Ever wonder why the Tea Party hates building green?

[Dymanic]

And what do you think the reason for that is?

Uh... because the tax rate on petroleum and natural gas structures is lower than the rate for structures associated with any other asset type? Maybe I don't undertand the question.

Sometimes goverment guarantees private loans, sometimes it's a direct loan from the Fed. Not much difference either way.

I'd say there's quite a bit of difference, considering that a loan guarantee costs the taxpayer nothing if the receiving entity is able to repay the loan (a matter which the very need for government loan guarantees implicitly places in question).

And in the case of nuclear reactors the loan guarantees are not because there's a question of the reactor not generating enough power, or being unable to find buyers for that power. It's to protect against the risk of baseless lawsuits and politics delaying the opening of the plant for years, if not forever.

Or lawsuits that are not baseless, such as those associated with, you know, nuclear accidents. But it's not the loan guarantees that do that anyway, and no such guarantees are necessary. It goes without saying that the government will be stuck with the tab for any cleanup costs that exceed the utility's resources.

 

[Dymanic]

They will still only get the benefits of a hybrid in city traffic for the most part. And that's the point you took issue with, wasn't it?

Was it? Maybe you can direct me to the post in which I took issue with that.

What I meant was that oil companies do not drill in areas where it is known there is no oil.

I don't understand why you'd see that as a point worth making.

 

[AlBell]

You seemed to be complaining that dry hole costs can be expensed, although maybe I misread you.

 

[Dymanic]

You seemed to be complaining that dry hole costs can be expensed, although maybe I misread you.

It's not that simple. The whole idea of a government subsidy is to encourage an activity that is deemed to have benefits for society as a whole. The logic is that oil companies, placing their own profits first, would be less inclined to support riskier efforts to explore and develop sources, that production would suffer as a result, and there'd be less oil for all -- an idea which, at its core, may once have made sense. Privatize profits and socialize losses, and everybody gains (some quite a bit more than others, but still).

The problems I have with that are that it's no longer necessary with oil companies posting record profits, and there's no longer a future in it anyway, as the inevitable decline in production forces us to re-engineer our energy economy, including a great deal of our infrastructure, around other sources.

 

[mhaze]

....
The problems I have with that are that it's no longer necessary with oil companies posting record profits, and there's no longer a future in it anyway, as the inevitable decline in production forces us to re-engineer our energy economy, including a great deal of our infrastructure, around other sources.

And That is Fracking-Ridiculous...

 

[mhaze]

You seemed to be complaining that dry hole costs can be expensed, although maybe I misread you.

I think the way this (sick, perverted, collectivist) argument goes is based on the normal tax procedure of amortizing business start up expenses. If I start a dry cleaning business, the costs of "startup" might include studies to determine the business location and that of satellite stores, legal fees for organizing the company and others.

IIRC some of this goes on 7 year schedule for writeoff, other is 20 or 30 year schedule. So the progressive would argue that drilling dry holes is "cost of business startup" and should be done similarly.

Congress allows an immediate expense for those costs.

But it seems to me that once a well was drilled and established to be useless, even if it were to be put on the longer term depreciation schedule, it would immediately be written off with salvage value = 0. That's a lot of paperwork, and the same result is achieved by allowing immediate expensing.

Does that sound right? If so, there's nothing remotely comparable to the subsidies for wind energy fantasies and solar. Those include loan guarantees for the companies, followed by tax credits to the companies and consumers for building the facilities, followed by tax credits for every kilowatt of energy production.

Who exactly do the resident propagandists think they are kidding?

According to this whackjob concept by the loony left, if a rancher had a herd of 5000 cattle, and 500 died in a drought, they shouldn't be allowed to be written off in the year they died but kept on the books on a depreciation schedule.

 

[WildCat]

Uh... because the tax rate on petroleum and natural gas structures is lower than the rate for structures associated with any other asset type? Maybe I don't undertand the question.

What is the return on imvestment for those types of assets? Is there a government interest in increasing domestic oil supplies? High oil prices put a lot of marginal oil fields in the US into play again. Raise taxes on these marginal fields and you don't get more tax revenue, you just shut those fields down and import more oil.

