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Thread: House Democrats target Big Oil with higher Fees & Taxes

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    House Democrats target Big Oil with higher Fees & Taxes

    [QUOTE]House Democrats target Big Oil with higher fees, taxes
    POSTED: 1:11 p.m. EST, January 18, 2007

    From CNN.com

    WASHINGTON (AP) -- Newly empowered House Democrats sought to recoup billions of dollars in lost royalties from offshore drilling as they anticipated approval Thursday of a $15 billion package of fees, taxes and royalties on oil and gas companies. The money would be used to promote renewable fuels.

    The House took up the energy bill as the final one of a string of high-priority issues that Speaker Nancy Pelosi vowed to address in the first 100 hours of Democratic control of Congress. She has characterized the energy measures as key to reducing government subsidies for the oil industry.

    The bill is largely aimed at recovering an estimated $10 billion that stands to be lost to the government because of an error in deep-water drilling leases for the Gulf of Mexico issued in the late 1990s. Congressional auditors and the Interior Department's inspector general have said the mistake was ignored for six years by the Minerals Management Service, which oversees the leasing program. (Interactive: View the other measures on the House Democrat's '100 hour' agenda)

    As the House began debate on the energy measure, Interior Inspector General Earl Devaney told a Senate hearing Thursday that the minerals bureau showed "a shockingly cavalier management approach" in dealing with the leasing error, although the problem was known within the agency as early as 2000.

    It's "a jaw-dropping example of bureaucratic bungling," he told the Senate Energy and Natural Resources Committee.

    The White House on Wednesday expressed support for some of the tax and royalty proposals but said other provisions unfairly single out the oil industry or jeopardize domestic oil and gas production.

    The legislation would impose a "conservation fee" on oil and gas taken from deep waters of the Gulf of Mexico, scrap nearly $6 billion worth of oil industry tax breaks enacted by Congress in recent years and seek to recoup royalties lost to the government because of an Interior Department error in leases issued in the late 1990s.

    Democratic leaders estimate the measure would generate an additional $15 billion in revenue. Almost all of that money would be funneled into a research and development fund for renewable fuels such as solar and wind power, alternative fuels including ethanol and bio-diesel, and conservation incentives.

    Bill's prospects in the Senate uncertain
    The legislation was expected to move through the House with broad support from Democrats and moderate Republicans. Its prospects in the Senate were uncertain, given the Democrats' narrow majority there and sharp opposition from some Republicans as well as the White House.

    Sen. Maria Cantwell, D-Washington, said Wednesday she doubts the Senate would accept the package as written. She suggested the Senate might want broader legislation to fix what she characterized as an oil and gas royalty program "riddled with blatant mismanagement."

    While President Bush supports a rollback of some of the royalty breaks for deep-water drilling contained in the House bill, the White House said Wednesday it strongly opposes the new production fees and a provision that would bar oil companies from future lease sales unless they renegotiate and pay royalties under the flawed 1998-99 leases.

    Those measures could embroil the government's offshore oil and gas leasing program in protracted litigation, delay future lease sales and disrupt energy supplies, said the White House.

    "We must be mindful of potential unintended consequences. Litigation could take years to resolve," Interior Assistant Secretary C. Stephen Allred told the Senate hearing. He said a three-year delay in leases would cut domestic oil production by 1.6 billion barrels and cost the government $13 billion in lost royalties over 10 years.

    The 1998-99 leases did not include a provision that would trigger royalty payments once market prices reached a certain level far below today's prices. The mistake so far has cost the government nearly $1 billion in lost royalties with the losses potentially growing to $10 billion over 25 years, according to Congress' Government Accountability Office.

    The House bill also would prohibit the oil and gas industry from taking advantage of a 2004 tax break that was aimed at helping U.S. manufacturers compete against imports. That provision was never intended for highly profitable large oil companies, but it has saved them $700 million a year, maintains Rep. Jim McDermott, D-Washington.

    The White House opposed that provision as an attempt "to single out this industry from others for punitive tax treatment."

    The oil industry has been lobbying hard to try to block the tax and royalty provisions -- if not in the House, perhaps in the Senate.

    Repeal of royalty relief and rollback of the tax breaks "will discourage new domestic oil and gas production and refinery capacity, threaten American jobs and make it less economical to produce domestic energy resources," Red Cavaney, president of the American Petroleum Institute, wrote members of Congress on Wednesday.[/QUOTE]

    I wonder if the Dems understand that the additional 15 Billion will not come out of Big Oil's Profits, but will instead come out of OUR pockets, in the form of passed on costs and higher gasoline prices at the pump?

