Senator Wyden is the hero this week, as my ambivilent-streak concerning the Democrats may be coming to an end quite soon. The profits have been obscene for oil companies for a while already now, and in spite of this, Republicans continue to give them billions in “tax relief” to supposedly encourage exploration. Reverse Robin Hood on steroids and methamphetamine, this arrangement is the kind of thing ‘small government’ conservatives would be talking about if Republicans weren’t in power.
Here’s a paragraph I lifted off of ‘Preemptive Karma’
Senator Wyden is currently holding the floor in filibuster, in order to gain a vote on his amendment to eliminate royalty relief (ie subsidies) for oil companies whenever the price of a barrel exceeds $50 $55. Not only the GOP leadership, but certain corporate-beholden Democrats do not relish such a vote. Good on Wyden for making the stand now, as the oil companies release their 1Q profit statements and nearly everyone in the country sees a ‘3’ at the front of the price of gas in their area.
Democrats are slowly realizing strengths they never knew they had.
Oil companies spend billions of dollars on research, innovation, refineries, stupid blended gas and exploration and the moment they make a million in profit the Tax & Spenders go ape shit. Profit is a good thing, especially on the heels of massive infrastructure investment.
OMG!
I think I may agree with RT on something.
The oil industry has been taking it in the shorts for years. Look at crude oil prices back in 2002. It would have been a good time to purchase oil stocks. They were beat up.
I say let them have their profits. They will need them. In fact I think that the only way that alternative fuels will take off is for oil companies to have a prolonged period of profitability. That’s what draws competitors. In fact that’s about all that will draw competitors, they sure won’t be drawn in by any warm fuzzy feelings they may get from biofuel production.
I think I may agree with RT on something.
Karl made this same metamorphosis about 4 months ago. Congratulations!!!! You both are now members of Secretly Conservative Annonymous :- ) Make sure you continute to sound liberal in public, though.
Chris,
Remember what I was saying in response to you about taxes, infrastructure and utilities investment??? You can’t hamstring the people who bring you stuff and continue to have a good life.
If anything, we should cut taxes now too really give them a boost into the next era of renewable energy. Increase the tax per gallon at the pump and give a shit load of tax encentives for hybrids, Hydrogen or whatever. This could be a pivotal time in our energy history.
Businesses are supposed to make profit. No one can fault them for that, provided they do it fairly. The fact is, that these oil prices are socking it to people, epscially poor folk. People only have a certain amount that they can spend. If they are spending an extra $1,000/yr on gas, then that’s a refridgerator not being bought at Sears.
So should the government waive all taxes on US gold mining companies as well? How about all the hog farmers?
What justifies a subsidy? Is it having a child, producing a future taxpayer…how about the businesses that educate those future taxpayers? I think so. I think there’s a tangible self interest in the government providing me tax breaks for raising my children, on both sides it makes sense, and both are made better for it.
That’s my litmus test when it comes to subsidies…what’s the benefit to the government, and in the case of an industry being the recipient rather than an individual, the government is basically ‘the market’, the buyers on the back end who either benefit or don’t benefit from the subsidy.
When the balance is off, a tax break is going to be scrutinized by whoever feels they’re getting bent over and used.
First of all, the public wasn’t even provided the courtesy of hearing these oil executives testify to congress under oath. Senator Stevens made sure that wasn’t asked of them, and the result was a joke. So basically…the people have to pay more, yet aren’t deserving of a good faith showing that everything’s on the up and up?
That’s an unfair deal in my opinion. Because for all the talk we hear about needing more refineries, more fields opened, etc – Nobody from any of these giants, Exxon, Chevron, have an explaination for why prices fluxuate up and down across the board, all at once…almost like those involved aren’t actually competing against one another, but working together.
Maybe it’s just me, but the day Intel and AMD both hike up the cost of all their chips by 10%, Comcast and Cablevision do the same at the same time…you know the fix is in, and the customer is the one getting screwed.
