Tax breaks and oil companies

In a bid to deflect voters’ anger, Obama has called for an end to tax breaks for oil and gas companies, opened a probe of market speculators and urged world producers to raise output. Will this become another stepping stone for more oil companies to move overseas and take those jobs with them?

I don't know. I wish I could have been a fly on the wall when this policy change was being discussed. I do think that the "real" oil policy that goes on behind closed doors may not much resemble what we are allowed to think it does. An end to tax breaks for oil companies may appear on the surface to be about mollifying angry consumers but I suspect there is a lot more to it than that.

Evil oil companies again? Pemex, which supplies Mexican petrol to the US, is owned by their goverment and I doubt it receives tax breaks from the US, nor Venezuela's Citgo. Taking away tax breaks from American drillers would just take more jobs from Americans. And give more money to foreign oil producers.

More unintended consequences from Obama?

Here are the numbers (in millions) for Exxon for the first quarter. Extravagent profits percentage-wise? I think not.
Ask yourself if you purchased a used SUV for $3322 and sold it $3728 and you realized a $406 profit, would this profit be extravagent?
Would your neighbors insist that you be penalized or fund improvements to their driveway because of your obscene profits from this SUV sale?

Revenues $372,824.0
Profits $40,610.0
Assets $242,082.0
Stockholders' equity $121,762.0

the link: http://money.cnn.com/magazines/fortune/fortune500/2008/snapshots/387.html

No, but I wouldn't require taxpayers to kick in $4 BILLION a YEAR in subsidies to help me with my SUV.

It's time we stop subsidizing this enterprise when they make $11 BILLION a QUARTER in profits (59% INCREASE)... Something tells me they'll look for it anyway..

You are calling certain tax benefits received by companies in all manner of industries as “subsidies" for the oil industry. Trying to depict tax credits used by the energy industry (in the same fashion as every other industry) as some sort of special love festival for big oil is dishonest.

1. Intangible Drilling Costs – Companies which engage purely in energy exploration and discovery can recover their costs related to exploration at tax time at a rate of 100%. This lessens the burden on energy providers for the number of “dry holes” which may be found in the process. Integrated companies (i.e. “big oil”) can recover these exploration costs at 70%. Not a subsidy.

2. Domestic Manufacturer’s Deduction – A deduction (not a credit) equal to 9% of income earned from manufacturing, producing, growing or extracting in the United States, is available to every single taxpayer who qualifies in the U.S. The oil and gas industry, and only the oil and gas industry, is limited to a 6% deduction.

3. Percentage Depletion – The percentage depletion deduction is a cost recovery method that allows taxpayers to recover their lease investment in a mineral interest through a percentage of gross income from a well. This depletion method is not available to companies that produce oil as well as refine and market it (i.e. “Big Oil”.) This is available to all extractive industries (gold, iron, clay, etc) in the US and is in no way unique to the oil and gas industry.

They run a business...

1) Intangible drilling costs is a cost of doing business... Nobody is forcing them to be in that business... My tax dollars do NOT need to subsidize their "intangibles."

2) Same

3) Same

What's DISHONEST is the oil companies crying for $4 BILLION a year of MY TAX DOLLARS to subsidize their obscene profits that they're gouging us for. Production is NOT the problem... They decide they want more profits, they deliberately limit the amount they produce... OPEC wants more money per barrel...It's not a production problem... They just withhold more to drive up the prices... But the companies want US to subsidize their profits?... THAT's what's obscene.

1. Our current rises in gas prices are due to the futures market. The oil futures market is just that, a futures market.
2. Obama has completely shut down the existing oil drilling infrastructure in the U.S.
3. The Obama EPA is denying approval of the Keystone pipeline which would increase the amount of oil the U.S. receives from our friendly neighbor Canada by over a million barrels per day.
4. Prices are being driven up by the U.S. dollar, which has fallen against most international currencies.
5. The government's Energy Information Agency estimates that the drilling moratorium in the Gulf will curtail oil production by about 120,000 barrels a day in 2011. The moratorium has been lifted, but new permits have been slow in coming.

If you elliminate tax deductions for the oil companies, you must also deny other companies these tax deductions also.
It sounds to me like green with envy. Those who are unsuccessful are very envious of those who are successful.

major bean wrote: 1. Our current rises in gas prices are due to the futures market. The oil futures market is just that, a futures market.
2. Obama has completely shut down the existing oil drilling infrastructure in the U.S.
3. The Obama EPA is denying approval of the Keystone pipeline which would increase the amount of oil the U.S. receives from our friendly neighbor Canada by over a million barrels per day.
4. Prices are being driven up by the U.S. dollar, which has fallen against most international currencies.
5. The government's Energy Information Agency estimates that the drilling moratorium in the Gulf will curtail oil production by about 120,000 barrels a day in 2011. The moratorium has been lifted, but new permits have been slow in coming.

If you elliminate tax deductions for the oil companies, you must also deny other companies these tax deductions also.
It sounds to me like green with envy. Those who are unsuccessful are very envious of those who are successful.

Great points MB, but it's much easier just to whine and squeal about them making a profit, any profit. Something the whiners never understand is that increasing their costs to do business is paid for by we the people anyway....maybe some people enjoy paying more money at the pump just to make an idiotic point.

They run a business...

1) Intangible drilling costs is a cost of doing business... Nobody is forcing them to be in that business... My tax dollars do NOT need to subsidize their "intangibles."

2) Same

3) Same

What's DISHONEST is the oil companies crying for $4 BILLION a year of MY TAX DOLLARS to subsidize their obscene profits that they're gouging us for. Production is NOT the problem... They decide they want more profits, they deliberately limit the amount they produce... OPEC wants more money per barrel...It's not a production problem... They just withhold more to drive up the prices... But the companies want US to subsidize their profits?... THAT's what's obscene.