    I still get pissed at the Dems push over this knowing both Kerry and Kenedy stopped Air Energy Production in their own State in a fit of hypocritical NIMBY-ism. Supporting their new-energy agenda would be alot easier not know ing things like that.

    Well Bit, you wanted Billions for Alt-Energy Funding, here it is if it passes. Congrats. I'll be looking for my Water-Fueled Taurus any day now. :D :P

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    [QUOTE=Warfish]I wonder if the Dems understand that the additional 15 Billion will not come out of Big Oil's Profits, but will instead come out of OUR pockets, in the form of passed on costs and higher gasoline prices at the pump?

    I still get pissed at the Dems push over this knowing both Kerry and Kenedy stopped Air Energy Production in their own State in a fit of hypocritical NIMBY-ism. Supporting their new-energy agenda would be alot easier not know ing things like that.

    Well Bit, you wanted Billions for Alt-Energy Funding, here it is if it passes. Congrats. I'll be looking for my Water-Fueled Taurus any day now. :D :P[/QUOTE]

    the last post in this thread:

    [url]http://www.jetsinsider.net/forums/showthread.php?t=135943[/url]

    Apple Computer, whose board includes algore, turned in record profits last quarter....


    will higher fees and taxes no be assigned to IPods & MACS???

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    The liberal answer to every problem is to raise taxes or pass unenforceable laws.
    Last edited by Spirit of Weeb; 01-19-2007 at 04:05 PM.

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    raise taxes on big oil? how about just stop subsidizing them... I believe they got 15 billion in subsidies last year, and the big 5 oil firms made 100 billion dollars in profit last year... how does that make any fiscal sense for the gov't to give them that kind of subsidies?

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    [QUOTE=Come Back to NY]the last post in this thread:

    [url]http://www.jetsinsider.net/forums/showthread.php?t=135943[/url]

    Apple Computer, whose board includes algore, turned in record profits last quarter....


    will higher fees and taxes no be assigned to IPods & MACS???[/QUOTE]


    when people need ipods and macs to survive then I agree we should raise taxes on Apple

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    and I keep hearing about how Oil keeps declining, yet prices are either staying the same or increasing,,, how come when Oil increases it seems the Oil companies dont waste a second jacking the prices up

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    Fish how do you know that the increased costs will be passed on to consumers. Don't you belive in free markets. These companies had record profits. Their inventories skyrocketed in value overnight when the price of oil went up.


    Their margins may go down from their record profits but what's wrong with that? The marketplace will affect the price we pay.

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    [QUOTE=Queens Jet Fan]Fish how do you know that the increased costs will be passed on to consumers. Don't you belive in free markets. These companies had record profits. Their inventories skyrocketed in value overnight when the price of oil went up.

    Their margins may go down from their record profits but what's wrong with that? The marketplace will affect the price we pay.[/QUOTE]

    So, you think Oil companies will just take it in the ass, and say "naaa, why raise prices and maintain our profits, when we can just eat the extra Billions in taxes. We LOVE Our customers THAT much".

    Lol, what a joke. I know, because that how business (All business) does business. Corporations don't pay taxes, you and I do...every time we buy something. The consumer ALWAYS pays the taxes.

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    [QUOTE=Warfish]So, you think Oil companies will just take it in the ass, and say "naaa, why raise prices and maintain our profits, when we can just eat the extra Billions in taxes. We LOVE Our customers THAT much".

    Lol, what a joke. I know, because that how business (All business) does business. Corporations don't pay taxes, you and I do...every time we buy something. The consumer ALWAYS pays the taxes.[/QUOTE]
    Companies try to sell a product at the highest price that they can. Demand for petroleum in many respects in not elastic. What you are saying is that this is not a free market model where when supply goes up price will come down. Just because their taxes go up does not mean that they can always pass that on to the consumers.

    I'm in a business also. When my taxes and costs go up I can't necessarily raise my prices because I have to keep them in line with what my customers can pay and the competition is charging. Why is that not true of the oil companies? Why do they need a special break?
    Last edited by Queens Jet Fan; 01-19-2007 at 01:31 AM.

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    [QUOTE=Queens Jet Fan]Companies try to sell a product at the highest price that they can. Demand for petroleum in many respects in not elastic. What you are saying is that this is not a free market model where when supply goes up price will come down. Just because their taxes go up does not mean that they can always pass that on to the consumers.

    I'm in a business also. When my taxes and costs go up I can't necessarily raise my prices because I have to keep them in line with what my customers can pay and the competition is charging. Why is that not true of the oil companies? Why do they need a special break?[/QUOTE]

    I don't personally care if they get a "break" or not. But I understand that the cost of losing their break will be passed on to consumers, plain and simple.

