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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Wharf Rat who wrote (191627)	7/13/2006 8:30:25 PM
From: SiouxPal	Read Replies (1) \| Respond to of 281500

Nice facts. Hope he understood what you were saying.

To: Wharf Rat who wrote (191627)	7/14/2006 1:20:58 PM
From: Brumar89	Respond to of 281500

Immediate Expensing of Exploration and Development Costs – $200 million/year Oil, gas, and coal producers can immediately expense (write off) most or all of their development costs. Other businesses must deduct these expenses over a longer period of time. Intangible drilling and mine development costs are expensed immediately. I wouldn't have a problem if it went away. The atlternative would be to require capitalization and depreciation/amortization - only the timing of the deduction would change. It would hurt a few small operators and reduce domestic production a little. Wouldn't impact foreign oil & gas at all. The oil, gas, and coal industries are massive (remember reading about how the big companies were making tens of billions of profits and hundreds of millions of sales?) - if you think a $200M* a year deduction is a big subsidy for this industry you're mistaken - its a drop in the bucket. Assuming your number is accurate - I note your list double counts this as you have IDC listed below with a $500M price tag on it. Maybe the $200M is based on E&D wells, and the $500M on production wells? Who knows. $200M or $500M, doesn't make a big difference to the O&G industry. Percentage Depletion Allowance for Oil and Gas – $600 million/year Independent oil and gas companies can deduct 15 percent of their sales revenue using the special percentage depletion allowance – instead of the standard cost depreciation – regardless of the actual loss in value over time. The majors lost this in the mid 1970's. Taking it away from the "independents" would hurt smaller companies, ranchers and other royalty owners. Big deal. Again a drop in the bucket for a massive industry. Get my point - these subsidies you're talking about aren't what the energy industry depends on. Requiring Full Coal Firm Support for the Black Lung Fund – $350 million/year Designed to internalize the health-related costs of coal mining, this fund requires government support to pay for work-related disabilities of coal miners. Coal companies pay a special tax for this. The tax receipts go into a govt fund from which payments are made. You're counting the payments from the fund and ignoring where they come from - coal companies. Thus this isn't a subsidy at all. Intangible Drilling Costs – $500 million/year Integrated oil and gas companies can immediately deduct 70 percent of "intangible" drilling costs. Most other businesses deduct such expenses over time and therefore receive less of a tax benefit. See above. Passive Loss for Oil and Gas – $100 million/year .... Tax Breaks for Enhanced Oil Recovery – $100 million/year ... Multilateral Development Bank Loans for Fossil Fuel – $80 million/year Insignificant again - affects investors in drilling programs, not o&g companies. Non-Conventional Fuel Production Credit – $1.3 billion/year This tax credit for certain types of fuel extracted from "non-conventional" sources was intended to provide incentives for petroleum alternatives, but most of the credit has gone for oil and gas production. This supports some things environmentalists like - the claim is made it supports non-conventional oil and gas production - not that I'm aware of. Clean Coal Technology Program – $250 million/ year This program helps finance private companies to develop cleaner burning coal technologies by providing up to 50 percent in federal matching funds. Aids utility companies research in lowering emissions. If you wanta cut it, its okay with me. Coal R&D – $100 million/year* Same as above. Other Fossil Energy R&D – $100 million/year R&D subsidization isn't unique to the energy industry - the tax treatment isn't too important for the traditional o&g industry, its much more important for the socalled "high tech" industry - you know the stuff involving silicon etc and for that matter solar technology. Export Import Bank Guarantees for Fossil Fuel – $300 million/year The Export Import Bank provides federal loan guarantees for investments in unstable countries. A portion of these loans are used for fossil fuel development. What portion? How do you calculate the cost of a loan guarantee which doesn't go bad? Capital Gains Treatment of Royalties on Coal – $15 million/year Individual owners Yes, benefits farmers and ranchers with coal under their land. Income Tax Exemption for Publicly Owned Utilities – $200 million/year .... Tax Exemption for Publicly Owned Utility Bonds – $550 million/year You want to stick to publicly owned utilities? Fine by me. Be sure you don't live in a city or area with one before you support this one. Rural Utilities Service Loans – $900 million/year The federal government provides low-interest loans to rural-electrification cooperatives. These cooperatives have invested heavily in energy plants using fossil fuels. Now you want to stick it farmers by raising their electricity cost a little. OKay with me. Say, aren't you one? Maybe you aren't in an area served by a RE coop. Okay, you've listed your subsidy list and my answer is all of this is pretty insignificant for the oil/gas/coal/power generation industries. They don't DEPEND on these subsidies. It is okay with me if all of this went away. It won't make a difference.