Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: Cogito who wrote (72410)	6/15/2008 11:40:19 PM
From: Sam	Read Replies (1) \| Respond to of 542114

Allen, a lot of the oil companies' cash is going to stock buybacks: google.com I haven't bothered to compare how much is going to buying back stock versus how much they are investing in finding new sources or exploiting older ons, but Charlie Rose had some people discussing the price of oil on his show last week. One of them claimed that the American oil companies are in a long term process of liquidation. Here is the link if you want to watch it: charlierose.com I should add that another one of the panelists didn't appear to share that opinion.

To: Cogito who wrote (72410)	6/15/2008 11:53:30 PM
From: 8bits	Read Replies (2) \| Respond to of 542114

I didn't say they would never have to be paid. But if they are deferred, then they haven't been "turned over", have they? Instead, these companies are able to use that money for their own purposes. Yes apparently they can collect interest on the money, but if the company is prudently managed, that should be it. Here's part of a explanation: "For example, let's say that the amount of tax that a business should pay is $100,000, but due to tax laws, the amount actually payable for this fiscal year is $85,000. The additional $15,000 would be a deferred income tax liability that the company would need to pay later on." The IRS doesn't allow me to make that choice, I notice. Presumably because you haven't filed paperwork for Cogito, Inc. :-) Hop to it. Still, while there are a lot of areas in the US that are not available for oil drilling, there are other areas that are available. I'd like to see the oil companies stop whining about the closed areas, and start exploiting the open ones, if they're so hard up for supplies. I'd say the only reason they are whining, as you put it, is they are being hauled before congress and asked why oil prices are so high. As for exploring available areas, believe me at $135 a barrel for oil, they are, as fast and furious as they can, in some cases going for tertiary recovery. (Fields that have been abandoned not once but twice before..) The problem is we also have a global shortage of available rigs and personnel to man them. As Quehubo pointed out it takes years for a new field to be developed. As recently as November 2001 oil was $18 a barrel. Even as recently as 2003 oil averaged $27.69 for the year. It's really just been in the last 2 and 1/2 years that most of the oil companies realized that oil prices were going to stay higher, ie making previously uneconomical ventures now worthwhile to pursue. Large fields can take many years to develop, especially in the more challenging areas that are left for US oil companies to explore.

To: Cogito who wrote (72410)	6/16/2008 3:51:33 PM
From: Alastair McIntosh	Respond to of 542114

Most deferred income taxes result from capital cost allowance rates (for tax purposes) being higher than depreciation rates for financial accounting purposes. For example, if a piece of equipment can be expected to last 10 years with zero residual value, only 1/10 of the cost may be taken as an expense each year. (That is simplifying the process). The IRS may allow the equipment to be written off over 5 years so that after five years the company has claimed all of the equipment as an expense for tax purposes while it has only claimed half of the original value for financial accounting purposes. At the end of 10 years, both accounts are in balance But if they are deferred, then they haven't been "turned over", have they? Instead, these companies are able to use that money for their own purposes. No, the company does not have the money. The company either had to pay cash or arrange for financing for the full cost of the equipment. They aren't "using the money for their own purposes". It has already been spent but can only be used as a deductible expense over a period of years.