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Congress Takes Aim at 'Big Oil'

red states rule

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The Dems are once again wasting time by attacking another US industry. With their approval numbers sinking like the Titantic, Dems are trying to appease their rabid base by going after one of their favorite targets - the oil companies




June 21, 2007
Congress Takes Aim at 'Big Oil'
By Steve Forbes

In what's become an annual rite of spring, politicians in Washington are posturing before the cameras about how they are going to deal with rising gas prices. Their solutions always start with how they are going to take on big, bad oil companies and end with more taxes, regulation, price controls and mandates. While the rhetorical attacks may sound good on TV or in their press releases, these policies would only harm the very consumers they claim to be concerned about.

First up is to outlaw "price gouging," which they allege is behind the run up in prices - never mind the rise in the price of crude oil on the world market and other market forces. Ignoring the fundamental laws of economics, as they often do, Congress wants to criminalize the law of supply and demand and keep the specter of criminal penalties hanging over the industry. Every investigation by the FTC and by state and local officials has concluded that there is no evidence of gouging or manipulation.

Even the New York Times in a recent article asked if gouging was a "phantom menace." In the article, reporter Edmund Andrews pointed out "if the oil industry is so powerful, why did it let gasoline prices fall through the floor throughout the 1980s and part of the 1990s? For that matter, why did it let gasoline prices fall sharply after they spiked in 2005 and 2006?" This political posturing by Congress will only result in de facto price controls, and anyone who lived through the 1970's will tell you how that worked - it only led to shortages and long gas lines

More worrisome are the various tax proposals coming out of the economic geniuses in Washington. Every increase in gas prices or positive profit announcements from energy companies is met with a call for more taxes on the industry despite the fact that oil companies already pay more in taxes than most other corporations. According to the Tax Foundation, the "average effective tax rate" on oil companies is nearly 39%, compared to 33% for other industries. The reality is that increased taxes and regulation creates an environment for less investment, which means less production and higher prices.

The crown jewel of their tax proposals is always the windfall profits tax. Year after year, members of Congress reintroduce the legislation to tax the "excess" profits of oil companies. Never mind that the last time we enacted the windfall profits tax in the early 1980's it led to decreased domestic production and increased our reliance on foreign oil, according to the Congressional Research Service.

And to make matters worse, earlier this year the House passed legislation (H.R. 6) that would increase taxes on the energy industry to create a government fund to support alternative energy. Many referred to the bill as a national version of Proposition 87 in California, which was resoundingly defeated in one of the greenest states in the country. Voters understood that it makes no sense to raise taxes on the domestic oil industry to create a pot of money for politicians to play with. The House passed the disastrous bill anyway, putting American companies at a disadvantage to foreign oil companies, many of whom are controlled by their governments.

for the complete article

http://www.realclearpolitics.com/articles/2007/06/criminalizing_supply_and_deman.html
 
OP
red states rule

red states rule

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A windfall profits tax is a bad idea.

It will only drive up the price of gas - then libs can bitch about that as well

Oil companies make a dime profit on a gallon of gas, while government makes about 50 to 60 cents in taxes off the same gallon
 
OP
red states rule

red states rule

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A windfall profits tax is a bad idea.

The liberal media does not share your opinion


CNNÂ’s Velshi Takes Shots at GOP, Oil Firms
Posted by Dan Gainor on June 22, 2007 - 15:31.
The energy debate on the Hill could help determine policy and prices for decades. Just donÂ’t expect CNN to report it in a fair way.

Instead, you get Ali Velshi, the ‘American Morning’ business reporter, taking swipes at energy companies and the Republican Party. While the GOP stopped plans for a new tax to pay for more Democratic goodies, Velshi said the Republican wasn’t “particularly sound.”

That’s OK, he also complained that the oil companies are “getting off free.” Apparently, Velshi, not always known for math accuracy, needs a tune-up when it comes to taxes. Oil companies paid an estimated $48.36 billion in income taxes in 2004. They also collect a similar number in excise taxes for Uncle Sugar.

http://newsbusters.org/node/13675
 

SolarEnergy1

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The Dems are once again wasting time by attacking another US industry. With their approval numbers sinking like the Titantic, Dems are trying to appease their rabid base by going after one of their favorite targets - the oil companies




June 21, 2007
Congress Takes Aim at 'Big Oil'
By Steve Forbes

In what's become an annual rite of spring, politicians in Washington are posturing before the cameras about how they are going to deal with rising gas prices. Their solutions always start with how they are going to take on big, bad oil companies and end with more taxes, regulation, price controls and mandates. While the rhetorical attacks may sound good on TV or in their press releases, these policies would only harm the very consumers they claim to be concerned about.

