industry, BP has sold its partner a 50 per cent stake in its Toledo oil refinery in Ohio. The companies will invest $5.5bn (£2.7) in the project, making BP one of the biggest players in tar sands extraction.

Mr Hayward made it clear that BP considered its investment was the start of a long-term presence in Alberta. He said: "BP's move into oil sands is an opportunity to build a strategic, material position and the huge potential of Sunrise is the ideal entry point for BP into Canadian oil sands."

Canada claims that it has 175 billion barrels of recoverable oil in Alberta, making the province second only to Saudi Arabia in proved oil riches and sparking a £50bn "oil rush" as American, Chinese and European investors rush to profit from high oil prices. Despite production costs per barrel of up to £15, compared to £1 per barrel in Saudi Arabia, the Canadian province expects to be pumping five million barrels of crude a day by 2030.

BP said it will be using a technology that pumps steam heated by natural gas into vertical wells to liquefy the solidified oil sands and pump it to the surface in a way that is less damaging than open cast mining. But campaigners said this method requires 1,000 cubic feet of gas to produce one barrel of unrefined bitumen - the same required to heat an average British home for 5.5 days.

A spokesman for BP added: "These are resources that would have been developed anyway."

Licenses have been issued by the Albertan government to extract 350 million cubic metres of water from the Athabasca River every year. But the water used in the extraction process, say campaigners, is so contaminated that it cannot be returned to the eco-system and must instead be stored in vast "tailings ponds" that cover up to 20 square miles and there is evidence of increased rates of cancer and multiple sclerosis in down-river communities.

Experts say a pledge to restore all open cast tar sand mines to their previous pristine condition has proved sadly lacking. David Schindler, professor of ecology at the University of Alberta, said: "Right now the big pressure is to get that money out of the ground, not to reclaim the landscape. I wouldn't be surprised if you could see these pits from a satellite 1,000 years from now."