Comments on: The Reality of the Offshore Drilling Ban,

By: Andrew

Andrew — Fri, 08 Aug 2008 13:59:28 +0000

Those taxes are not defferred ad infinitum. Defferred taxes appear on the balance sheet because of differences between the government’s depreciation schedule and the one the company reports to its shareholders. If the level of defferred taxes only increases, it is because the company is adding capital.

By: John Médaille

John Médaille — Sun, 03 Aug 2008 18:48:18 +0000

The oil companies want the leases not to drill them, but to insure that nobody else does. There is a perverse incentive not to drill. Raising oil to the surface costs about $10-20/bbl; with the current price at $125/bbl, that a lot of profit. Why drill and increase the supply? Better to have control of the leases and not use them. The oil isn’t going anywhere, and they can drill them when their current fields play out, this keeping the supply low and the price high. This is also why they are always content to “lose” the ANWR debate; they don’t want to drill ANWR, they just don’t want anybody else to do so.

The solution is simple: allow the oil companies a lease anywhere they like, any time. But put a time limit on it. Say, “You must use this lease in five years, or it reverts back to the people, and you lose any lease payments.” You will find not one single taker for the leases under those conditions.

As for funkool’s claim of a mere 9% profit, that is indeed what the oil companies claim–to the general public. But they give a different story to their investors. Their total ROI for 2007 before taxes was 29%, and 17% after taxes. However, even that is not meaningful, because of the $29B charge for taxes, $23B is in “deferred” taxes (meaning they don’t actually pay them–tax accounting is weird.)

The “9%” is a return on sales, which is a meaningless number; an investor looks at return on investment (ROI). Even the 9% number is a gross understatement, a manipulated number. The stated return on revenues for 2007 is actually 10.5%. But even just adding back in the (infinitely) deferred taxes brings that to 16.4%. And then there is the outright looting of the company by higher-level executives who take enourmous salaries, expense accounts, and perks, money which comes from what rightfully belongs to the workers and the investors.

In any case, when you hear a company making claims like this, the best way to check it out is to see what they say in other contexts. If they really only earned 9%, they would be hard-put to get any investors, so they have to tell the investors something which comes a bit closer to the reality, even if there are still mythical elements.

By: Bush Still Pushing Offshore Drilling « Heck if I know…

Bush Still Pushing Offshore Drilling « Heck if I know… — Tue, 15 Jul 2008 02:27:36 +0000

[...] As I’ve said before, making new offshore oil leases available will accomplish exactly nothing — except to put more money in the oil companies’ pockets. [...]

By: Funkool

Funkool — Fri, 11 Jul 2008 09:40:38 +0000

Two ways to reduce price: decrease demand or increase supply.

Decreasing our demand, through other sources, less & better efficiency is good, but will not have much affect. Global demand keeps increasing.

Increasing out own supply will help. Currently about 40% of our oil needs is from domestic sources. ANWR can supposedly handle 5%; maybe we can get another 5% from offshore. So people don’t think if the oil mix is change to 50% domestic, that won’t help?

Domestic barrels are cheaper; their price is averaged with the global price.

Oil companies gouging? Please check the facts. Despite record profits, they are not exorbitant, with the average margin for all US oil companies being slightly less than 9% for last year.

By: Susan from fireplaces

Susan from fireplaces — Mon, 07 Jul 2008 20:47:29 +0000

I even heard, that your government want to give right to drill in some reservations. I think, that they mentioned that it was some protected reef ecosystem…
And you are right. You should lower the consumption. And you Americans have the best opportunity to use alternative sources of energy. I know it, because I study them You even used them, but then the donations for were cancelled and low prices of oil made alternative sources too expensive compared to energy from oil…

By: RC of strangeculture

RC of strangeculture — Mon, 07 Jul 2008 03:47:08 +0000

with a quick raise in prices, (as opposed to slow and steady) it definitly has made gas prices and our response to them a HUGE priority.

it’s pretty crazy.

By: nate

nate — Tue, 01 Jul 2008 16:17:48 +0000

Hmmmm….at this rate, by 2030 the U.S. economy will already have collapsed.

Instead of investing in fossil fuels, I’d like to see my tax dollars further develop this idea:

By: tigereye

tigereye — Thu, 26 Jun 2008 02:52:46 +0000

I’m very, very glad I work at home now, because otherwise I don’t know how I’d make it… and I DON’T know what I’m going to do this winter, when the heating oil prices are even higher than last year. I can’t think and become hostile when I’m cold.

My sorry state’s governor says he’s all for offshore drilling. What his from-near-Hilton-Head a** means is “They can drill off Myrtle Beach, where the tacky tourists go, or they can drill off those poor counties going down toward Charleston, but they can’t drill where MY people live.” He’s trying his best to catch up to GWB on my Most Hated, I’ll give him that. He’s clearly not complacent with just making the Top 10.

By: heathenly

heathenly — Wed, 25 Jun 2008 21:04:34 +0000

Yeah. Psychological benefit. I know I’ll feel better… eyeroll.

I’m struggling right now with not driving so fast, not jumping on the gas when the light turns green. Because even that helps. My commute with daycare and whatall is not conducive to bus-takin’, and the bus system here is totally loaded right now anyhoo. So, slower driving for me!

Move forward, indeed. Rest assured that my next vehicle will not be a Ford Explorer with a V8 engine.