Patterico's Pontifications

8/14/2008

FactCheck.org: Obama’s Tire Pressure vs. McCain’s Offshore Drilling

Filed under: 2008 Election — DRJ @ 8:11 pm



[Guest post by DRJ]

FactCheck.org says: Obama’s call for proper tire pressure could save approximately 1B barrels gallons of fuel per year, but McCain’s plan to drill offshore would yield at least 3 times as much and possibly 10 times as much fuel for American consumers.

Details and more information are at the link, so read the whole thing.

Here’s my 2 cents: Obama’s plan depends on full participation from America’s drivers, something that is unlikely to occur. McCain’s offshore drilling depends on full participation from profit-motivated oil companies, something that is likely to occur. Thus, McCain’s proposal is more likely to produce the desired results than Obama’s plan.

— DRJ

87 Responses to “FactCheck.org: Obama’s Tire Pressure vs. McCain’s Offshore Drilling”

  1. Once more, economic self-interest (or, as Gordon Gecko would say: Greed!) trumps the inconvenience of actually having to check the air-pressure in your tires.
    Thank you, Gordon.

    Another Drew (249078)

  2. The Democrats are vulnerable on this issue so expect more misrepresentations of the Pelosi-Obama position in weeks to come.

    Mike K (155601)

  3. “Obama’s plan depends on full participation from America’s drivers”, and ass u me ‘s that every (100% of)American is so stupid they don’t check their tire pressure at any time. If that doesn’t prove he’s an elitest POS then we’re doomed.

    Scrapiron (d671ab)

  4. I agree, Scrapiron, plus it fails to take into account modern technology. My new Yukon has a built-in tire pressure gauge in every tire. If the pressure gets too low or too high, I get an email and a message on my dashboard alerting me to remedy it. So I’m already in full compliance and many others who have newer vehicles are, too.

    It wasn’t Obama that made that possible, it was GM.

    DRJ (a5243f)

  5. True, scrapiron. And who is going to check everyone’s tires, anways, Obama’s civilian security goons…er, police?

    Besides the cost of gas to ourselves, we should be extracting every ounce of oil we can for even more important political purposes–if we were a net oil supplier rather than consumer, the ME and radical Islam would not be flush with cash for terrorism, Russia would not be invading Georgia, and we would not be indebted to potential enemies.

    What good is a pristine coast if we lose our sovereignty?

    Patricia (f56a97)

  6. As scrapiron pointed out, the discrepancy’s even greater. Everyone’s tires are inflated. Who’s Obama talking to?

    acm (f2a481)

  7. None of this would even be as issue if the govt pols and bureaucrats did not have a stranglehold on every conceivable way of creating usable energy from natural resources. It’s called the permitting process, but it’s simply obstructionism at work. A first rate nuclear facility could be erected and functioning within a 2 year span. That is how long it takes in France and China from what I read. Even after a green light in the US, the permitting and construction is ten years. Completely asinine. We’ve shot ourselves in the foot in so many ways, but this is at the heart of the decline in US industrial and commercial ability to respond to the challenges from the new capitalists.

    It’s so ridiculous that here in CA they are presently holding up two of the world’s large ever solar facilities for ‘permitting’. Solar, the greenies favorite non-carbonated drink. And AFTER these same obstructionists placed deadlines and percentage requirements on the utilities to incorporate alternative energy inputs into the power grid.

    Next up, water shortages and infrastructure woes. And with no extra grid capacity to help. Wonderful. [insert well-known angry pirate sound here]

    allan (988066)

  8. If we inflated our tires to match the Big O’s ego, every tire in the country would burst.

    tmac (86debe)

  9. You vill inflater zu tires!

    Icy Truth (e52465)

  10. Lessee. The uses about 7.3 billion barrels of crude a year (4.8 Bbbl imported). So, Obama suggests that by simply inflating ties to their design pressure we would save almost 14% of our oil bill. Never mind that much of it goes for purposes other than gasoline.

    Fairly hard to believe.

    Perhaps he said 1 Billion gallons of gasoline (out of about 140 billion gallons/year)?

