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Thread: "Gang of 10" Energy Compromise

  1. #1

    "Gang of 10" Energy Compromise

    Seems that the Dems and Republicans are close to a deal.

    It would allow for some offshore drilling, but would also fund major alternative-energy projects without a windfall profits tax. It would be paid for by denying energy companies a "manufacturing" tax break that had been receiving for some reason.

    Anyhow, read all about it here.

    [QUOTE]Democrats, Republicans Team Up on Oil Bill
    By STEPHEN POWER and IAN TALLEY
    August 2, 2008; Page A3

    WASHINGTON -- A group of Democratic lawmakers is banding with Republicans to draft legislation that would ease the federal moratorium on offshore oil drilling while ending a tax break for oil companies.


    The effort highlights the eagerness of some Democrats to break a deadlock in Washington over energy policy as Congress heads for a monthlong recess without having passed legislation to address high gasoline prices.

    Many party leaders, including Democratic presidential candidate Sen. Barack Obama, have criticized proposals by President George W. Bush and the Republicans' presumptive presidential nominee, Sen. John McCain, to lift the offshore-drilling ban. But opinion polls indicate rising support among voters for increased domestic drilling, including in coastal areas where such activity is currently prohibited.

    In a move that could signal a possible softening of Sen. Obama's position, his campaign on Friday issued a statement praising the bill but stopped short of an endorsement.

    A spokesman for Sen. McCain said that while he "applauds the bipartisan effort," he wouldn't support the proposal because "he cannot and will not support legislation that raises taxes."

    On Friday, 10 senators -- five Democrats and five Republicans -- announced legislation to open to drilling additional acreage in the Gulf of Mexico off Florida's western coast. The legislation would allow Virginia, North Carolina, South Carolina and Georgia to "opt in" to allowing drilling off their shores if their legislatures approve.

    At the same time, the bill would raise billions of dollars for various conservation and energy-efficiency programs by making oil companies no longer eligible for a manufacturing tax credit. Some estimates have put the potential savings from such a move at $13 billion over 10 years.

    The manufacturing tax credit seeks to encourage job creation in the U.S. by giving a tax break to all domestic manufacturers that produce goods in the country, including oil companies.

    Within minutes of the senators' unveiling of the bill, Sen. Obama's campaign released a statement that praised the proposal as "a good faith effort" and "an important step in the process of reducing our dangerous dependence on foreign oil."

    Asked whether Sen. Obama's comments signal an intention to support a relaxation of the ban, an Obama campaign spokesman said, "He welcomes this compromise as a first, bipartisan step....If a group of senators come to him with a good-faith effort to solve a major challenge like this one that contains some steps he doesn't like, he's not going to reject it out of hand." A person familiar with the matter said Sen. Obama is likely to elaborate in the coming days on steps he would pursue as president to boost domestic energy production.

    Although Sen. Obama said he remained "skeptical" that new offshore drilling would reduce gas prices in the short term, his comments opened the door to working with the group. He said he welcomed "the establishment of a process that will allow us to make future drilling decisions based on science and fact."

    There were signs that the measure could attract support from other Democratic leaders. While Senate Majority Leader Harry Reid (D., Nev.), said he didn't agree with all of the provisions in the proposal, he said, "I am hopeful this plan can begin to break the current legislative stalemate on the Senate floor."

    In a bid for the support of Rust Belt lawmakers, the legislation would steer $7.5 billion to help auto makers and auto-parts makers retool their factories and another $7.5 billion to develop alternative-vehicle technologies, such as advanced batteries.

    Those provisions -- which aim to have the nation's petroleum-guzzling vehicles using 85% nonoil fuel sources within 20 years -- are similar to proposals that Sen. Obama has made in recent weeks.

    A repeal of the manufacturing tax credit for oil companies, along with a proposed requirement that oil firms that haven't paid royalty fees on certain leases in the Gulf of Mexico ante up billions of dollars in payments, could prove more contentious.

    It was unclear how energy companies and their congressional allies would react. A spokeswoman for the Washington-based American Petroleum Institute, a trade troup, said the group commended the bipartisan effort to expand production. But "we remain concerned some proposals in this broad energy plan would impede efforts to maximize U.S. energy supplies," she said.

    The legislation reflects some provisions advocated by Securing America's Future Energy, a Washington-based nonprofit group that has been advising senators for weeks and has ties to the campaigns of both Sens. McCain and Obama. It advocates reducing foreign oil dependence through tougher automobile-efficiency standards, increased offshore drilling and more reliance on biofuels.

