Rural Power Companies: Forced Greening?

LadyJazzer wrote: I'd like to have that $4 BILLION/year subsidy for the oil/gas companies (who are making annual profits in the HUNDREDS of MILLIONS and DON'T NEED MY TAX-DOLLARS) stay in the treasury too. $4-BILLION would cover the cost of renewable subsidies by a factor of THOUSANDS.

But of course, he knew that too...

I'm sure you'd also like to pay higher gas prices.

Rick wrote:

LadyJazzer wrote: I'd like to have that $4 BILLION/year subsidy for the oil/gas companies (who are making annual profits in the HUNDREDS of MILLIONS and DON'T NEED MY TAX-DOLLARS) stay in the treasury too. $4-BILLION would cover the cost of renewable subsidies by a factor of THOUSANDS.

But of course, he knew that too...

I'm sure you'd also like to pay higher gas prices.

Why would that result in higher gas prices? Since we are constantly told that gas prices are set on the world oil market supply, why would the loss of taxpayer subsidies result in higher prices? It might affect the profit margins, but not the price at the pump. Besides, why should those of us who conserve our fossil fuel consumption have to subsidize those who refuse to do so? Why not have true marketplace prices instead artificial prices?

If this was all rainbows and ice cream like Dog believes why is this so hotly debated and rammed through in the last days?

Chevy Volt Battery Technology Questioned After Billions Wasted





Submitted by Mark Modica on Thu, 04/11/2013 - 09:25

http://nlpc.org/stories/2013/04/11/chev ... ons-wasted

And why are rural Democrat legislators fighting urban Dems over their bill? Modern American democracy, the populous urban areas enforcing their will on the rural minority.

For the same reason that less populated rural areas have been fighting heavier-populated urban areas since the formation of the country. This is not new information.

What I have never understood is why some collectivists seem to feel it is okay to impose their beliefs on everyone else simply because a majority of people believe a certain thing and yet they get all hot and bothered when another group, say a religious one, attempts to impose their beliefs on them. Isn't it an imposition of beliefs on others in both instances?

Something the Dog Said wrote: And of course you provide no facts to support your babble. Xcel has shown that wind energy (.02 - .03$ per kWh) is quickly approaching the cost of dirty coal, and will in the future become even cheaper than coal. And of course you also know that fossil fuel is heavily subsidized by the taxpayer as well.

http://www.nrel.gov/docs/fy05osti/37657.pdf

Your own source says wind energy is only competitive due to tax breaks...

Wind energy requires a production tax credit (PTC) to achieve these economics.

True, but every energy source receives significant federal subsidies; it is disingenuous to expect wind
energy to compete in the marketplace without the incentives enjoyed
by established technologies. 3

Their note 3 to explain federal "subsidies" for established technologies is a website, not a direct link to any paper or article. I did a search there and found a 104 page paper from 1993, but I could of missed something.

Renewable energy enjoys many tax breaks in the form of deductions and credits which established technologies do not get. Here are a few of them...

ITC federal tax credit. Companies can get an unlimited up to 30% tax credit on equipment purchased for renewable energy.

http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US02F&re=1&ee=1

PTC federal tax credit (mentioned above). Power companies get reduced income taxes based on killowatt-hours of renewable energy produced.

MTC federal tax credit. For domestic clean energy facilities.

MACRA Bonus Depreciation. Accelerated depreciation schedules for renewable equipment help reduce taxes.

http://www.wri.org/publication/bottom-line-series-renewable-energy-tax-credits

In addition, individual states offer similar programs. And individuals can get up to 30% energy credits too on their federal taxes for various clean energy related purchases. All of this has the effect of reducing the cost of renewable energy through tax breaks.

Now, what are the $4 billion of "subsidies" for oil/gas that LJ refers to? Based on my research, it kind of depends on what source you are looking at. But in general these too are tax credits and tax deductions. I know the word "subsidy" makes it sound worse, kind of like a free government handout. But if a subsidy is a tax deduction or tax credit, then that means most all of us with some income are getting subsidized in some manner.

