Bureaucrats gone wild

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20120223-084836.jpgWith gas prices reaching historic seasonal highs, Americans are asking themselves what’s going on. What’s going on is plenty, and all of it in the wrong direction under the Obama Administration.

One wrong-headed move follows another with this president, and listing them would take days. Drilling bans, ridiculous regulatory burdens, locked up lands, and halting the Keystone Pipeline come quickly to mind, but there is more. Two moves currently underway underscore the problem. The first is the “Menendez Amendment” that may be introduced as part of the coming highway bill in the Senate. It is yet another run at taking away “loopholes” from American oil companies – “Loopholes” that are available to every other type of American company for ordinary manufacturing tax credits and to avoid double taxation when foreign taxes on some profits have already been paid. So Senator Menendez – at the STate of the Union urging of the President – wants to single out U.S. companies for “special” treatment.

(Of note: Orrin Hatch voted for a similar tax hike back in December of 2007. Bob Bennett’s no vote was the margin by which it was defeated…)

Meanwhile, foreign oil producers like BP and Shell, and the national companies from Venezuela and Iran, get yet another competitive advantage. 

What happens if we raise taxes on oil and gas producers? Well, you think four bucks a gallon is bad…

But even that is not enough for this administration. Now the SEC is looking to force those same U.S. oil producers (as a little known part of Dodd/Frank, naturally) to disclose sensitive competitive information about monies paid to foreign governments to the whole world – including those same foreign companies against which American producers compete! U.S. companies that are publicly traded would have to account publicly for every payment down to the level of individual well leases. No one is opposing transparency here, but to have an American bureaucracy impose this kind of regulation ONLY on publicly-traded, AMERICAN companies is yet another example of the wrong move at the wrong time. Disclose total payments to particular countries? No problem. To give away the store to Venezuela and Iran? That’s a problem. 

Do the Obama-ites even realize who the really Big Players in the world oil market really are? You don’t get to companies like Exxon-Mobil till you’re way out of the Top Ten. To force U.S. producers to open their books to all their foreign competitors more than wrong-headed, it is insane.

It is just one more example of “Bureaucrats Gone Wild” under this administration – and one more explanation of four-dollar gas. If the Obama Administration gets its way on Menendez and Dodd/Frank disclosure, five bucks is just down the road.

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23 Responses to “Bureaucrats gone wild”

  1. Drew Gilliland Says:

    High gas prices are always problematic because all prices will increase as the costs of transportation goes up. I can regulate to a certain degree how much gas I will use, but I cannot regulate the amount of food I need to feed my family. When the price of food goes up (and it will with higher gas prices), you really start to squeeze those (including myself) on tight budgets.

  2. Ronald D. Hunt Says:

    “halting the Keystone Pipeline come quickly to mind”

    I don’t get the fixation on the Keystone XL pipeline, its a bad deal. The pipeline would go over soft soils(a giant no no for pipelines FYI), these soft soils are directly over a huge underground reservoir that a multi billion dollar farm industry depends on, the republicans in the states it goes through are against it, The specious claim of 15,000-20,000 jobs is of total jobs most of which are in Canada not the united states we would get around 1,500 likely less, they want an exception from liability from spills as part of there application(liability which could be huge over the soft soils that are very permeable to the ground water below).

    Also it takes years for many of these oil assets to go into production, and if you add the entirety of oil assets that are not in production either now or in the mid term future(15years), or that could be accessible under any conditions, minus the assets that are unreachable outside of extreme price increases in the market(Utah’s tar sands) the total difference on US demand would be between 1% and 3% in the year 2020.

    We can’t solve our Oil problem with more Oil anymore then a drug addict can solve their problem with more of their drug of choice.

    With the increasing demand from China for oil, there geographic closeness to many of the producers, Many producers themselves being dictator regimes. It just isn’t in our National security interest to be so dependent on oil from any source.

    “What happens if we raise taxes on oil and gas producers? Well, you think four bucks a gallon is bad…”

    The taxes won’t effect pump prices more then a few tenths of a percent.

    At $4 a gallon for gas(assuming $100 or per barrel), it costs $8,000 per crate shipping container to ship stuff from China, Push the price higher and more manufactured goods will be made in the United States again. So high prices are not completely a bad thing on the market either.