I'd say there's quite a bit of difference, considering that a loan guarantee costs the taxpayer nothing if the receiving entity is able to repay the loan (a matter which the very need for government loan guarantees implicitly places in question).

And we know nuclear power plants are able to repay loans, because their product is in demand.

Or lawsuits that are not baseless, such as those associated with, you know, nuclear accidents. But it's not the loan guarantees that do that anyway, and no such guarantees are necessary. It goes without saying that the government will be stuck with the tab for any cleanup costs that exceed the utility's resources.

So the lawsuit filed already against the Georgia nuclear plant which hasn't been built yet is in response to an accident?

 

[Dymanic]

Is there a government interest in increasing domestic oil supplies?

It's important to word that correctly. Slowing the rate of decline in domestic production is what we're really talking about. Increasing domestic production isn't even on the table. Frack yourself silly, whatever; not gonna happen. Best we could hope for is small temporary surges like the one that took place after the completion of the Alaska pipeline and the start of production from the largest oil field in North America, Prudhoe Bay (which peaked two years later).

As to "government interest", that's a pretty complicated package, if you really look at it. In theory, government is supposed to represent the interests of the people, and that's always a tricky affair, individual interests being so often in conflict with one another (or even with themselves, if you consider that long-term interests are constantly at odds with short-term interests). Now that "corporations are people too", it's even harder to judge how well government is performing at that job. But the short answer is yes -- at least, the assumption that there is a "government" interest in encouraging production is the basis for government subsidies to the oil industry. Nothing says it has to be domestic production, tho.

High oil prices put a lot of marginal oil fields in the US into play again. Raise taxes on these marginal fields and you don't get more tax revenue, you just shut those fields down and import more oil.

I'm for it. Leave more of our own oil in the ground while we continue to suck the arabs dry, and our grandchildren will surely thank us. I've suggested before that we could soften the blow for oil companies by making government policy more friendly to practices like "drill and cap", say by extending the expiration dates on oil leases.

Of course, sequestering resources for the future is a risky practice under our present corporate system -- one which values short term gains above all else -- and, unfortunately, our political system suffers the same flaw. A US President seeking re-election may be forming his policies on how they will affect the future of the country decades into the future, but his re-election is going to depend more on how the average voter feels about the economy's performance during the last six months (if that).

We no longer have the production capacity to significantly impact global oil prices. Recently, questions have arisen as to whether even Saudi Arabia still has enough reserve capacity to do that. So the choice we're facing is to develop alternatives now, accepting whatever sacrifices that may entail, or continue to cling to an obsolete view of our energy situation and make even greater sacrifices later. I remember what happened to the last US President who dared to suggest to the American people that they needed to re-evaluate their system of values, and to build a more secure future by learning to sacrifice. It's especially chilling to note that one of the main things that happened to him can be summed up in a single word: Iran.

We live in interesting times.

 

[Dymanic]

Does that sound right?

In a word: No. "Not even wrong" is how I'd describe it. It sounds like the result of a very small brain trying to wrap itself around two of the most complex and nuanced abstract constructs ever created by man: US government subsidy policy and US tax code.

 

[mhaze]

In a word: No. "Not even wrong" is how I'd describe it. It sounds like the result of a very small brain trying to wrap itself around two of the most complex and nuanced abstract constructs ever created by man: US government subsidy policy and US tax code.

Really? I thought I explained the likely scenarios, and you've only replied with an adhom argument.

Gee...those are typical of small brains. Like brains with 2 cells.

 

[mhaze]

It's important to word that correctly. Slowing the rate of decline in domestic production .....

I chopped the rest of your peak oil standard babble. Looks to me like we are poised to be the major oil producer of the world pretty soon.

 

[Dymanic]

Looks to me like we are poised to be the major oil producer of the world pretty soon.

A laughable proposition for anyone who understands the first thing about the subject, but I'm not the least bit surprised that it looks that way to you. Your learning curve on this has been a flat line ever since we first started discussing it. Quote an oil industry analyst predicting that the US will soon become the worlds' major oil producer.