Let' look at the top four "Big Oil" $4 billion of "subsidies" discussed in this CNN article...

http://money.cnn.com/2011/04/26/news/economy/oil_tax_breaks_obama/index.htm

1. Domestic manufacturing tax deduction, $1.7 billion.

Companies get up to a 9% tax deduction to keep factories in the United States. I read elsewhere that Exxon only gets 6%, while Apple gets the full 9%. But the point is that this "subsidy" can apply to most any company, including renewable energy companies.

2. Percentage depletion allowance, $1 billion.

OK, this tax break is specific to companies that are similar to oil/gas (like mining or timber) in that they use natural resources which they have purchased rights to use. These companies are unique in that they make a purchase of resourses that can last many years, and the value decreases each year as the resources are depleted. The tax break is actually similar to depreciation of capital equipment which any company can take. The question is should it be allowed or not, but it seems consistent to me.

3. Foreign tax credit, $850 million.

I've seen this figure vary a whole lot. Regardless, any company that has foreign operations can take this credit. Oil/gas by their very nature are multinational (oil isn't only found in the US). Other companies like Google and Apple take advantage of this credit too by setting up complex foreign entities. Individuals can get this credit too, it's even on the 1040 tax form. And renewable energy companies can take the credit as well.

The simple idea of the credit is that if you do business overseas, you are paying taxes to other countries. These taxes can be deducted from the federal taxes you owe.

4. Intangible drilling costs, $780 million.

Oil/gas companies can write off expenses like wages, fuel, repair and hauling. Other companies can do the same thing. The article claims oil/gas can do it over one year while others have to spread it over several years, but that makes no sense to me. You should be able to take write offs in the year you spent the money.

Here is another article that looks at a different type of oil "subsidies", some of which even liberals support. But this post is long enough so I won't get into the details right now...

http://www.forbes.com/sites/energysource/2012/04/25/the-surprising-reason-that-oil-subsidies-persist-even-liberals-love-them/

Bottom line is most gas/oil "subidies" are tax credits or tax deductions which in most cases are also available to most any company (if not in the exact same way). Renewable energy companies can also get those "subsidies", plus they get many others as well.

The solution? I tend to prefer to get rid of most tax breaks and cut corporate tax rates to make them competitive with the tax rates in other industrialized countries. I don't see how it makes sense to only take the tax breaks away from gas/oil companies, but still allow other companies with huge profits like Google and Apple to get the tax breaks.

Something the Dog Said wrote:

Rick wrote:

LadyJazzer wrote: I'd like to have that $4 BILLION/year subsidy for the oil/gas companies (who are making annual profits in the HUNDREDS of MILLIONS and DON'T NEED MY TAX-DOLLARS) stay in the treasury too. $4-BILLION would cover the cost of renewable subsidies by a factor of THOUSANDS.

But of course, he knew that too...

I'm sure you'd also like to pay higher gas prices.

Why would that result in higher gas prices? Since we are constantly told that gas prices are set on the world oil market supply, why would the loss of taxpayer subsidies result in higher prices? It might affect the profit margins, but not the price at the pump. Besides, why should those of us who conserve our fossil fuel consumption have to subsidize those who refuse to do so? Why not have true marketplace prices instead artificial prices?

The so called subsidies, which are really tax exemptions and tax reductions, lower the cost of providing the commodity. The lower the cost to produce, the lower the final product can be sold at. When the cost of manufacturing the product rises, the cost of the product rises as well.

Public Service, I'm sorry, Xcel Energy doesn't care about higher costs. It is a government granted monopoly that has been promised a profit of X% regardless of what its costs are. Rural electric co-ops, on the other hand, are not granted a similar guarantee by the government. Green energy is thus going to be profitable for Xcel even if it costs twice as much to procure as energy from fossil fuels.

Sounds like you are advocating socialism, Printsmith. Having the taxpayer subsidize the highly profitable energy companies to lower the cost, rather than having the true cost of the product being paid by the actual consumer. Why not have a true marketplace?