    Of course time will push it well past this in the next 10 20 30 years no matter what policy on oil exploration we take, It’s going to happen, even if you drill in every last possible place in the entirety of the United States, the Oceans, Antarctica, Mars, The moon, and any pretend places you can think of.

    The demand growth curve on this market is exponential on a 20-25 year doubling time. During each doubling period we will use more oil then had been used in the entirety of history before that doubling period. And let me tell you that is sooo, Sustenable.

    “Do the Obama-ites even realize who the really Big Players in the world oil market really are?”

    Nationalized State own corporations, I suppose to be competitive we should nationalize our own oil companies then?

    “Now the SEC is looking to force those same U.S. oil producers (as a little known part of Dodd/Frank, naturally) to disclose sensitive competitive information about monies paid to foreign governments to the whole world – including those same foreign companies against which American producers compete!”

    Actually 2 provisions, one relates to American companies paying bribes to foreign governments, and the other relates to transfer pricing as it relates to defrauding investors of dividends.

  3. jbt Says:

    What are being called “loopholes” in this article are in fact government subsidies to big oil companies such as Exxon Mobile who have been raking in billions in record profits. In other words, U.S. taxpayers are subsidizing large oil producers putting millions of dollars in the pockets of big shareholders and corporate executives. There are needs in the U.S. far more urgent than lining the pockets of those who are already wealthy where those tax dollars could be better spent. Hiring workers to repair crumbling infrastructure, and addressing social problems to name just a few.

    During the first three years of the Obama administration the number of oil rigs in U.S. oil fields has more than quadrupled. More oil is being produced now than during the last four years of the Bush administration.

    The price of oil is determined by forces in the world market. To blame President Obama’s policies for the high price of gas at the pumps is nonsense. To do so reflects a desperate political party grasping at straws to deflect attention away from their embarrassingly lame field of presidential candidates.

  4. Ronald D. Hunt Says:

    Wow, TransCanada sure knows how to burn bridges,…

    http://www.nytimes.com/2011/10/18/us/transcanada-in-eminent-domain-fight-over-pipeline.html?_r=2

    Unbelievable, a Private company thinks it has the power of eminent domain and can just go around seizing private property. Eminent domain certainly a necessary legal construct, but it should never be in the hands of a privately own company.

    And it sounds like their behavior might actually be legal in Texas, just wow. It most certainly isn’t in the other States where they are attempting it.

    How can conservatives possibly justify defending this disgusting abuse?

  5. Mark Steele Says:

    I’ve heard this defense of oil companies from fellow Republicans for years. And each time, it seems Exxon goes out and has another quarter with record profits. I get it that exploration and development costs serious money, but what part of ‘record profits’ do you not understand?

    I know that we don’t need to tax everyone extra that’s succeeding, but companies like Exxon (record profits) are not on the edge of extinction, as you imply…

  6. Pops Says:

    Well, Obama did promise skyrocketing energy prices – he’s simply getting a bit of help in delivering on that promise.

    What will be the net effect of higher taxes and more regulations on domestic oil companies? Will there be an economic upturn? No, the opposite. Will energy prices go down? No, they’ll go up. Will employment go up? No, it will go down. Will more dollars stay in the United States? No, foreign companies will have the advantage. Will my Exxon stock produce a better ROI? No, it will lose money.

    But perhaps it will convince the American people that Barack Obama and his allies don’t understand the first thing about economics and they will then fire the whole lot of them.

  7. Ronald D. Hunt Says:

    The $18 billion dollars related to this tax credit being repealed would have almost no appreciable effect on the ROI of this multi-thousand billion dollar industry. Nor would this appreciably have any effect on pump prices.

    You want cheaper gas, place position limits on the futures market(a regulation Obama has the authority to implement under Dodd Frank but hasn’t), Nationalize the US oil industry and air mark ALL US produced oil for sell in the US market directly to pumping Stations at cost, Greatly expand mass transit systems in the USA to reduce demand, Greatly expand HSR rail nation wide to slow growth in air travel(actually we are running out of runway space anyway so this policy is needed either way) this would greatly lower growth in fuel use, Start a government lease program for electric car batteries that obtain a minimum of a 300 mile range to lower the price of electric vehicles further reducing demand for oil(and by extension price of oil).

    We can’t solve our problem with more drilling, or by handing extremely profitable well established industries more free money.

  8. Pops Says:

    Nationalize the US oil industry…

    Sorry, Godwin’s law prevents me from going there.