    Easy to believe. Also less than 1%.

    I find it unlikely also that McCain plans on producing 3 billion more barrels a year (8 million barrels a day) — it would double US production and have the US (by far) the largest oil producing nation on earth. Although this is rather more believable (being barely possible) than saving all those barrels by inflation.

    Kevin Murphy (0b2493)

  11. And, checking the link (d’oh), I see it IS 1 billion GALLONS, not 1 billion BARRELS.

    Kevin Murphy (0b2493)

  12. Thank you, Kevin Murphy. I’ve corrected the post and I apologize for the error.

    DRJ (a5243f)

  13. If the profit driven companies (Big Oil Co.’s) are so keen to drill why have they spent so little money on capital expenditures and new refineries and exploration?

    McCain’s plan is basically to let things stand as they are, and I don’t know anyone who thinks that’s in anyone’s best interest but the big five oil co’s.

    Peter (e70d1c)

  14. The ONLY things that worry me is if American oil companies are permitted to drill in areas currently protected, what stops FOREIGN oil from receiving permits and more importantly, we presume the oil would stay in THIS country but ALL oil companies sell their product to the highest bidder, I thought so what makes us presume it will stay in this country at a cheaper than current price?

    I guess I’m missing something here that protects American consumers. Anybody?

    teacat (47bbb2)

  15. The only reason the numbers are in the same league is because FactCheck.org two thumbs on the scale. One is to assume ANWR and the shale out of existence, effectively treating “all the oil they’re talking about getting off drilling” as though it were synonymous with “all the oil they’re talking about getting off drilling offshore.” The other thumb is using the conservative estimate of the oil in the OCS, which is almost certainly too low given that exploration has been banned there fore so long. Yeah, maybe they just happened to find all the oil that was there before the government ordered them to quit exploring. Or maybe not.

    Xrlq (62cad4)

  16. 2 thumbs on the scale, Xlrq? They are freakin’ standing on the scale.

    JD (75f5c3)

  17. “If the profit driven companies (Big Oil Co.’s) are so keen to drill why have they spent so little money on capital expenditures and new refineries and exploration?”

    Wow, this question just answers itself if the person asking it takes the time to thinks it through. There hasn’t been a new refinery built in the United States for 30 years, not for dint of trying. Why is that? “Little money” is in the eye of the beholder and a function of attractive exploration opportunities. Where are they in the United States that they are not already being explored?

    daleyrocks (d9ec17)

  18. McCain’s offshore drilling depends on full participation from profit-motivated oil companies, something that is likely to occur.

    Full participation? I had no idea they had sifted through the variables for this. Will there be NO the taxpayer subsidization of private oil and gas exploration for the entire outer-continental shelf? Does McCain’s plan require all new production be used domestically? Does Obama categorically rule out expanding OCS exploration?

    The strongest argument against drilling is that it could distract the country from a pursuit of alternative sources of energy.

    I’d also like to think policy decisions are based on what we actually know, rather than on what we hope to be the case.

    steve (f628a7)

  19. The strongest argument against drilling is that it could distract the country from a pursuit of alternative sources of energy.

    If that is the strongest arguement against drilling, you should be embarassed.

    JD (75f5c3)

  20. I’m anything but embarrassed.

    The other arguments have merit. A comprehensive approach is beyond obvious..

    OPEC can still manipulate the price of oil far more effectively than we can. There will continue to be price-shocks, since the price of oil is set on the world market.

    steve (f628a7)

  21. OPEC can still manipulate the price of oil far more effectively than we can.

    Because they control so much of the supply. The more supply that we control, the more impact we have on OPEC’s ability to fix prices and production.

    Drill here, drill now, drill right through Nancy Pelosi’s swimming pool.

    Pablo (99243e)

  22. Will there be NO the taxpayer subsidization of private oil and gas exploration for the entire outer-continental shelf?

    On the contrary, they pay us to do it. That’s what those leases are all about.

    Pablo (99243e)

  23. steve,

    I’ve never argued against other forms of energy. In fact, I’ve already said I want a glut of energy from public and private sources.

