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

[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.

.....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....





Public Citizen.org



Global Policy



Halliburton Watch



Washington Post

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]

.....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?

[Nbadan]

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

[scott]

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

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 bull 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 S 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."