    …we are running out of runway space…

    What planet do you live on?

    Start a government lease program for electric car batteries that obtain a minimum of a 300 mile range to lower the price of electric vehicles…

    Faux logic there. It might lower the price, but not the cost. You can’t mandate technology.

    We can’t solve our problem with more drilling…

    Of course not. We need refineries, too. And nuclear power plants.

    We can’t solve our problem … by handing extremely profitable well established industries more free money.

    Right. We have to drive them into the ditch first, then give them free money to rescue them. Politicians thrive on crisis.

  9. Ronald D. Hunt Says:

    “Nationalize the US oil industry…

    Sorry, Godwin’s law prevents me from going there.”

    You want cheap oil or not? A huge part of the price of oil is all of the middle men, not just the people who find, extract, ship, and refine the stuff but also all of the futures market steps between each stage of production. Getting the futures market out of US produced oil would drop the price of a gallon by a $1.20, Nationalizing the oil companies and selling directly to gas stations would drop the price another $0.70 to $1.00.

    “What planet do you live on?”

    Earth, our runways are already over capacity during parts of the year and its a serious safety problem that hasn’t yet been addressed.

    This of course is a bigger problem for places like New York or California then it is a problem for Utah. Here we obviously have plenty of airspace in which an airport could use for planes waiting in line to land that is far enough from existing airports to not cause problems.

    “Faux logic there. It might lower the price, but not the cost. You can’t mandate technology.”

    No need for a mandate, customers if they had a long enough range vehicle would often choose electricity over gas, the “fuel” is vastly cheaper, electric motors have more torque providing a very nice feeling ride.

    Their are other reasons to promote this as well, during peak hours parked vehicles can have a reserve area in the battery feed back to the grid reducing the need for peak hour capacity which is often CNG power plants this would free up CNG for vehicles(which should be the target fuel for large and commercial vehicles when possible).

    And anything that reduces oil usage serves a positive national security position.

    “Right. We have to drive them into the ditch first, then give them free money to rescue them. Politicians thrive on crisis.”

    Ending one tax carve out isn’t driving anyone into the ditch.

  10. Pops Says:

    You want cheap oil or not?

    You want cheap anything or not? Nationalize everything. A huge part of the price of anything is the middle men. You’ll find out it doesn’t work the way you wish, but by then it will be too late to go back.

    No need for a mandate, customers if they had a long enough range vehicle would often choose electricity over gas…

    See the “if” in your statement? That’s where the technology mandate comes in. Or magic.

    Ending one tax carve out isn’t driving anyone into the ditch.

    Not sure if you read Holly’s post:

    It is yet another run at taking away “loopholes” from American oil companies – “Loopholes” that are available to every other type of American company for ordinary manufacturing tax credits and to avoid double taxation when foreign taxes on some profits have already been paid.

  11. Ronald D. Hunt Says:

    “You want cheap anything or not? Nationalize everything. A huge part of the price of anything is the middle men. You’ll find out it doesn’t work the way you wish, but by then it will be too late to go back.”

    Hardly, Nationalize resource extraction industries has been a huge success from many many Nations, Norway for example has the burdensome “problem” of figuring out how to invest their National sovereign wealth fund obtained through their nationalized oil company. Their are plenty of other examples as well.

    “See the “if” in your statement? That’s where the technology mandate comes in. Or magic.”

    Again no need to mandate anything, the technology already exists(LIFEPO4 batteries), its just a matter of giving industry the means to spread the initial cost of the battery out over the life of the battery in a uniform manner. We don’t need to require anything to do this. Very simply providing a government program to lease batteries over a 10 to 15 year period that meet a minimum size to qualify for the program. No one is force to use the program and in reality the up front cost of the program is paid for by long term revenue(Israel is running a similar program through Nissan in their Nation, Holland is looking to set up something similar as well).

    “Not sure if you read Holly’s post:”

    I did, I don’t much like the transfer pricing tax scam every industry runs these days. I will take just repealing the oil industries loophole but I would be fine with repealing the loophole for everyone. Why ever should our government take less money in just because a foreign government opted to take more? This just leads to out sourcing, and movement of US capital to foreign shores without any return for the loss.

    Why should I have to subsidize Wong Dee.. Err John Deer and have my tax dollars pay for them moving their factories to China? We get nothing out of this exchange for us its a Lose Lose Lose situation.