    DRJ (8b9d41)

  24. The strongest argument against drilling is that it could distract the country from a pursuit of alternative sources of energy.

    If by “drilling” you mean opening up new places to drill, I tend to agree. The world’s energy needs are exploding, and trying to correct that by simply letting a bit more oil into the system does only postpone the inevitable need for alternative sources of transportation energy.

    The reason it’s important to give alternative energy sources a leg up is because the oil/gas driven vehicle industry is so established that any competition has massive barriers to entry.

    The past year, we’ve finally seen a huge rush to develop electric cars. There are several purportedly launching in the next couple of years — the Chevy Volt looks the most promising to me. I do worry that all that will be tossed aside if the price of gas drops too far.

    On one hand, I want the market to work; on the other hand, if we don’t get over the barriers to entry for electric cars now, then we’re back to one option — gas-powered cars. Which leaves us ripe for another oil bubble, where once again we have the promise of electric cars dangled in front of us, but not for a couple years. When will we finally get some true competition for the gas-driven vehicles?

    If we can get viable electric vehicles into the market, then next time the speculators get crazy over oil, the consumer will have a choice — switch to electric vehicles. That, in itself, will add stability to the oil market — because speculators won’t be rent-seeking over a world that is utterly dependant on one source of energy for transportation.

    Phil (6d9f2f)

  25. Phil – How are we going to generate all that electricity for the cars that used to run on gas? Electricity doesn’t generate itself.

    daleyrocks (d9ec17)

  26. Racists

    JD (75f5c3)

  27. Go breath some biodiesel JD.

    daleyrocks (d9ec17)

  28. We’re talking “politics”. Who said anything about “facts”?

    Obamabots and the Dem leadership couldn’t care less about facts – they are all about how they feel

    And isn’t it interesting that San Fran Nan has invested heavily in “alternative energy sources”, just as she refuses to allow anything that will cause prices to drop as drastically as her policies have caused them to rise? It’s almost like there was a conflict of interest, if it weren’t that Democrats don’t believe in those unless a Republican is involved.

    Drumwaster (5ccf59)

  29. It is interesting how the Left decries the large, after-tax profits posted by the Oil Majors, yet conveniently overlooks the even-larger amounts they pay in taxes, and in expoloration/R&D – and then they scream: Why aren’t they doing more to develope alternative energy streams?
    The Feds have been subsidizing alternative energy since the 70’s – why isn’t it commercially available?
    Because, even at $120/bbl oil, it isn’t economically feasable. The Dollars and Cents just don’t pencil out; which is why we have to subsidize the growing of corn for ethanol, restrict ethanol imports (which are cheaper than the home-grown/distilled variety), and impose usage quotas to create a market for the crap.
    Ethanol is for Drinking – Not Driving!

    Another Drew (3397e8)

  30. FEED PEOPLE NOT CARS!!!!!!

    daleyrocks (d9ec17)

  31. AD – If oil and tobacco went out of business, all levels of government would follow shortly thereafter.

    JD (75f5c3)

  32. JD…You present a cruel dilemma…
    Should we allow people to debase themselves with Demon Rum and Cancer Sticks; or,
    Should we cut the government’s nuts off?
    I know which way I would vote!

    Another Drew (3397e8)

  33. As to oil…
    If Big Oil was so bad for society, why haven’t the large Public Employee Pension Funds dumped all of their stock-holdings in oil?
    I guess it’s that silly fiduciary responsiblity to all of their worthless, little gov’t worker maggots thing.
    Gordon Gecko wins again!

    Another Drew (3397e8)

  34. How are we going to generate all that electricity for the cars that used to run on gas? Electricity doesn’t generate itself.

    For purposes of this discussion nuclear-generated electricity, water-generated, coal-generated, solar generated are all equally viable sources of energy. I’m not looking for electric cars because I’m a fanatical environmentalist; I want electric cars so that consumers have an alternative to pumping gas into their cars.