    Deny it if you like, complain about your little conspiracy theories if you like, tell Big Oil they should run their business just like you (lol) if you like, but none of that will change the truth here, and that is that this tax-break withdrawal will be directly passed onto consumers, period.

    Of course, it's in your political best interests to disagree, since Dems and Libs hate the idea that their constant desire to raise taxes to make "corporations pay" rarely results in lower profitmargins for corporations, but always results in higher prices for the average man.

    An inconvenient truth indeed. :rolleyes:

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    [QUOTE=Warfish]I don't personally care if they get a "break" or not. But I understand that the cost of losing their break will be passed on to consumers, plain and simple.

    Deny it if you like, complain about your little conspiracy theories if you like, tell Big Oil they should run their business just like you (lol) if you like, but none of that will change the truth here, and that is that this tax-break withdrawal will be directly passed onto consumers, period.

    Of course, it's in your political best interests to disagree, since Dems and Libs hate the idea that their constant desire to raise taxes to make "corporations pay" rarely results in lower profitmargins for corporations, but always results in higher prices for the average man.

    An inconvenient truth indeed. :rolleyes:[/QUOTE]

    What's wrong with the price of oil going up even if it is passed along to all consumers. It's still better than having tax dollars subsidize them. I have the ability to use less oil, I don't have the political clout to against them in Congress. It seems much better to me in a free market to get rid of all of these subsidies and if publicly owned lands are being used for oil, farming or cattle, the price should be at the market not some deal worked out after a pay off.

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    [QUOTE=Warfish]I don't personally care if they get a "break" or not. But I understand that the cost of losing their break will be passed on to consumers, plain and simple.

    Deny it if you like, complain about your little conspiracy theories if you like, tell Big Oil they should run their business just like you (lol) if you like, but none of that will change the truth here, and that is that this tax-break withdrawal will be directly passed onto consumers, period.

    Of course, it's in your political best interests to disagree, since Dems and Libs hate the idea that their constant desire to raise taxes to make "corporations pay" rarely results in lower profitmargins for corporations, but always results in higher prices for the average man.

    An inconvenient truth indeed. :rolleyes:[/QUOTE]
    Well to many recent events have shown that what the consumer pays at the pump is not necessarily reflective of what the oil companies pay for a barrell of oil. It's funny how you mention that liberals want to sock it to the corporations but really all that is happening here is that the Dems want the oil companies to pay the same share that other corp. do and to take away their special subsidies. It's ironic that you criticize the Dems for going after the oil companies profit margins when it was Bush and the Republicans who gave the companies special breaks when their profit margins were the highest and one could argue when they needed it the least. The Dems are just tryin to take away those breaks now. The oil companies did not give the consumer any break when they rec'd those benefits.

    Yes an inconvenient truth indeed :rolleyes:

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    [QUOTE=Queens Jet Fan]Well to many recent events have shown that what the consumer pays at the pump is not necessarily reflective of what the oil companies pay for a barrell of oil. It's funny how you mention that liberals want to sock it to the corporations but really all that is happening here is that the Dems want the oil companies to pay the same share that other corp. do and to take away their special subsidies. It's ironic that you criticize the Dems for going after the oil companies profit margins when it was Bush and the Republicans who gave the companies special breaks when their profit margins were the highest and one could argue when they needed it the least. The Dems are just tryin to take away those breaks now. The oil companies did not give the consumer any break when they rec'd those benefits.

    Yes an inconvenient truth indeed :rolleyes:[/QUOTE]

    Spin it however you like. The End Result will be higher gas prices at the Pump. That sir, is a real world fact.

    I can afford it, hell I don't even think about gas prices other than debate here on forum. So personally, I could give a rats ass one way or the other. So no worries here.

    But your clear political spin that this is going nail those evil fat cats in Big Oil right in their profit margins is laughably ignorant and naive of how real world economics and business work.

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    [QUOTE=Warfish]Spin it however you like. The End Result will be higher gas prices at the Pump. That sir, is a real world fact.

    I can afford it, hell I don't even think about gas prices other than debate here on forum. So personally, I could give a rats ass one way or the other. So no worries here.

    But your clear political spin that this is going nail those evil fat cats in Big Oil right in their profit margins is laughably ignorant and naive of how real world economics and business work.[/QUOTE]
    And this my good friend is your spin on the matter. Time will tell what will happen. You very well could be wrong here.

