Tomorrow we hope to present more thorough comment on an extraordinary community turn out of citizens in Anchorage, following a similar event in Fairbanks, supporting tax reform. Governor Sean Parnell (NGP Photo), Governor Tony Knowles, Teamster Barbara Huff Tuckness and representatives of Native and small Alaska businesses united to offer one message to legislators: Don't come home without meaningful tax reform. We are most disappointed in the uncharacteristically misleading and acidic report on that event appearing in today's Alaska Dispatch and will have more to say about that tomorrow. -dh (ADN story.) |
The Importance of Commenting — Especially by Elected Leaders (dfh commentary)
Calgary Herald by Tony Seskus. Most Albertans believe the government should actively promote pipeline projects that would boost oil exports, but they're divided on whether tax dollars should be given to industry to increase the amount of bitumen refined in the province, a new poll reveals.
Fairbanks News Miner by Max Buxton. House lawmakers on Wednesday approved a bill aimed at developing a natural gas pipeline… but Fairbanks legislators were divided on the measure.
ADN/AP by Dan Joling. Federal offshore drilling regulators on Wednesday approved Shell Oil's spill response plan for exploratory drilling in the Beaufort Sea…. (Note: we encourage NGP readers to repress sighs of relief until all permits are in hand, until threats of court injunctions diminish and until drilling is actually in progress. The federal administration, so comfortably aligned with environmental activists and act passively aggressive, agreeing to this on one hand while stopping that with the other. -dh)
Comment: Over the last three "Obama years" not one federal decision affecting Alaska resource development has fairly, honorably or reasonably benefited Alaska or the nation's economy, for that  3939x3151 3939x3151.jpg)
matter. This administration has, in our unchallenged opinion, perverted the regulatory process and rule of law and regularly circumvented the jurisdiction if not the intent of Congress. Yet, had we not turned out in droves at federal hearings over the last few years, the legal record of those proceedings would have given the enviro-governmental cabal more reason to shut Alaska down (i.e. "The record clearly shows that Alaskans did not support further development"). As it is, the record clearly shows Alaskans know their Constitution and the Statehood Act are based on resource development and support reasonable development. Whenever an elected official appeared at a hearing or commented in writing, the jurisdictional agency has shown particular deference. One would think that every elected leader over the last few years would have turned out to testify or comment in writing on every federal issue affecting our Constitutional dependence on resource development. Yet only a handful have appeared. The Resource Development Council (RDC) for Alaska — to its great credit — keeps elected leaders and other citizens informed on the status of these critical federal comment periods here. The U.S. Fish and Wildlife Service and FERC, respectively, have two open comment periods now, on Cook Inlet Region's Kenai natural gas project and on Alaska's big hydroelectric project. Attached are the gas and the hydro comments we found from Alaska State Senator Cathy Giessel (NGP Photo), one of the few legislators who regularly participates in federal comment periods. All of our Congressional Delegation, our legislators and our mayors and assembly members can join with the few frequent elected official commenters and respond to the RDC call for comment. How better can elected officials defend Alaska's constitution TODAY? (P.S. If we were doing a 'report card on the performance of public officials, we would include the degree and vigor with which they defend Alaska's Constitutional reliance on resource development at federal and state hearings and public comment periods. High on that list would be only a few, beside Senator Giessel: Governor Sean Parnell and his staff; Senator Lesil McGuire; Representatives Charisse Millett, Lance Pruitt, Dan Saddler, Bob Lynn and Craig Johnson; Mayor Dan Sullivan; Assembly Member Chris Birch. While we have seen others from time to time attend hearings, most are AWOL (Away without leave) on this important Alaska issue. Let this be a wake up call. Citizens are depending on elected officials to defend them against federal attacks on Alaska's constitution. Let 2012 be a year in which elected officials of both parties–not just one–turned out en masse to represent Alaska. All citizens and elected officials who do participate may send their comment/testimony here and we will be delighted to feature it and archive it for future reference.) -dh
Comment: This morning, Senator Lisa Murkowski (NGP Photo) said at the Senate Energy and Natural Resources Committee, "the federal government controls access to millions of acres of federal lands with oil potential. Of all the factors I’ve just listed, access is the only factor that this committee has direct jurisdiction over. Our decisions help determine whether companies have access to the Outer Continental Shelf, the non-wilderness portion of ANWR, and much of the Rocky Mountain West. So if I seem eager to focus on access to federal lands and waters, it’s because that is the area where we have the most direct authority to help." See this morning's video here.