    Phil (6d9f2f)

  35. Phil, in case you just didn’t notice over the past 10+ years, electric cars have been available.
    Of course, they were sold at an extreme loss for the companies that actually put one someone would want to buy onto the streets (GM excepted, their’s were only leased on a non-purchase basis); the infrastructure for convenient re-charging away from home still doesn’t exist; the cost of battery-pack replacement is horrendous; there are tremendous recycling costs when utilyzing lead-acid batteries; there were some safety issues with batteries (acid damage in accidents, explosions from overheating with some of the more experimental batteries, etc.); and, probably a few other issues that I can’t think of at this time.
    Electric cars have existed since the advent of the automobile; and, even with the primitive infrastructure to support motoring prior to 1920, they were not as convenient, efficient, and cost-effective as ones powered by that noisy, stinky, infernal-combustion (sic) engine.

    Another Drew (3397e8)

  36. The world’s energy needs are exploding, and trying to correct that by simply letting a bit more oil into the system does only postpone the inevitable need for alternative sources of transportation energy.

    How? That’s like saying that putting gas in my car prevents me from riding my bicycle. One does not follow the other. All of the above is a perfectly rational energy plan.

    Pablo (99243e)

  37. “AD – If oil and tobacco went out of business, all levels of government would follow shortly thereafter.”

    JD – Don’t forget the fucking lotteries. Not on the same scale, but get rid of gambling too and the state and local governments are SOL. They’ve already written checks they can’t cash on retiree pension and medical benefits for their workers to keep labor peace.

    daleyrocks (d9ec17)

  38. Great- coal generated electricity..I thought the Greens were opposed because coal is dirty pollutant?
    Nuclear generated electricity? The Jane Fonda types oppose because they deem in dangerous, although France seems fine with it making most of their electric. Plus the green asshats/Nimbys sue endlessly…no new oil refineries since ’76.
    Liberals are full of kaka. Problem is people buy into the media-driven propaganda.
    Anyway I disagree that solar, wind, water, nuke are all equally viable.

    Needed gas badly and stopped at a Hess- see that its product contains ethanol and so bought 2 gallons. SCrew ethanol usage.

    madmax333 (0c6cfc)

  39. The past year, we’ve finally seen a huge rush to develop electric cars. There are several purportedly launching in the next couple of years — the Chevy Volt looks the most promising to me.

    I like the Tesla Roadster which now has it’s second production year model on the road. But the thing is, be they Teslas or Volts, it’s going to be the better part of a generation before we can hope to replace internal combustion vehicles with electrics. Those who can least afford sky high gas prices are also those who can least afford brand new cars. Also, I haven’t seen anyone working on an electric tractor trailer, so we’re going to need those for years too with oil prices impacting the price of every tangible product we buy.

    We need oil and will for some time. We should be doing all we can to change that, but we can’t fail to recognize that it isn’t going away soon.

    Pablo (99243e)

  40. Pablo – Have you seen any electric commercial fishing boats or electric container ships? Just askin’.

    daleyrocks (d9ec17)

  41. Nope. No electric passenger/cargo aircraft, either.

    Pablo (99243e)

  42. BTW, the Chevy Volt is not an “electric” car – it is a hybrid. It still uses gasoline! It will only go approx. 40-miles on battery power alone.

    Another Drew (3397e8)

  43. Indeed.

    I really, really like the Tesla. Fully electric, 220 mile range and 0-60 in 3.9 seconds. If anyone is looking for a Christmas present for me, there you go. And I’ll take my Mustang to the scrapyard for Gaia.

    Pablo (99243e)

  44. #13 Peter. Here’s something chew on about your Big 5 Oil co’s comment:

    “Compounding the problem, much of the world is off-limits to the traditional exploration and production model. The large national oil companies (NOCs), such as Saudi Aramco, Sonangol, Petroleos de Venezuela, Gazprom, Rosneft, etc., control the bulk of the world’s resources. About 85% of the world’s oil and gas reserves are controlled by NOCs. About 7% of the world’s hydrocarbon reserves are controlled by the Western companies.”

    So the traditional Big Oil outfits (Exxon Mobil, Shell, BP, Total, etc.) are scrambling hard to replace the reserves that get pumped out via normal production. Even in the places where the Western companies can operate, it’s no picnic.