 

[mhaze]

A laughable proposition for anyone who understands the first thing about the subject, but I'm not the least bit surprised that it looks that way to you. Your learning curve on this has been a flat line ever since we first started discussing it. Quote an oil industry analyst predicting that the US will soon become the worlds' major oil producer.

Surrrreeeee, bucko.

We'll just ignore your adhom in 249, your ad homie in this here post, and your lack of credible response to 249. We'll take your word as Gospel and ignore those little creatures that dare refute you.

Except....you a big talker, dude. That's about it.

 

[Dymanic]

Surrrreeeee, bucko.

We'll just ignore your adhom in 249, your ad homie in this here post, and your lack of credible response to 249. We'll take your word as Gospel and ignore those little creatures that dare refute you.

Except....you a big talker, dude. That's about it.

Quote an oil industry analyst predicting that the US will soon become the worlds' major oil producer.

 

[mhaze]

Quote an oil industry analyst predicting that the US will soon become the worlds' major oil producer.

Yes, shouting is a way of ignoring my previous comment.


We'll just ignore your adhom in 249, your ad homie in this here post, and your lack of credible response to 249. We'll take your word as Gospel and ignore those little creatures that dare refute you.

Oh, and now you are an expert on oil and gas production, AND on taxation and tax policy. What else shall we add to the list? (Hint: It's definitely not automobile and Prius fuel economy, efficiency and cost issues)

 

[Dymanic]

Yes, shouting is a way of ignoring my previous comment.

Customarily, it is the use of all-caps that is widely interpreted as the internet equivalent of shouting. Bolding, at least around here, is most often treated as a means of calling attention to something the user finds worthy of particular attention, or something he feels has been ignored. (My way of ignoring things I don't find worthy of attention is simply to ignore them).

You did make an effort above to encapsulate two massive, intersecting complexities and reduce them to a couple of sentences -- sentences begining with phrases like "I think the way this (sick, perverted, collectivist) argument goes is...", and I gave that as much attention as I felt it deserved. I would ask that you take into account that I had already provided a response to AlBell that also applies to your effort: "It's not that simple", and also that I had already provided a link, further above, to a 38-page PDF that addresses energy subsidies in considerable detail (and which you appear not to have done so much as lightly skim, since it both answers the trivial question you asked as well as showing how simplistic the viewpoint is that limits itself to the question of expensing versus amortization). In case you missed that, here it is again:
http://www.elistore.org/Data/products/d19_07.pdf

Other than that, if your post contained some actual content to which you feel I have neglected to give adequate attention, you might try bolding it. Just a suggestion. And by the way, post 249 was mine.

As for my being an expert on oil and gas production, no, I'm not. No more than any other layperson with an internet connection. It is precisely because of this that I must defer to the opinions of experts -- and the reason for my asking you (twice... er, well, three times now) to quote an expert who supports your claim that the US will soon become the worlds' major oil producer. Heck, quote anybody saying that (other than you) and we can discuss their expert qualifications and their potential biases. It's just the way things are done here at JREF, mhaze.

What I find comical is that you go much further than the typical peak oil denialist: you deny that the US has yet to reach its peak, and you do so without apparently realizing how much stronger a claim that is, and without apparently realizing that in the oil industry, what you are denying has for decades been universally accepted as historical fact. I know you're frantically looking for even one person whom you can present as a bona fide "oil industry analyst" and whom you can quote saying something that would support your claim, and I also know you're not having any luck. And I know why. But if you were ever going to figure it out, it seems like it would surely have happened by now.

 

[mhaze]

...

What I find comical is that you go much further than the typical peak oil denialist: you deny that the US has yet to reach its peak, and you do so without apparently realizing how much stronger a claim that is, and without apparently realizing that in the oil industry, what you are denying has for decades been universally accepted as historical fact. I know you're frantically looking for even one person whom you can present as a bona fide "oil industry analyst" and whom you can quote saying something that would support your claim, and I also know you're not having any luck. And I know why. But if you were ever going to figure it out, it seems like it would surely have happened by now.

Oh, I see. You've got a study by some paid off Green interests. That's nice. Why didn't I expect that?

Well, never mind.

Wait.....why should I believe them?

Let me hear you explain it.