Tell yourself whatever you want about how horrible it was to be an oil company back in the day – bust out the violin. Nobody’s crying for the businessman who has to work hard to come up a dollar short in any other industry. I don’t see any tears being shed over the insurance company gone under or forced to sell out – or the telecom business being priced out of business by a giant competitor.
That’s the nature of the beast, and every single person reading this knows this is the way it’s always been. Why should these oil companies have it easy now? Why on our dime?
Because ‘GOOD TIMES ARE A-COMIN’? Not likely. This is a creature that’s walking and talking like a duck, and there’s plenty of greenbacks to go around to whoever’s willing to call it a cute little kittykat.
That above comment should be a post itself. Makes a lot of sense.
Re: Agreeing with right.
Even a blind squirrel can find a nut every now and then.
Oil Companies deserve to make a profit, and it is not the fault of the oil companies that people have insisted on inneficient driving SUV’s, they don’t need subsidies or tax breaks though as it seems that they are doing fine on their own.
One thing about oil companies that seems to get lost in these debates is that they are large multi-national companies and are not in business to help the American consumer they are in business to make money for their shareholders. That is why opening ANWR makes no sense, it would not help the US become energy independant, it would give the oil companies more inventory to sell to the highest bidder. The reason people do not realize that oil companies are not benovolent companies, is that debates like whether to drill in ANWR are always presented as something that will be good for the US, Drilling would be good for big oil, not drilling would be good for the enviroment, but anyway you look at it Joe Sixpack with his SUV is screwed.
I don’t disagree that they should be allowed to make a profit, but if our government is going to “help out”, there are plenty of burnt out people and industries who could use that help a lot more! The victims of Katrina come to mind.
How do you cut VA benefits and pell grants at the same time you’re giving Exxon a tax break?
Exactly!!! Why should the oil industry be subsidized? I could see subsidizing makers of wind energy or even renewable ethanol supliers but the oil industry does not need help, at least I think $8 billion in profits is probably enough to keep the shareholders of exxon off of food stamps.
The line of crap we’ll be fed from now until 2011 (I hope not too far beyond), is that the subsidies go towards the advancement of green technology. Which is basically like giving big tobacco money to think of ways to convince people not to smoke.
Technologies are going to be developed by scientists working for all sorts of companies, on college campuses, inventors in their basements and garages, etc. Giving the loot to Exxon with that as an excuse ($ for development of green technology) is not only stupid, it’s a waste if what you’re really going after is cleaner burning fuel.
It’s just wrong. They don’t need the money, and other people/businesses do. Take that money and invest it in education! Let’s not fall for this.
That was part of the key to the Clinton boom is that he focused on creating medium sized business. These businesses produce a lot of high paying midlevel jobs and innovation. Now the focus is on helping big companies that seem bloated at the top and not particarly innovative.
BTW CM:
If you agree with Right it is best compliment Clinton shortly after it, so he has something to get mad about.
Look into how much petroleum that is required to produce one refridgerator, and the petroleum required to get it to market. There is no facet of our civilization that isn’t petroleum dependent. And what’s worse if you simply conserve and then put those savings in the bank, the bank is just going to turn around and lend that money to someone that will consume petroleum in some way. There is no escaping energy consumption.
You think it’s wrong. That doesn’t make it wrong. Could it possibly be that oil stockholders don’t “think” it’s wrong for Exxon, Chevron, etc. to making good profits? Look at the oil company stock prices. They AREN’T up in the stratosphere because the market knows that oil is a risky business and the profits of today could easily evaporate next year.
Google is selling at over $400/share with net income of $1.4 billion. Exxon is at $63/share with net income of $36 billion. Make sense of that. Why is Google so overvalued when clearly oil is the business to be in?
Well, the last I heard Alaska was a part of the U.S. and drilling in ANWR would be good for Alaska. I’m in Alaska and I’d reckon that roughly 99.8% of Alaskans have never been within 100 miles of ANWR. When are you guys planning your family vacation to ANWR (bring lots of mosquito repellent)? ANWR is more of an emotional issue than anything. It tugs at the part of our heart that is sensitive to environmental degradation. But you know what? There is a lot of inaccessible virgin land in Alaska that is de facto “reserve” simply because there is no way to get there (other than float plane). ANWR is a red herring issue in my book.