    As regards the leasing arrangements in another comment above…from The Washington Post —

    “The five leases that have made up the Shell Perdido project off Galveston since 1996 are not classified as producing. Only when it starts pumping the equivalent of an estimated 130,000 barrels of oil per day at the end of the decade will it be deemed ‘active.’ Since 1996, Shell has paid rent on the leases; filed and had approved numerous reports with the MSS [Minerals Management Service], including an environmentally sensitive resource development plan and an oil spill recovery plan that is subject to unannounced practice runs by the MMS; drilled several wells to explore the area at a cost of hundreds of millions of dollars; and started constructing the necessary infrastructure to bring the oil to market.”

    allan (f42d3b)

  45. Pablo – I suppose we can transition to farm raising all the fish we need. Obama is planning to cut off foreign trade with everyone so that solves the container ship issue, although the job dislocation issue will be pretty messy. The airplanes I suppose can fly on pixie dust.

    Energy problem solved!

    daleyrocks (d9ec17)

  46. The Tesla is very cool. I wonder how long it’ll take them to design a more economic model based on the same technology?

    Phil (6d9f2f)

  47. Yeh, one that your average min.wage worker can afford to buy to replace the 20-yr old clunker he’s driving now.

    Another Drew (3397e8)

  48. Prolly around the same time that the technolgy becomes more economical.

    JD (5f0e11)

  49. AD – Good point. For the common good, we should subsidize purchases of hybrid vehicles for lower incomes. Or, kind of like the Home Depot thing yesterday, we should force businesses to sell electric/hybrid cars to people at lower prices. Problem solved.

    JD (5f0e11)

  50. Oh, so we’re pretending that Obama’s entire energy plan consists of asking Americans to inflate their tires to the proper level?

    Great premise!

    Next up: we discuss the pros and cons of Obama’s domestic policy – i.e. Hating America Incompetently.

    Leviticus (feabb4)

  51. There is nothing incompetent about how the Obamaistas hate Amerika!

    Another Drew (3397e8)

  52. Oh, so we’re pretending that Obama’s entire energy plan consists of asking Americans to inflate their tires to the proper level?

    Who said that, Leviticus?

    Pablo (99243e)

  53. The Tesla is very cool. I wonder how long it’ll take them to design a more economic model based on the same technology?

    They’re a small outfit, so their production capacity is limited. But with the right capitalization they could conceivably move into mass production and that ought to drop the price of the vehicle significantly. And from a budget standpoint, how much higher of a car payment could you afford if you didn’t have to pay for gas? If they were available for $50 – 60K, I’d go buy one tomorrow.

    Pablo (99243e)

  54. The Gulf of Mexico Energy Security Act of 2006 opened up 8.3 million OCS acres for oil and gas leasing. The first 2.5 million acres was to be made available in less than one year. The bill passed, 79-9.

    Presumably, we’ll soon hear of a drilling frenzy for the estimated 1.26 Billion Barrels of Oil and 5.8 Trillion Cubic Feet of Natural Gas.

    Isn’t taxpayer subsidization of private oil and gas exploration in the OCS is a policy we need to re-think?

    “The legislative package also includes several key tax provisions, including a two-year extension of the Gulf Opportunity (GO) Zone tax incentive that provides strong motivation to invest in the Gulf Coast.”

    steve (2a320f)

  55. Given that Formula One is beginning to experiment with Kinetic Energy Recovery Systems, they are being introduced into the sport next year, I imagine that hybrid technology five years from now will be at a level of sophistication (and low cost) unimaginable currently. I think there are some very exciting, market driven (BMW is one of the major forces behind the introduction of KERS), alternative energy/energy conservation technologies just around the corner.

    As for Bio-diesel…

    BIOFUEL IS PEOPLE!!!

    Christian Lindke (6f6601)

  56. Unfortunately, KERS has already caused more injuries than racing has this year.
    This technology works on railroads because their equipment has the mass to carry the equipment needed to dispell the immense heat build-up; or, in the case of electrified railways, they just pump the juice back up into the catenary.
    F-1 cars will find it very difficult to deal with the voltage that they will now be carrying around. I don’t look forward to pitstops where you have fuel-rigs pushing fuel, at the rate 12-litres/sec, into a car that is a rolling capacitor.