Oh, "peak oil denialist" that's a good one. Some of the guys working fracking here disagree with you. Were you looking for a place to explain to the commoners about "peak oil"? Maybe this is the place. Is that right? Coooollll....

http://www.rigzone.com/news/article.asp?a_id=110840

 

[TimCallahan]

Oh, I see. You've got a study by some paid off Green interests. That's nice. Why didn't I expect that?

Well, never mind.

Wait.....why should I believe them?

Let me hear you explain it.

Oh, "peak oil denialist" that's a good one. Some of the guys working fracking here disagree with you.

Within the last year, IIRC, National Geographic had an issue devoted to the end of oil. Is the National Geographic Society a "paid-off Green interest." BTW, whose big bucks are paying off these green interests, and to what end? The big money is with the oil companies, not with green interests.

ETA: I looked at a number of sites regarding the peak of oil production. It seems to still be a topic of debate. This site quotes Kuwaiti scientists - not exactly wild-eyed tree-huggers - as saying they expect oil production to peak in 2014.

 

[Dymanic]

Oh, I see. You've got a study by some paid off Green interests. That's nice. Why didn't I expect that?

As I said, we can certainly discuss expert qualifications and potential biases -- but don't lose track of where we are. That study addresses energy subsidies, not Peak Oil. (And it's obvious that you still haven't bothered to even look at it, or you'd know that).

Wait.....why should I believe them?

Let me hear you explain it.

I don't see the observation that oil is among the most heavily subsidized of all industries as being really all that controversial, but you don't have to "believe" them. You can see the subsidies they list (and how they define "subsidy"), do the math, and decide for yourself whether the numbers support their conclusions.

Unfortunately, I don't have the same luxury with regard to the article you've just linked to. An English newspaper quotes a report issued by a large investment firm which (allegedly) includes a prediction that the US will be top producer by 2017. Based on what? Studies? I don't see any studies. I don't get to see any numbers at all, aside from their astonishingly optimistic output production numbers. Hell, I can't even seem to find my way to the Sunday Times article, let alone the report (and others appear to have had no better luck). Can you link me to the numbers and methods they used in reaching their conculsion? Can you verify that they were talking about production versus exports? Can you verify that they were talking about crude oil? Because the Peak Oil issue is not about natural gas liquids, and it's not about liquified refinery gases, and it's not about biofuels. It's about oil.

 

[mhaze]

Within the last year, IIRC, National Geographic had an issue devoted to the end of oil. Is the National Geographic Society a "paid-off Green interest." BTW, whose big bucks are paying off these green interests, and to what end? The big money is with the oil companies, not with green interests.

ETA: I looked at a number of sites regarding the peak of oil production. It seems to still be a topic of debate. This site quotes Kuwaiti scientists - not exactly wild-eyed tree-huggers - as saying they expect oil production to peak in 2014.

peak oil IIRC as a theory goes back to the 1950s, and it's had both cult style believers, and rational people considering the implications since then.

Two things merit consideration regarding peak oil.

1. Alternative chemicals are available to easily overcome "shortages of oil". Natural gas, and methanol, produced by steam reforming from natural gas are prime examples. EG so called gas-to-liquids synthesis. Also dimethyl ether for diesel operations.

2. ALL of the theories of peak oil did not take into account recent technical advances that have led to the current growth in shale oil and gas, and oil sands. These deposits dwarf traditional reserves and new in-situ retrieval methods have great promise for areas like Utah and Colorado. Utah is if everything goes right to being large scale production in the late 2020 decade. That's not in line with the Goldman Sachs 2017 number, but I mention it for a reason: Our production is likely to continue going up, both due to new conventional drilling and the new fracking production.

Next is a fundamental question, as to whether theories of peak oil have any predictive or useful value in guiding action, investments, or public policy.

My opinion is no. I'll stand with the winning side on the Julian Simons/Paul Erlich bet, and be happy to take money from the profits of doom and gloom, peak oil being included in that group. But your opinion might be yes or maybe or who knows. "Peak Oil" is a theory of resource scarcity, with resulting economic effects. History shows that when a resource price rises due to scarcity, other commodities and new methods fueled by human ingenuity rush to take advantage of the high price created by the scarcity.

That's the general idea, anyway.