Good debate guys, and an important one.
You might be right about ANWR being a red herring. No one has even said how much oil is really there, I am told the results from the exploratory wells drilled in the 80’s is a very closely guarded secret. Sometimes I wonder if they don’t bring it up as sort of a bait and switch with where they really want to drill.
No matter what though, drilling in the ANWR is not going to lower US gas prices or help the average SUV driver, but that is how it is usually argued.
I heard Rush Limbaugh making the case before the Iraq war that it would lower gas prices because the US would be a player in the worlds oil markets. The problem is oil companies benifit from higher prices so making american caompanies a player in the oil market, just gives them a chance to make a good profit it is not going to help the consumer. Of course losing the war seems to have made the US even more inconsequential in the region but that is another story.
Interesting education on oil stocks, and you are right that the companies probably do deserve a risk premium, but I still do not think they need subsidies.
cm – Energy companies have been a good investment over the past 5 years. Personally, I took to heart the point you just made and invested in PetroBrazil and PetroKazikstan. I also held Halliburton shares that went up 6% in short time. My point being, if you invested in an energy focused ETF two years ago, you’re glad you did today!
Comparing the industry to Google is unfair. One has been around for over a hundred years, the other created a new market. If Dow Chemicals discovers a method to make plastic w/out petroleum, it’ll generate billions also…or the first automobile manufacturer that makes a car capable of flight…you wouldn’t compare that company’s success w/ that of an oil giant who’s been around for decades.
If you want to compare market value, it has to be done using industry statistics…comparing energy with telecom, health care, retail, etc.
These companies are leveraging deals made w/ the government when a barrell cost $30 years ago. There’s no longer a need to subsidize this industry, it’s HEALTHY. If the government goes around giving money away to those who need it the most…
Well, that’s the entire policy of Republicans since they took over. Give money away to wealthy individuals and wealthy corporations – wait for it to trickle down to the workers’ paychecks. Just keep waiting, it’ll equal something good for me and you sometime soon…how likely does that seem?
Meanwhile, our children are graduating high school at lower rates, and compared with the rest of the world, they’re a low grade brand of stupid per capita.
Big Oil or our most valuable resource (the brains of our future workforce)? Who needs it more? Who benefits in the long run from giving money to one or the other?
You mentioned telecom and health. Both of these industries are heavily subsidized (just look closely at your phone bill & Medicaid pharma receipts). Should we start looking to reduce future subsidization in the event that either of them become incredibly profitable industries? And as for deals worked out years ago, unfortunately our legislative process responds much more slowly than the market. Measures taken today could be meaningless, or even dangerous a year from now. It is very difficult to know all the outcomes in the absence of good information and data.
I wasn’t really trying to directly compare any two companies, I was more pointing out the oddness of how our market values certain companies. Say what you want but the market is one of the few reasonably efficient systems of resource distribution. Granted it is far from perfect, but value (and anticipated value) is generally reflected in current stock value. Given that Exxon stock isn’t off the chart tells me that the market doesn’t view Exxon’s future prospects as being all that great. Again, it’s a high risk industry and is prone to profitability problems.
I’m in favor of high fuel prices simply because it is long overdue. And if that means big oil makes some excessive profits along the way, then I’m OK with it, and if I want I can even buy some of their stock and share in their good fortune.
I’ve stopped being concerned too much about the education of other people’s children. They are entitled to a free and appropriate public education. That’s it. The rest of the educational burden falls directly on the parent. If a child is getting left behind it is the primary responsibility of the parent. End of story, parents need to self-educate and then pass that on to their children. There aren’t enough highly qualified teachers on the planet to fix the problems with our educational system. You could easily throw an extra $100 billion at this problem and end up 10 years from now with the same level of educational attainment of our student base. Schools should be viewed strictly as knowledge dissemination centers, and not daycare or therapy centers.