    The group's co-chairman is FedEx Corp. Chairman Fred Smith, who is listed as one of six "national campaign co-chairs" on Sen. McCain's campaign Web site. One of the group's advisory-board members is Jason Grumet, head of an energy-related think tank in Washington and an adviser to Sen. Obama's campaign on energy and environmental issues.

    Write to Stephen Power at [email]stephen.power@wsj.com[/email] and Ian Talley at [email]ian.talley@dowjones.com[/email][/QUOTE]


    What do we think?

  2. #2
    I'll go first.

    I like this deal.

    My main aversion to drilling --aside from the environmental impact, which seems somewhat limited by the relatively narrow scope of the areas being opened up-- is that (1) I don't think it'll really amount to much price relief and (2) I fear it is a distraction from the real challenge/opportunity of alternative energy that actually can impact prices.

    This bill puts some serious money behind those causes, and it does it without a "windfall profits tax" which I have said is probably the dumbest idea Obama has put forth.

    Also, I do not understand how oil companies --which are plainly not manufacturers-- were receiving $13 billion in manufacturing tax credits. The challenges faced by manufacturers --and, presumably, that inspired this tax credit-- clearly are not afflicting oil companies.

    That's just stupid and is a loophole that obviously ought to be closed.

  3. #3
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    The plan sounds brilliant to tell you the truth. The fact that a bipartisan group of Senators is pushing it tells you something about it.

  4. #4
    [quote=nuu faaola;2670509]I'll go first.

    I like this deal.

    My main aversion to drilling --aside from the environmental impact, which seems somewhat limited by the relatively narrow scope of the areas being opened up-- is that (1) I don't think it'll really amount to much price relief and (2) I fear it is a distraction from the real challenge/opportunity of alternative energy that actually can impact prices.

    This bill puts some serious money behind those causes, and it does it without a "windfall profits tax" which I have said is probably the dumbest idea Obama has put forth.

    Also, I do not understand how oil companies --which are plainly not manufacturers-- were receiving $13 billion in manufacturing tax credits. The challenges faced by manufacturers --and, presumably, that inspired this tax credit-- clearly are not afflicting oil companies.

    That's just stupid and is a loophole that obviously ought to be closed.[/quote]

    I like it as well - and the fact that McCain is opposing it for fear of being tarred as a tax crazy liberal annoys me.

  5. #5
    Doggin are you trying to put a bull's eye on your chest? If you read this board on a daily basis the only candidate running is Obama. You really are silly...:)

    [QUOTE=doggin94it;2670985]I like it as well - and the fact that McCain is opposing it for fear of being tarred as a tax crazy liberal annoys me.[/QUOTE]

  6. #6
    Just keep your tires inflated to the proper level and we wont have to drill. Is Obama that nieve or is he lacking any common sense? We must open the oil fields now. I signed the Newt Gingrich petition a month ago. It is the the American People (us) took back our government.

  7. #7
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    [quote=nuu faaola;2670509]
    Also, I do not understand how oil companies --which are plainly not manufacturers-- were receiving $13 billion in manufacturing tax credits. The challenges faced by manufacturers --and, presumably, that inspired this tax credit-- clearly are not afflicting oil companies.

    That's just stupid and is a loophole that obviously ought to be closed.[/quote]

    Libs whine about all the jobs flying overseas. Well, this is why. Corporations have one goal - to make a PROFIT. If it's cheaper to do business here, they stay, otherwise they go to mexico or thailand or korea or china.

    Corporations don't pay tax -- their employees and their customers pay taxes. The more employees and customers, the more tax the government collects.

    And on the subject of "evil" profits, how many libs go to work (the ones not on the government dole) for no paycheck -- simply for the pleasure of benefitting their fellow man or society at large? How many hollywood libs give up their obscene salaries just to entertain us peasants for free?

    Libs/dems use class warfare so successfully that logic just flies right out the window.

  8. #8
    All you need now is Pelosi to stop her blockade and allow for a vote.

  9. #9
    You keep outdoing yourself. Profits are never high enough, that is why companies use slave labor overseas.

    [QUOTE=Spirit of Weeb;2671215]Libs whine about all the jobs flying overseas. Well, this is why. Corporations have one goal - to make a PROFIT. If it's cheaper to do business here, they stay, otherwise they go to mexico or thailand or korea or china.