    Another Drew (3397e8)

  57. BIOFUEL IS PEOPLE!!!

    Soylent Green, anyone?

    Another Drew (3397e8)

  58. Isn’t taxpayer subsidization of private oil and gas exploration in the OCS is a policy we need to re-think?

    From your link:

    The Gulf Opportunity (GO) Zone tax incentive passed in 2005 allows businesses to take a 50% tax reduction for new facilities or equipment in areas impacted by Hurricanes Katrina and Rita. Current law requires that businesses put new facilities or equipment in place by the end of 2008, but the package will extend the benefit until 2010.

    Do you think that oil and gas companies should be excluded from that legislation that applies to all businesses that might invest in the Gulf Coast area impacted by Katrina? If so, why? Do you think that tax incentive is properly referred to as an oil and gas subsidy when it encompasses virtually every business that operates on the Gulf Coast?

    More on the GO Zone tax incentive here.

    Pablo (99243e)

  59. AD – That should make for some explosive pit stops.

    JD (75f5c3)

  60. JD @ #58…
    Yeh! And we already have way too many small fires during pit stops now due to malfunctions in the FIA-mandated equipment being used.
    If there were an explosion, you have upwards of 15-20 people at risk just in that one pit-box.
    It would not be fun.

    Another Drew (3397e8)

  61. steve @ 53 – None of the tax incentives listed at your link relate to oil and gas exploration. Did you intentionally mischaracterize your comment or are there some incentives buried somewhere else in the bill you did honestly intend to highlight instead?

    daleyrocks (d9ec17)

  62. AD – But it would make for good TV !

    I wish we still had the F1 here in Indy, but ever since that Michelin fiasco, I knew it was doomed. MotoGP should be entertaining in its place.

    JD (75f5c3)

  63. daleyrocks – That is the gleenwaldian school of linking.

    JD (75f5c3)

  64. Is there some indication the OCS Deepwater Royalty Relief Act, with resulting losses to the Treasury, stopped with the 2006 law?

    “Forgone royalties on deep water leases issued under the act from 1996 through 2000 could be as high as $80 billion.”

    The bill summary linked above does not itemize new tax incentives for drilling. I stand rebuked.

    steve (2a320f)

  65. Thanks steve. Royalty relief is also not the same thing as a tax incentive and is frequently dependent on the price of gas or oil.

    daleyrocks (d9ec17)

  66. Where is the scientific evidence that tire pressure has a significant effect on gas mileage? Did some one conduct experimental tests recording gas mileage under various tire pressure conditions? Various makes of automobiles, vans, SUVs and trucks? My guess is that the weight of the vehicle would cause a variance as well as the amount of air in the tires i.e. almost flat tires would have the worst mileage.

    czekmark (3682a3)

  67. Royalty relief is also not the same thing as a tax incentive and is frequently dependent on the price of gas or oil.

    Call it a general subsidy. What threshold price for gas or oil makes royalty forgiveness unwarranted?

    steve (6830b3)

  68. Ask Congress, it’s their decision.

    Another Drew (3397e8)

  69. “Call it a general subsidy.”

    Bullshit

    It involves no payment from the government like a subsidy. Terming it such is dishonest.

    daleyrocks (d9ec17)

  70. Dishonest?

    Forgiving 12% royalties from oil and gas lease-holders on its property constitutes a government subsidy. Unless its across-the-board.

    What threshold price for gas or oil makes royalty forgiveness unwarranted?

    steve (6830b3)

  71. Bullshit again.

    Call it a market based lease adjustment. That recognizes the commodity nature of the underlying product and creates a lease structure that recognizes that the producer has no control over the ultimate price. If the price gord up, there is more ability to pay. If the price goes down, there is less ability to pay. Calling it a subsidy is blatantly dishonest under these terms. Congressional democrats only seem to have oil companies in their sights when they are making fay profits, however, not when they are losing money. Why don’t you hear your leaders shouting about bailing out the oil companies when the price of oil is low steve?

    daleyrocks (d9ec17)

  72. fat profits

    daleyrocks (d9ec17)

  73. #66 – czekmark

    — That was very efficient of you to answer your own question as you were asking it.