    Also not the entire $18 billion or so in the targeted loophole is for foreign profits, around $4.6 billion is for subsidizing of domestic drilling operations.

  12. Pops Says:

    Nationalize resource extraction industries has been a huge success from many many Nations…

    What we have works better, but only if environmentalists don’t prevent extraction from occurring. They must be on the government payroll or something.

    Very simply providing a government program [re leasing batteries]…

    If it’s economically viable, there’s no need for a government program. Arguments of your kind are based on wishful thinking and never pan out in the real world. Look at the booming (NOT) green energy industry.

    Why ever should our government take less money in just because a foreign government opted to take more? This just leads to out sourcing…

    Sorry, you have that backwards. Double taxation makes a company less competitive. If the only way to avoid it is to go offshore, then offshore it will be. The goal ought to be to create an economic environment that favors business rather than punishing business. Where do you think jobs come from – the tooth fairy? Oh, right, they come from Obama…(NOT)

    …have my tax dollars pay for them moving their factories to China? We get nothing out of this exchange for us its a Lose Lose Lose situation.

    Actually, that would be Win Lose Win – John Deere wins and China wins. It’s the American worker who loses. So let’s tax them more, because that will convince them to keep jobs here. NOT!

    …around $4.6 billion is for subsidizing of domestic drilling operations…

    So, which is more expensive: paying for all of the drilling operations, or subsidizing a portion of it? You strain at a gnat and propose that we swallow a camel instead.

  13. Paul Dayton Says:

    Domestic energy production is at an all time high. The reason gas prices are high is that the economy is improving, and that we now have a very large global market for oil.

  14. Ronald D. Hunt Says:

    “What we have works better,”

    I disagree, I submit the success of Norway as evidence. Or hell nearly any of the European nations that have nationalized resource extraction industries.

    “If it’s economically viable, there’s no need for a government program. Arguments of your kind are based on wishful thinking and never pan out in the real world.”

    Every industry has had some point of being at a beginning. And one could ask the same question of the Hundreds of billions of dollars that have been used to subsidize oil over the years, why does oil need a “government” program. It makes much more sense to subsidize all avenues of energy production, even if we end the $18 billion dollars in tax benefits to the oil companies we still subsidize them in the form of their low cost access to federal lands, all of the super fund sites left by defunked companies that have to be cleaned up on the public dime, etc.

    “Double taxation makes a company less competitive. If the only way to avoid it is to go offshore, then offshore it will be.”

    No the way this tax is setup encourages companies to off shore, all it does is feed the transfer pricing tax scam. We need to end this tax break, move to a territorial tax system for foreign profits and lower the overall rate for all corps in the US rather then giving so much benefit to multinationals.

    “Actually, that would be Win Lose Win – John Deere wins and China wins. It’s the American worker who loses. So let’s tax them more, because that will convince them to keep jobs here. NOT!”

    In your magic objectivist universe maybe, but here in reality its much more slighted then that. Wong Deer pays a 45% tariff to ship tractors from the US to China, but will pay a 0% tariff to ship tractors from China to the US.

    Then you add on top the ability to overwrite the cost for foreign made goods to take advantage of the taxed foreign profits tax deduction(likely by moving the money through Ireland) and we have a tilted system where a Communist country gains(lose), the America government loses revenue(lose), and the American worker loses their jobs(lose).

    “So, which is more expensive: paying for all of the drilling operations, or subsidizing a portion of it? You strain at a gnat and propose that we swallow a camel instead.”

    Under a nationalized system, the government would pay for drilling out of revenue from drilling =p.

    “Domestic energy production is at an all time high. The reason gas prices are high is that the economy is improving, and that we now have a very large global market for oil.”

    It is worse then that, the developing markets of India and China demand for oil is exploding, our usage is still down even as the market improves as our production is way up, the new markets are pushing prices up at an incredible rate.

    To tell the truth tho I for one look forward to $10-$20 a gallon gas, the cost of shipping containers from China will vastly outweigh the slave labor and tax scam advantages and move manufacturing back here, we have the tech to implement an electric car grid any time we like, vehicles is the one area where we still have a strong manufacturer base.

    Anything we can do to improve the readyness for this eventuality the better, we can even spread the problems of oil out a little bit with smart policy on both further development, and deployment of alternative technologies.

  15. Pops Says:

    America became the greatest economic power in the history of the planet through free markets. Let’s change that, by all means.

