Thursday, March 05, 2009

 
Reuters - U.S. oil and natural gas producing companies should not receive federal subsidies in the form of tax breaks because their businesses contribute to global warming, U.S. Treasury Secretary Timothy Geithner told Congress on Wednesday.
...
The Obama administration's budget would levy an excise tax on oil and natural gas produced in the Gulf of Mexico, raising $5.3 billion in revenue from 2011 to 2019.

This new 13 percent tax on all oil and gas production in the Gulf would only affect those companies enjoying a loophole that allows them to avoid paying royalties on the energy supplies they drill. Companies already paying royalties would get a tax credit.

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posted by oyster @ 11:24 AM
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9 Comments:

And those tax increases are passed on to who you ask? Why you and me of course, the consumers.

By Anonymous el stevo, at 11:29 AM  

Right. We should subsidize Big Oil so that they can pass the "savings" on to us.

By Blogger oyster, at 11:42 AM  

Right, stevo....because the companies who are enjoying the loophole and are NOT currently paying royalties are now selling their products for so much less than those that are NOT enjoying the loophole and ARE paying the royalties.

By Anonymous Puddinhead, at 11:57 AM  

Stevo, I'd like to see you reconcile your comment with your conniption fit over an earlier comment that I made about renters paying property taxes.

By Blogger bayoustjohndavid, at 11:59 AM  

I didn't argue for subsidizing anybody. I understand your point, doesn't change mine. Thats how business works. Then again, what do I know, I'm just and oil and gas attorney.

By Anonymous el stevo, at 12:01 PM  

It's interesting...Do you guys think-for a nanosecond-that they aren't just going to stack the rigs and wait it out? They'll sit on the sidelines, and not just because oil's trading for $40/bbl right now, either.

The oil they extract will get squeezed on both ends, as not only will they make less money on the profit side when they sell it post-extraction, but the already smaller margin in terms of profit will be eaten still further by an increased tax burden.

I know guys in O&G...and I speak with folks in the industry that I don't know all that well, on a daily basis. The work is drying up, the only work that's plentiful and easy to obtain in the Gulf right now is mooring/towing operations, which are simply moving portable rigs back to Houston & Louisiana.

Once the rigs get moved in, that work will dry up, too...

It's just like Capital Gains taxes. They know the oil is there. Why pull it out of the ground and take the hit on your profit margin when you can take your jacks, go home, and work for more money later?

The only guys who get hurt in this are the end consumer, & the employees of the O&G & offshore industry, with ripple effects, of course.

They're estimating the money they'll make off oil extraction rates that don't exist today, and will be a laughable dream tomorrow.

You guys can talk about "fairness" and scoff all you like...But, the "reality" of President Obama's changes will come home to roost in that industry, quite soon.

By Blogger GO, at 12:32 PM  

Cue Senator Landrieu's outraged response....

By Blogger jeffrey, at 12:51 PM  

How much do we get?

By Blogger mominem, at 1:10 PM  

Here you go.

http://www.neworleanscitybusiness.com/UpToTheMinute.cfm?recID=23461

Guess they'll just get Mary to sign the petition.

By Blogger jeffrey, at 3:30 PM