    Corporations don't pay tax -- their employees and their customers pay taxes. The more employees and customers, the more tax the government collects.

    And on the subject of "evil" profits, how many libs go to work (the ones not on the government dole) for no paycheck -- simply for the pleasure of benefitting their fellow man or society at large? How many hollywood libs give up their obscene salaries just to entertain us peasants for free?

    Libs/dems use class warfare so successfully that logic just flies right out the window.[/QUOTE]

  10. #10
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    [quote=cr726;2671220]You keep outdoing yourself. Profits are never high enough, that is why companies use slave labor overseas.[/quote]

    And your solution to limiting profit in a capitalist society is...

    ...waiting for a solution instead of an insult, genius.

  11. #11
    [QUOTE=Spirit of Weeb;2671215]Libs whine about all the jobs flying overseas. Well, this is why. Corporations have one goal - to make a PROFIT. If it's cheaper to do business here, they stay, otherwise they go to mexico or thailand or korea or china.

    Corporations don't pay tax -- their employees and their customers pay taxes. The more employees and customers, the more tax the government collects.

    And on the subject of "evil" profits, how many libs go to work (the ones not on the government dole) for no paycheck -- simply for the pleasure of benefitting their fellow man or society at large? How many hollywood libs give up their obscene salaries just to entertain us peasants for free?

    Libs/dems use class warfare so successfully that logic just flies right out the window.[/QUOTE]

    Fine. Then give them an "oil company" tax credit. See who would sign off on that. Of course, nobody would, which is why they were allowed to siphon of tax dollars that were clearly never intended for them in the light of day.

    It is a scandal the oil companies are getting tax breaks intended for manufacturers, who get those because they are dealing with huge global shifts that are making their continued operation here difficult.

    Generally the biggest profit in history is a pretty good sign you don't need tax breaks built for struggling businesses.

  12. #12
    [QUOTE=MnJetFan;2671155]Just keep your tires inflated to the proper level and we wont have to drill. Is Obama that nieve or is he lacking any common sense? We must open the oil fields now. I signed the Newt Gingrich petition a month ago. It is the the American People (us) took back our government.[/QUOTE]

    So what do you think of this proposal, then?

  13. #13
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    [quote=nuu faaola;2671405]Fine. Then give them an "oil company" tax credit. See who would sign off on that. Of course, nobody would, which is why they were allowed to siphon of tax dollars that were clearly never intended for them in the light of day.

    It is a scandal the oil companies are getting tax breaks intended for manufacturers, who get those because they are dealing with huge global shifts that are making their continued operation here difficult.

    Generally the biggest profit in history is a pretty good sign you don't need tax breaks built for struggling businesses.[/quote]

    The definition of manufacturing is to transform raw materials into finished goods on a large scale. What is it about an oil company that doesn't fit that definition?

    Perhaps the oil companies don't contribute enough to the democrat coffers.

  14. #14
    [QUOTE=Spirit of Weeb;2671462]The definition of manufacturing is to transform raw materials into finished goods on a large scale. What is it about an oil company that doesn't fit that definition?

    Perhaps the oil companies don't contribute enough to the democrat coffers.[/QUOTE]

    Right. Please find me one financial analyst or business analyst alive who classifies energy companies as part of the "manufacturing" sector. You do that, and I'll concede the point.

    But I won't be holding my breath until then.

  15. #15
    Where did I say profits should be limited?

    [QUOTE=Spirit of Weeb;2671349]And your solution to limiting profit in a capitalist society is...

    ...waiting for a solution instead of an insult, genius.[/QUOTE]

  16. #16
    [QUOTE=nuu faaola;2671523]Right. Please find me one financial analyst or business analyst alive who classifies energy companies as part of the "manufacturing" sector. You do that, and I'll concede the point.

    But I won't be holding my breath until then.[/QUOTE]
    I hate the fact that tax laws are as convoluted as they are because they allow loopholes that can only be used by a small few, but the difference between refining and manufacturing is nothing but an arbitrary classification. Yeah itís a loop hole but only because of a technicality. Personally, I donít see why one highly complicated process which produces a valuable product should be taxed higher than another.

    Also, corporations donít really pay taxes. They collect them by upping prices and lowering salaries for their employees. If the objective is to make oil products more affordable then taking away tax breaks is the wrong way to go.