I agree that oil independence is a false argument for ANWR. But I firmly believe that Alaska as an autonomous entity will benefit greatly from oil exploration and development there. Either the U.S. will let us develop our resources as WE (in all of our diversity) see fit, or all of the lower 48 must be prepared to subsidize us with public welfare when the time comes. Which would you prefer?
I’m fairly certain that it’s just a passing gastronomical anomaly. I ate a funny tasting burrito right before I read your post.
Right Thinker says:
Make sure you continute to sound liberal in public, though.
captain_menace says:
I’m fairly certain that it’s just a passing gastronomical anomaly. I ate a funny tasting burrito right before I read your post.
See, that wasn’t hard at all, was it! Throw in some Bush=Hitler and the commies won’t suspect a thing!!!
That’s my litmus test when it comes to subsidies…what’s the benefit to the government
Holy crap, I think this statement would be grounds for divorce, if we married!!! What’s the benefit to the government?? Who gives a flying F#$% what the benefit to the governemnt is?? What’s the benefit to the taxpayer, that’s what I want to know?
I’m not running some charity to prop up a bloated socialist dictatorship. The governemnt is there to make sure I can get to what I want if I have the means to get it. They are also there to make sure I have access to the means. Taxes on corporations only increase the cost of getting a product to market and giving my hard earned money to pork barrel projects. Governemnt works for me!! Not the other way around.
How do you cut VA benefits and pell grants at the same time you’re giving Exxon a tax break?
A college education won’t fuel my car so I can get to work.
Nobody from any of these giants, Exxon, Chevron, have an explaination for why prices fluxuate up and down across the board, all at once…almost like those involved aren’t actually competing against one another, but working together.
Oil is a commodity and, thus, is subject to speculation. What was that movie with Dan Akroid and Eddie Murphy, Trading Places? The Dukes were trying to corner the Orange Juice market by having advanced knowledge of Orange crop figures.
With oil, there is no real research you can do to tell if Nigeria is going into civil war or if Hugo Chavez of Venezuela goes even more ape shit than he is now. Iran wants a nuclear winter and the wastelands of a baren Alaska are so inhospitable to life even oil rigs aren’t allowed there. We don’t have a supply problem now, we have a refining problem coupled with a terrorist problem.
I would love to use hydrogen and let the middle east starve to death. I’d give the technology to everyone for free and oill would only be used for lubrication (you know what I mean, grow up!!:- ) and home heating.
The only problem with comparing Bush to Hitler, is that Hitler was actually very popular, and quite successful for a while. And he followed the Neil Young rule… “it’s better to burn out than fade away”. Bush was really only popular for a time due to the tide of support and sympathy he (and the U.S. in general) gained after 9.11.
It’s funny to hear Bush supporters say “he sticks to his guns”. So do most tyrants. Not that I really think Bush is a real tyrant. Just funny. Compromise should be the cornerstone of politics, and boasting of sticking to guns (in a political context) makes me chuckle.
For you married folk, when you are in an argument with your spouse, how successful are you in getting your way when you “stick to your guns”? I know for myself, peacefully ending an argument usually requires that I at some point admit that I could be wrong, or often times it requires an outright apology from me. And for the record, I am still happily married. And I think my wife would agree about the happy part.
I’m not so sure about Iran. I think they probably really need civilian nuclear power. And I can completely understand why they may want nuclear weapons. Of course I don’t feel comfortable with the weapons part given their acknowledged hatred for western culture.
As for Alaska. Come on now. The North Slope isn’t hospitable but there have been rigs on the northern most point of Alaska for decades. Look at Prudhoe Bay on a map. And ANWR is fairly green and beautiful during the summer (like most of Alaska).
I disagree. It is college-educated physicists, engineers, chemists, etc. that will create the future technologies which will power your car of the future. A simple case of give the man a fish, or teach him to fish.