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    [QUOTE=Winstonbiggs]What's wrong with the price of oil going up even if it is passed along to all consumers. It's still better than having tax dollars subsidize them. I have the ability to use less oil, I don't have the political clout to against them in Congress. It seems much better to me in a free market to get rid of all of these subsidies and if publicly owned lands are being used for oil, farming or cattle, the price should be at the market not some deal worked out after a pay off.[/QUOTE]

    No worries here my friend. Perhaps sometime soon, whne all tax breaks and subsidies go away, we'll pay something close to TRUE market price for oil, what say, the UK pays. ~$4-6 a Gallon for Petrol.

    Works for me, I have free access to public transportation right ot my office. Won't hurt me at all. I drive by choice, not requirement.

    Other folks though......

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    [QUOTE=Warfish]No worries here my friend. Perhaps sometime soon, whne all tax breaks and subsidies go away, we'll pay something close to TRUE market price for oil, what say, the UK pays. ~$4-6 a Gallon for Petrol.

    Works for me, I have free access to public transportation right ot my office. Won't hurt me at all. I drive by choice, not requirement.

    Other folks though......[/QUOTE]

    War-As a liberitarian how can you support subsidizing these companies or giving them under priced access to public lands? If you think it's okay to subsidize energy because it's good social policy that's a rather liberal argument. I never got that from you?

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    [QUOTE=Winstonbiggs]War-As a liberitarian how can you support subsidizing these companies or giving them under priced access to public lands? If you think it's okay to subsidize energy because it's good social policy that's a rather liberal argument. I never got that from you?[/QUOTE]

    Not Liberal. Nationalist.

    I know, I'm an odd Political Bird at times. Libertarian (or more accurately a Personal Freedomist), but a Nationalist too. Conservative on many issues, but flamingly Liberal on a few (Drug legalization, Prostitution legalization, Morallity and Faith issues, etc).

    With that said, my most consistent view is the "What is best for Warfish" ideal. I don't relish the idea of higher gas prices, cause I LIKE to drive, and I drive alot. So when tax breaks are removed, I will pay more (despite Queens blue-sky idea that Oil Companies will sacrifice their profit margin). Hence, I dislike this end result.

    In theory, it's easy, no tax breaks of any kind for anyone. Flat Tax accross the board. But theory and reallife aren't the same, and frankly, my theory will never likely be real life. So I have to deal with what IS real life, and very soon, it'll be higher gas prices.

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    [QUOTE=Warfish]Not Liberal. Nationalist.

    I know, I'm an odd Political Bird at times. Libertarian (or more accurately a Personal Freedomist), but a Nationalist too. Conservative on many issues, but flamingly Liberal on a few (Drug legalization, Prostitution legalization, Morallity and Faith issues, etc).

    With that said, my most consistent view is the "What is best for Warfish" ideal. I don't relish the idea of higher gas prices, cause I LIKE to drive, and I drive alot. So when tax breaks are removed, I will pay more (despite Queens blue-sky idea that Oil Companies will sacrifice their profit margin). Hence, I dislike this end result.

    In theory, it's easy, no tax breaks of any kind for anyone. Flat Tax accross the board. But theory and reallife aren't the same, and frankly, my theory will never likely be real life. So I have to deal with what IS real life, and very soon, it'll be higher gas prices.[/QUOTE]


    So you don't see the Dems using all that additional revenue that will come in as an opportunity to cut personal tax rates? :D

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    [QUOTE=Winstonbiggs]So you don't see the Dems using all that additional revenue that will come in as an opportunity to cut personal tax rates? :D[/QUOTE]

    Dems cutting Tax rates for the Middle class? No, can't say I expect that. :D

    And remember Winston, the explicit purpose of the removal of these breaks, is to subsidize alt-fuel. So it's more a question of one corporate subsidy vs. another.

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    [QUOTE=Queens Jet Fan]Fish how do you know that the increased costs will be passed on to consumers. Don't you belive in free markets. These companies had record profits. Their inventories skyrocketed in value overnight when the price of oil went up.


    Their margins may go down from their record profits but what's wrong with that? The marketplace will affect the price we pay.[/QUOTE]

    THe costs will definitely be passed on. Even when some NYers wanted to (fairly) fine ConEd for the power failure last summer, Bloomberg (as astute a business guy as there is) said he was against the fine because it was only going to come out of the payers pockets. Same here. tax Bog Oil and you can add a nickel a gallon or so until they get their huge checks.

    The only way to punish the oil companies is to decrease their subsidies and then subsidize competition for big oil. Right now, they are a monopoly. Increasing solar cells and alternative fuels that could compete with or replace big oil will get their attention.

    So now politicians have protected big oil from competition and taken money from our pocket. Great start.

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