    Icy Truth (824779)

  74. Call it a market based lease adjustment.

    It props up only one venture of exploration and recovery and hasn’t fluctuated in over a decade. How is that market-based?

    Subsidies, per se, aren’t a bad thing. France’s nuclear power wouldn’t be viable without subsidies. It should be demonstrated that royalty forgiveness increases Gulf production at today’s prices and technology.

    Houston-based drilling and finance firm Western Capital offers investors a dedicated web page on all the ‘Oil and Gas Tax Benefits’:

    The tax benefits generated by a direct participation in oil and/or natural gas are substantial. The immediate deduction of the intangible drilling costs or IDCs is very significant, and by taking this up front deduction, the risk capital is effectively subsidized by the government by reducing the participant’s federal, and possibly state income tax.

    steve (75a7e9)

  75. It props up only one venture of exploration and recovery and hasn’t fluctuated in over a decade. How is that market-based?

    What? Explain.

    Are you referring to specific programs or the concept of government oil and gas royalties in general, which is what I described?

    daleyrocks (d9ec17)

  76. “Houston-based drilling and finance firm Western Capital offers investors a dedicated web page on all the ‘Oil and Gas Tax Benefits’:”

    Congratulations on recognizing that taxes are indeed a cost to American businesses. You would find similar promotional material on a site offering investments in windfarms, geothermal power, and all manner of other partnership investments that businesses sometimes make available to individuals. Think about REITs that spread the risk of real estate investment to individuals from the institutional market.

    This shit should not be news to you.

    daleyrocks (d9ec17)

  77. That’s the real Democratic energy plan, coal-powered cars.

    Because that’s the only way we’ll see new electric generation capacity to run these silly electric cars that environmentalists are so fascinated by; by building more coal fired generation.

    If the environmentalists hadn’t killed nuclear in this country, there might be a viable alternative.

    SPQR (26be8b)

  78. If the environmentalists hadn’t killed nuclear in this country

    ‘Twasn’t “environmentalists”. It was that traitress (Traitoress? Traitrix?) Hanoi Jane and Jack Lemmon in a movie that overblew the dangers, literally just a few weeks before the essentially harmless* accident at Three Mile Island.

    * – yes, I said “essentially harmless”. There was a high amount of radiation released, but very little harmful radiation and the government reports have shown that there have been no unusual increases in incidences of cancer or other radiation-related ailments. (link)

    Detailed studies of the radiological consequences of the accident have been conducted by the NRC, the Environmental Protection Agency, the Department of Health, Education and Welfare (now Health and Human Services), the Department of Energy, and the State of Pennsylvania. Several independent studies have also been conducted. Estimates are that the average dose to about 2 million people in the area was only about 1 millirem. To put this into context, exposure from a full set of chest x-rays is about 6 millirem. Compared to the natural radioactive background dose of about 100-125 millirem per year for the area, the collective dose to the community from the accident was very small. The maximum dose to a person at the site boundary would have been less than 100 millirem.

    Drumwaster (5ccf59)

  79. The OCS Deepwater Royalty Relief Act (See #64, #67, #70) cannot be “a market-based lease adjustment” if leases are exempted from royalties, regardless of the prevailing market price of oil. Should producers benefit from royalty forgiveness even as oil prices hit record levels?

    This is a potential $60 billion that Americans stand to lose in royalty revenue over the life of these leases.

    steve (75a7e9)

  80. steve – Focus on the facts, not pie in the sky projections about future losses that ignore upfront payments for leases.

    From your GAO study page 7.

    “A second mechanism that can be used to limit royalty relief and safeguard against giving away all royalties is the price threshold. A price threshold is the price of oil or gas above which royalty relief no longer applies. Hence, royalty relief is allowed only so long as oil and gas prices remain below a certain specified price. At the time of the passage of DWRRA, oil and gas prices were low—West Texas Intermediate, a key benchmark for domestic oil, was about $18 per barrel, and the average U.S. wellhead price for natural gas was about $1.60 per million British thermal units.”