First up is to outlaw "price gouging," which they allege is behind the run up in prices - never mind the rise in the price of crude oil on the world market and other market forces. Ignoring the fundamental laws of economics, as they often do, Congress wants to criminalize the law of supply and demand and keep the specter of criminal penalties hanging over the industry. Every investigation by the FTC and by state and local officials has concluded that there is no evidence of gouging or manipulation.

Even the New York Times in a recent article asked if gouging was a "phantom menace." In the article, reporter Edmund Andrews pointed out "if the oil industry is so powerful, why did it let gasoline prices fall through the floor throughout the 1980s and part of the 1990s? For that matter, why did it let gasoline prices fall sharply after they spiked in 2005 and 2006?" This political posturing by Congress will only result in de facto price controls, and anyone who lived through the 1970's will tell you how that worked - it only led to shortages and long gas lines

More worrisome are the various tax proposals coming out of the economic geniuses in Washington. Every increase in gas prices or positive profit announcements from energy companies is met with a call for more taxes on the industry despite the fact that oil companies already pay more in taxes than most other corporations. According to the Tax Foundation, the "average effective tax rate" on oil companies is nearly 39%, compared to 33% for other industries. The reality is that increased taxes and regulation creates an environment for less investment, which means less production and higher prices.

The crown jewel of their tax proposals is always the windfall profits tax. Year after year, members of Congress reintroduce the legislation to tax the "excess" profits of oil companies. Never mind that the last time we enacted the windfall profits tax in the early 1980's it led to decreased domestic production and increased our reliance on foreign oil, according to the Congressional Research Service.

And to make matters worse, earlier this year the House passed legislation (H.R. 6) that would increase taxes on the energy industry to create a government fund to support alternative energy. Many referred to the bill as a national version of Proposition 87 in California, which was resoundingly defeated in one of the greenest states in the country. Voters understood that it makes no sense to raise taxes on the domestic oil industry to create a pot of money for politicians to play with. The House passed the disastrous bill anyway, putting American companies at a disadvantage to foreign oil companies, many of whom are controlled by their governments.

for the complete article

http://www.realclearpolitics.com/articles/2007/06/criminalizing_supply_and_deman.html

LOL I think Pelosi and company forget what fuels her PRIVATE jumbo jet she requests to have her and her children to fly in
 
OP
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LOL I think Pelosi and company forget what fuels her Private "jumbo" jet she requests to have her and her children to fly in

DO you mean her original jet Speaker Hassert had - or the more larger one she demanded?
 

SolarEnergy1

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DO you mean her original jet Speaker Hassert had - or the more larger one she demanded?

umm the one that has the big white dove with the Syrian flag in it's mouth painted on it
 
OP
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umm the one that has the big white dove with the Syrian flag in it's mouth painted on it

or the huge jet with the screening room, bedroom, shower, and all the luxury the Speaker of State demands and deserves?
 

SolarEnergy1

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or the huge jet with the screening room, bedroom, shower, and all the luxury the Speaker of State demands and deserves?

LOL come on RSR all the other speakers of the house around the world have one or two these babies. How would it look to the French or the Syrians if our speaker of the house wasnt "pimped" out with the latest high tech fully loaded private jet, she'd be a laughing stock if she didnt have it all, oh wait.... never mind
 
OP
red states rule

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LOL come on RSR all the other speakers of the house around the world have one or two these babies. How would it look to the French or the Syrians if our speaker of the house wasnt "pimped" out with the latest high tech fully loaded private jet, she'd be a laughing stock if she didnt have it all, oh wait.... never mind

Screecher Belosi at her best
 

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Toro

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It will only drive up the price of gas - then libs can bitch about that as well

Oil companies make a dime profit on a gallon of gas, while government makes about 50 to 60 cents in taxes off the same gallon

Actually, that's not what I'd be worried about because the margins are so high, the oil companies would eat at least some of that.

Instead, it would distort capital allocation and investment in marginal fields, which would depress long term supply and increase long term prices.
 
OP
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Actually, that's not what I'd be worried about because the margins are so high, the oil companies would eat at least some of that.

Instead, it would distort capital allocation and investment in marginal fields, which would depress long term supply and increase long term prices.

ten cents profit is a high margin ?
 