  17. #17
    [QUOTE=Oakliusmaximus;2674192]I hate the fact that tax laws are as convoluted as they are because they allow loopholes that can only be used by a small few, but the difference between refining and manufacturing is nothing but an arbitrary classification. Yeah itís a loop hole but only because of a technicality. Personally, I donít see why one highly complicated process which produces a valuable product should be taxed higher than another.

    Also, corporations donít really pay taxes. They collect them by upping prices and lowering salaries for their employees. If the objective is to make oil products more affordable then taking away tax breaks is the wrong way to go.[/QUOTE]

    The manufacturing sector is subjected to a difficult global environment in a manner that oil companies simply are not. One sector is sending jobs overseas at an alarming rate, and another is thriving like never before.

    Clearly American manufacturing is in a spot where it needs government help to stay viable/competitive. I simply don't see any good argument for applying that sort of aid to oil companies at a time they are making record profits. It's a loophole that clearly runs counter to the spirit of the tax break and it ought to be closed.

    I am pleased they found a way to do this that is not a "windfall profit" tax, as I think that is a stupid idea that sets a terrible precdent. Closing unjustified loopholes, however, is a good precedent and ought to be applied to individual taxes as well.

  18. #18
    [QUOTE=nuu faaola;2674397]The manufacturing sector is subjected to a difficult global environment in a manner that oil companies simply are not. One sector is sending jobs overseas at an alarming rate, and another is thriving like never before.

    Clearly American manufacturing is in a spot where it needs government help to stay viable/competitive. I simply don't see any good argument for applying that sort of aid to oil companies at a time they are making record profits. It's a loophole that clearly runs counter to the spirit of the tax break and it ought to be closed.

    I am pleased they found a way to do this that is not a "windfall profit" tax, as I think that is a stupid idea that sets a terrible precdent. Closing unjustified loopholes, however, is a good precedent and ought to be applied to individual taxes as well.[/QUOTE]Like I said, Iím with you on the loophole thing. I really wish tax codes would be simplified. And I agree on the windfall taxes thing, but mostly for the same reason I favor lower taxes to begin with.

    When you tax something you get less of it. So if business going overseas is a concern with the manufacturing industry, shouldnít we worry about the same thing happening with the oil companies? Itís already a very globalized industry; more than 70% of Exxonís record profit was earned outside the US last year.

    I see your point; I just donít see the distinction.

  19. #19
    [QUOTE=Oakliusmaximus;2674575]Like I said, Iím with you on the loophole thing. I really wish tax codes would be simplified. And I agree on the windfall taxes thing, but mostly for the same reason I favor lower taxes to begin with.

    When you tax something you get less of it. So if business going overseas is a concern with the manufacturing industry, shouldnít we worry about the same thing happening with the oil companies? Itís already a very globalized industry; more than 70% of Exxonís record profit was earned outside the US last year.

    I see your point; I just donít see the distinction.[/QUOTE]

    The distinction, I guess, is that the "labor" in the oil industry --at least, the blue collar sort that tends to be the most easily outsourced-- is necessarily attached to the sites of the wells/rigs.

    You can't get Indian guys from Bangalore to work oil fields in Texas, and they can't send a U.S. well overseas.

  20. #20
    [QUOTE=nuu faaola;2670509]Also, I do not understand how oil companies --which are plainly not manufacturers-- were receiving $13 billion in manufacturing tax credits. The challenges faced by manufacturers --and, presumably, that inspired this tax credit-- clearly are not afflicting oil companies.

    That's just stupid and is a loophole that obviously ought to be closed.[/QUOTE]

    First, let me say I do not care if the tax break is removed. Frankly, too many folks have too many tax breaks, which is part of our whole tax problem in the U.S. So if they loose a break, fine, just understand that we (the consumer) will be paying for it when the Oil Companies pass along the tax burden to us at the pump.

    But with that said......."Big Oil" is OBVIOUSLY a Manufacturer. Unless your car can run on pure crude, your home heater on pure crude, etc, etc, etc, they are, in most cases, indeed manufacturing something.

    A parallel claim would be "That woodworking guy isn't a manufacter". Like Big Oil he takes a natural resource (wood/oil) and manufacturers something better out of it (a chair/gasoline).

    In toehr words, most of "Big Oil" doesn;t just drill, they refine what they drill as well. Hence why they (rightfully) qualify for whatever tax credits exist for "manufacturers".

    Seems pretty logical to me.

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