  16. Ronald D. Hunt Says:

    Transcontinental railroad, NASA, The interstate highway system, the Internet, rural electrification, universal telephone service, Satellites, computers, ports, air ports, The first successful cross ocean telegraph cable, Alaska railway, the Manhattan project/nuclear industry, the vast majority of our knowledge about particle physics, etc.

    Free markets are but a component in a much larger scale of coming and goings. All above where paid for on the government dime or started out as a government project. There are simply things that the free market does poorly.

  17. Pops Says:

    Well, duh. The problem is figuring out where to draw the line between government authority and free markets, isn’t it? That’s where you consistently get it wrong, and then drag out these examples to justify it as if conservatives and classical liberals favored no government at all.

  18. Pops Says:

    Ron,

    It occurs to me that your education – or lack thereof – has left you devoid of understanding of the principles upon which legitimate government is founded, thus leaving you to consider every question of government action on the basis of expediency rather than principle. If you might wish to embark on a course of discovering said principles, there are those who would gladly facilitate that effort, myself included. Lacking that, however, continued endless discussions of the expediency of this government policy or that are nothing more than a meaningless exercise in contention, so you will forgive me if I no longer desire to indulge you in that vein.

  19. Ronald D. Hunt Says:

    “basis of expediency”

    The basic skill of observation is a powerful one. Several oil companies own super tankers not for the purpose of transporting oil but for the purpose of buying oil to keep it off the market to push prices up.

    In fact withholding production from the market to push prices up is getting more and more common. To the point that its endangering the US markets stability.

    And the growth of market speculators is making things worse as well. over 80% of those who participate in the oil futures are those who can’t actually take delivery of oil.

    And beyond that their is further indications of manipulation in the market from early in the recession where worldwide demand was down yet prices where still going up rapidly.

    This doesn’t even touch the joke for returns we make off of land use these days from resource extraction. The industries disregard for human life.

    To say nothing of all of the extra legal protections and power enjoyed by the legal construct under which their businesses exist. In many states they wield the power of eminent domain, if they commit murder the worst thing they have to face is a fine and paying the family if the murdered a few pittance.

    By all means insult me all you like, But I am not sure you should be using the word “principal” to reference the market in relation to US oil companies.

  20. ERIC in Murray Says:

    Hey HUNT: you got schooled by your pops. Now listen to your older wiser citizens and just move to norway since you like it so much.
    Cant wait to remove the cancer in our government and rid the rodents in 1600 PA Ave! ABO&OMG 2012

    bye bye bob – 2010
    bye bye orrin – 2012

  21. Ronald D. Hunt Says:

    Well we already all knew the results in Utah right?, of course the republicans will win the senate seat, and Orrin I would think is likely cooked by someone else(likely Dan but who knows until after the primary).

    And I will point out, you shouldn’t count your chickens before they have hatched Republican primary turnout is lower this year then it was in 2008 and 2000. Dips in turnout being larger in States where republicans hold the governorships.

    But I guess what I really don’t understand about your post is why you would suggest I move to another Nation as opposed to confronting the problems in our own Nation.

    But given the suggestion I will though it right back at you, Why don’t you move to Somalia?

  22. Pops Says:

    But I am not sure you should be using the word “principal”…

    Well okay, I won’t, since it’s the wrong word.

    By all means let’s turn oil production over to the federal government so we can get more results like Solyndra, Evergreen Solar, Beacon Power, SpectraWatt, Amonix, Fisker, Abound Solar, SunPower, First Solar, Babcock & Brown, Ener1, Nevada Geothermal, Eastern Energy, Mountain Plaza, etc.

    Personally, I’d rather leave it in the hands of private companies, where there is at least some chance of holding them accountable. They at least have to balance their books.

    Perhaps one of the reasons we don’t graduate as many native engineers is because of the effect of “self-esteem” curricula in our public schools – you know, the awarding of stars, good grades, and trophies to whomever happens to show up. The result is that instead of producing people who understand fundamental laws of nature (including human nature) and can apply them correctly for our benefit, our schools today produce people who think any idea is as good as any other, excepting of course one’s own ideas which are naturally superior to the ideas of others. Arrogant ignorance is what I call it.

  23. historic oil prices Says:

    historic oil prices…

    [...]Bureaucrats gone wild « Holly On The Hill[...]…

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