    “As with the application of royalty suspension volumes, problems arose with the application of these price thresholds. From 1996 through 2000—the five years after passage of DWRRA—MMS issued 3,401 leases under authority of the act. MMS included price thresholds in 2,370 leases issued in 1996, 1997, and 2000 but did not include price thresholds in 1,031 leases issued in 1998 and 1999.”

    “MMS also estimated that through 2006, about $1 billion had already been lost.”

    Trying to understand the issue more clearly would serve you better than just trying to demonize the oil industry.

    daleyrocks (d9ec17)

  81. And the 24 companies with 1,031 leases secured when royalty forgiveness had no price threshold will gladly pay back royalties voluntarily, turn the leases back and/or pay 12% royalties going forward?

    No.

    The proposition to grant royalty-free leases in perpetuity was boneheaded. Has nothing to do with “trying to demonize the oil industry.” No company should be awarded any new leases unless they renegotiate non-royalty leases.

    steve (75a7e9)

  82. Again, Steve, talk to Congress…
    It was their action (law) that allowed leases to be let under those conditions.
    Otherwise, it would be an invalid contract.
    But, of course, Congress would never think of abrogating a contract during its’ term, would it?

    Another Drew (c3bf7a)

  83. “Has nothing to do with “trying to demonize the oil industry.” ”

    steve – Please forgive my mistake in misinterpreting why you posted a solicitation from an oil and gas partnership syndicator, kept highlighting alternatively an $80 billion or $60 billion future cost to the U.S. Treasury when the actual cost to date is only $1 billion, insisted on dishonestly calling something a subsidy when no cash payment is involved like other subsidy programs like the farm subsidy programs, and your general lack of understanding of how business work.

    I don’t understand how I could have been so wrong. I apologize.

    daleyrocks (d9ec17)

  84. “MMS also estimated that through 2006, about $1 billion had already been lost.”

    The preceding paragraph:

    “In October, 2004, MMS estimated the cost of not including price thresholds on the 1998 and 1999 leases could be as high as $10 billion.”

    From the next paragraph:

    “MMS estimated in October 2004 that if price thresholds are disallowed for leases it issued in 1996, 1997 and 2000, an additonal $60 billion in royalty revenue could be lost.”

    All taken together (p.7):

    “Assessing the impact of royalty relief is an inherently complex task, involving uncertainty about future production and prices. In 2004, MMS preliminarily estimated that foregone royalties on deepwater leases issued under the act from 1996 thru 2000 could be as high as $80 billion dollars.”

    The government’s negotiating with little success and not from a position of strength.

    Any chance we deliberate the rationale for royalty forgiveness – with prices up 600% and vastly improved technology – rather than cherry-pick from the GAO study?

    Should companies be awarded any new OCS leases before they renegotiate non-royalty deepwater leases?

    steve (63f232)

  85. “Assessing the impact of royalty relief is an inherently complex task, involving uncertainty about future production and prices.”

    Absolutely. It also ignores the up front payments made by the companies made to acquire the leases.

    Look at the oil company profit margins. You brought the GAO study into the discussion, not me steve. It states the typical royalty rate varies between 12.5% and 16.5%, I believe. That’s for unrefined product, but if you assumed an entire company’s production came from these leases, steve, what would the impact of imposing a new royalty be on that entity’s profitability.

    Look at that and then answer your own question.

    daleyrocks (d9ec17)

  86. steve – It would save time if you want nationalize the oil industry or remove all incentive for the private sector to drill in these areas if you came right out and said so.

    daleyrocks (d9ec17)

  87. what would the impact of imposing a new royalty be on that entity’s profitability. Look at that and then answer your own question.

    Dunno. I’m required to answer some theoretical absurdity before hearing the rationale behind offering new OCS leases to companies that won’t renegotiate royalty-free ones?

    ¿Por qué?

    steve (75a7e9)


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