Windfall Profit Tax on Big Oil

[Imran Siddiqui]

Originally posted by Oerdin
Poor Dis just bought a V-8 powered car. He'll have to get a second job just to fill the tank up.

Not my fault he's an idiot .

[Dis]

Originally posted by Oerdin


Poor Dis just bought a V-8 powered car. He'll have to get a second job just to fill the tank up.

I get 6 more miles to a gallon than my truck.

[Dinner]

Originally posted by DanS

False.

Sure, China and India are driving some of this but let's face a few facts here. We're still the world's largest consumers and we could have massively decreased demand if we had wanted to. Hell, I recall reading we'd currently be consuming 10% less oil if we'd just maintained the average MPG we achieved in 1988. Toss on better building codes, more nuclear power plants (instead of fuel oil or NG plants), higher CAFE standards, and you can easily see our demand decreasing. We were on the virge of doing so in 1980 but then idiots derailed it.

[Imran Siddiqui]

You are going to have problems getting more nuke plants. First there is the NIMBY factor, and the successful efforts by groups like Greenpeace to portray nuclear energy as dangerous, and the high costs in start up.

[JohnT]

This is a complete bull**** idea. Why should retirees get punished because some politician wants to score an ignorant economic point?

[Dis]

speaking of nuke plants. time for an anniversary thread.

[Dinner]

You folks must hate California Prop 199 then. Personally, I haven't made up my mind because I not sure a single state can act on something like this along even if it is the nation's largest petroleum consumer. More then likely the refineries and corporate headquarters will just move to neighboring states to avoid the tax and that would be that. It would be much harder to move an entire company out of the nation though especially if Congress inacted an off shoring tax; I.E. move your corporate headquarters offshore and automatically get hit with a 90% tax on gross revenue. I bet you wouldn't find many companies willing to off shore to save money.

[Dinner]

Originally posted by Imran Siddiqui
You are going to have problems getting more nuke plants. First there is the NIMBY factor, and the successful efforts by groups like Greenpeace to portray nuclear energy as dangerous, and the high costs in start up.

I freely admit that Greenpeace is a bunch of anti-science luddites who should all be drug out into the street and shot.

[Dinner]

Originally posted by JohnT
This is a complete bull**** idea. Why should retirees get punished because some politician wants to score an ignorant economic point?

Why Mr T what a stunning refutation you have made. I'm so happy you have addressed the exemptions included which would allow oil companies to completely avoid this tax if they invest in increasing production.

[Flubber]

ok

a windfall profits tax?? In fairness you would have to define a "windfall" and any such tax should apply to all industries-- I have never seen any reason why oil should be singled out for special taxes

Oh and oh wise ones . . . the reason that more money is NOT being spent on exploration and production is that most companies are constrained NOT by available capital but available skilled personnel and equipment. An offshore drill rig is incredibly hard to get for instance. Industry has reacted to try to increase production but frankly there isn't a lot of easy oil sitting around waiting to be produced.

But don't let these facts get in the way of your theories

[Dinner]

Originally posted by Flubber

a windfall profits tax?? In fairness you would have to define a "windfall" and any such tax should apply to all industries-- I have never seen any reason why oil should be singled out for special taxes

The claim being made is that the oil industry has recently been consolidated down to an uncompetitive oligopoly which has driven prices up. Since the President refuses to enforce current anti-trust laws against such anti-consumer actions the Congress must take action to discourage price gouging and increased competition in the industry since it is vital to the economy.

The fact remains that companies can entirely avoid this tax by increasing production related expenditures or by increasing wages to employees. I dare say that higher wages will attract more works to geology or to pipe fitting or what ever else field is needed.

[Flubber]

Originally posted by Oerdin

especially if Congress inacted an off shoring tax; I.E. move your corporate headquarters offshore and automatically get hit with a 90% tax on gross revenue. I bet you wouldn't find many companies willing to off shore to save money.

The global nature of these companies causes you another issue. US production is significant but not the major area of production for most large oil companies. On what basis do you assess US taxes if they choose to operate major assets through their Canadian or Russian or Angolan branches? To assume or worse attempt to force US HQ/taxation is paternalistic-- I understand your goal in preventing "offshoring" but how do asses the validity of a jurisdictional choice.

The tax guys would turn things in knots and I'm betting that the reality of your ideas would be that quite soon there would be a lot of oil production out there with no discernable link to ANY US company.

Several Canadian oil companies sell product to the US but they could just as easily sell it elsewhere if doing business in the US would expose them to expropriation-level taxation

[Flubber]

Originally posted by Oerdin


The claim being made is that the oil industry has recently been consolidated down to an uncompetitive oligopoly which has driven prices up. .

I do not necessarily accept this premise. There remain dozens of large oil companies and hundreds of small ones. PLus I doubt that any amount of consolidation in the US would change the fact that national oil companies in the Mideast control a lot of production.

Originally posted by Oerdin


Since the President refuses to enforce current anti-trust laws against such anti-consumer actions the Congress must take action to discourage price gouging and increased competition in the industry since it is vital to the economy.

.

Well I have attended "partner meetings" for projects and the majors will not and do not share their long term price projections, their risking methodology, their required rate of return or their cost of capital.They are very conscious and jealous of their methods and work their ass off to try to get an advantage over one another.

When you use loaded terms like "price-gouging" do you mean oil or are you referring to gasoline which is a very very different market.

Originally posted by Oerdin




The fact remains that companies can entirely avoid this tax by increasing production related expenditures or by increasing wages to employees. I dare say that higher wages will attract more works to geology or to pipe fitting or what ever else field is needed.

Production expenditures are up but frankly as I explained before you can only increase so much given available resources. My undestanding is that almost every part of the industry is going pretty flat out even back to the folks that are building new exploration rigs.

As for higher wages, the oil industry is already known as a high wage environment. There is no problem attracting people that want in. The problem is that big projects need experienced and highly competent people. When a project I was working got stalled it took only days for projects worldwide to be making offers to the people and most were redeployed in days. Higher wages today will not attract the people needed since put bluntly they are all pretty much working for the oil industry already.

Last objection . . . raising wages broadly means that any given project is more expensive to do-- Therefore even more revenue is needed to even break-even . Requiring more revenue means HIGH prices unless you know another way to generate revenue from oil

[JohnT]

Originally posted by Oerdin


Why Mr T what a stunning refutation you have made. I'm so happy you have addressed the exemptions included which would allow oil companies to completely avoid this tax if they invest in increasing production.

Why do I have to spend time refuting ignorance? But what the hell.

I own 1,000 shares of XOM stock as do many people, including (especially) retirees, either as the stock or part of a larger fund offering. The stock pays a $1.28/year dividend. That's ~$1,000 after tax.

Reduce the profit, you reduce the dividend and/or reduce the companies effectiveness to be around for future generations.

If the idea is to "save" for retirement, please stop taxing my damned corporate profits at arbitrary levels, stop wanting to raise my capital gains tax (hell, it should be eliminated for the first $50k of capital gains), stop making it harder and less profitable for me to save.

Thank you.

[notyoueither]

Originally posted by Oerdin
(or maybe the people electing politicians were the lazy and stupid ones)

Now you're on to something.