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Pelosi doing her part to save on gas
 

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Toro

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ten cents profit is a high margin ?

Good God, no.

It ain't 10 cents.

Refining margins are ~$20 a barrel right now.

Return on equity is sky high.

They're making a fortune.

That's a good thing, though, as capital is pouring into the sector, both into hydrocarbons and into alternative energy solutions.

That's how the market works, and putting a windfall tax creates uncertainty for oil companies at the margin for capital expenditure. It would be better if they raised royalty rates, if that's what they wanted to do.

But a "windfall tax" is ridiculous class-baiting politics.
 
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Good God, no.

It ain't 10 cents.

Refining margins are ~$20 a barrel right now.

Return on equity is sky high.

They're making a fortune.

That's a good thing, though, as capital is pouring into the sector, both into hydrocarbons and into alternative energy solutions.

That's how the market works, and putting a windfall tax creates uncertainty for oil companies at the margin for capital expenditure. It would be better if they raised royalty rates, if that's what they wanted to do.

But a "windfall tax" is ridiculous class-baiting politics.

A multitude of factors can affect an individual oil company's profit on gasoline sales. However, data from the U.S. Energy Information Administration (EIA) indicates that when the average price of unleaded regular peaked at about $3 a gallon in the middle of 2006, major companies were making a profit of about 10 cents a gallon on their U.S. refining and marketing operations. Profitability factors include the efficiency of the firm's refining, distribution and marketing system, as well as its source of raw material. In times of rising oil prices, companies that own and produce a considerable portion of the crude oil used in their refineries may benefit more than other companies that must purchase most or all of their supplies on the open market.

Crude oil generally represents the single greatest cost component of gasoline, which explains why gasoline prices rise and fall so quickly with changes in the world price of crude oil. For example, at ConocoPhillips, crude oil costs make up 85 to 90 percent of the total costs of running its refineries. As an international commodity, crude oil is bought and sold 24 hours a day, so its price is changing constantly. In the matter of a day or two, crude oil prices can move up or down by several dollars, depending upon supply and demand factors.

In general, crude oil accounts for roughly half of gasoline's price, as shown in the graphic. Other price components include refining, distribution (pipelines and tanker trucks) and marketing (service stations and convenience stores). These so-called "downstream" costs have been falling as companies have made operations more efficient. When gasoline reaches the pump, another major factor comes into play – federal, state and local taxes – which average about 20 percent or more of the pump price. The federal tax is 18.4 cents per gallon, while state and local taxes vary from 8 cents in Alaska to nearly 50 cents per gallon in New York
http://daweb.newsvine.com/_news/2007/06/08/764239-what-do-oil-companies-make-on-a-gallon-of-gas
 

Toro

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Refining margins are highly volatile. I believe the crack spread had fallen to as low as $5 last year, though perhaps I'm wrong, I can't remember. Today, it is about $18-$20 and capacity utilization is running less than 90%. Profits have been exploding for refiners this decade, as you can see in Valero's income statement. Valero is a refiner.

But that is just refining. As your post stated, there are many cost components from when hydrocarbons are pulled out of the ground and put into your tank. And energy companies are capturing the value and making money right down the food chain, which is why integrated oil companies are making enormous profits.

This is Exxon's income statement. They were making so much money that they actually were sandbagging revenue to keep revenues below $100 billion in a quarter - no company has ever generated $100 billion of revenue in a quarter - to avoid a public backlash. Exxon buys $1-$2 billion of its own stock back every month.

That's one reason why I own energy stocks.
 
OP
red states rule

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Refining margins are highly volatile. I believe the crack spread had fallen to as low as $5 last year, though perhaps I'm wrong, I can't remember. Today, it is about $18-$20 and capacity utilization is running less than 90%. Profits have been exploding for refiners this decade, as you can see in Valero's income statement. Valero is a refiner.

But that is just refining. As your post stated, there are many cost components from when hydrocarbons are pulled out of the ground and put into your tank. And energy companies are capturing the value and making money right down the food chain, which is why integrated oil companies are making enormous profits.

This is Exxon's income statement. They were making so much money that they actually were sandbagging revenue to keep revenues below $100 billion in a quarter - no company has ever generated $100 billion of revenue in a quarter - to avoid a public backlash. Exxon buys $1-$2 billion of its own stock back every month.

That's one reason why I own energy stocks.

http://www.eia.doe.gov/bookshelf/brochures/gasolinepricesprimer/eia1_2005primerM.html
 

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