We further appreciate Senator Murkowski's fight against increased taxes on the oil industry, which would further hinder the economy and job market and energy security of both Alaska and the United states. Here is her floor speech from yesterday. Those considering tax reform in Alaska would do well to listen to the wisdom of Senator Murkowski's rationale for reasonable tax policies. -dh
Robert Dillon (NPG Photo) of Senator Lisa Murkowski's Energy Committee staff has produced this well thought out piece on President Obama's continuing attack on America's oil industry job producers which we are delighted to provide for your information and future reference, here. -dh
Syracuse.com: Shale gas has benefits for New York
Like many Northeastern and Mid-Atlantic states, New York relies heavily on natural gas during the typically cold winters. More than half of households in the state use natural gas as their primary energy source for heating. With this winter's above-average temperatures, most New Yorkers are seeing stark reductions in their heating bills.
In New Jersey, Gov. Chris Christie's administration pulled out of a proposed pact to cut global warming emissions in transportation fuels. In New Hampshire, the House passed a bill to leave the same regional initiative. And in Maine, the government opted to continue to engage in the program, but not to apply the rules to its own transportation sector.
Federal offshore drilling regulators on Wednesday approved Shell Oil's spill response plan for exploratory drilling in the Beaufort Sea, drawing strong criticism from environmental groups that claim oil companies cannot clean up oil in ice-choked waters. The announcement by the Interior Department's Bureau of Safety and Environmental Enforcement said the decision followed the agency's thorough review of the plan for Arctic Ocean waters off Alaska's north coast.
A new legislative memo suggests that about $2.2 million was spent on lobbying last year by the oil and gas industry and three affiliated organizations. Lobbying by industry and the Alaska Oil and Gas Association, Alaska Support Industry Alliance and Resource Development Council last year came as lawmakers debated an oil tax cut. Just the industry portion of that — excluding the affiliated groups — was about $2 million. Spending by the three groups totaled $185,319, the memo shows.
The Obama administration today announced a plan to allow companies to survey the Atlantic Ocean for oil and gas and other resources, an important first step in deciding whether, and where, to allow drilling, it said. In an election year in which the president has been under pressure to address rising gasoline prices, today's decision signals the beginning of a long road to developing new oil and gas in the Atlantic from Delaware south to Florida.
U.S. and Canadian oil producers and shippers are concerned that the owners of a pipeline that could compete with Keystone XL may hike prices for transporting crude oil from Cushing, Okla., to the Gulf Coast. At issue is Enbridge Inc. and Enterprise Products Partners' request to set rates for how much shippers must pay to transport oil on the Seaway pipeline system from the U.S. oil trading hub at Cushing to the Texas Gulf Coast.
New technologies in shale oil drilling, and the Alberta oil sands means that there is a glut of oil in Canada and the northern US with very few transportation options. This has led to trade prices far lower than world crude prices, and therefore there is an eagerness to get this oil to the coast for refinement and shipping.
With higher gasoline prices holding steady, the Obama administration on Wednesday took steps that could pave the way for oil and gas exploration off the coast of Alaska and in the Atlantic Ocean as it sought to combat criticism it is hostile to fossil-fuel development. The Department of Interior approved Royal Dutch Shell's plan for responding to oil spills in Alaska's Beaufort Sea, news the company called "another major milestone" toward drilling there this summer.
Alberta oil producers are making a lot of crude gestures — many of them pipeline proposals — these days, and for good reason. They’re losing billions of dollars because of depressed prices from a glut of Alberta crude at U.S. refineries. The latest monthly report from respected Scotiabank commodities analyst Patricia Mohr says the Canadian crude-oil “discount” has now reached above $30 CDN a barrel. That’s largely because of regulatory and political bottlenecks.
Stocks of oil at the delivery place for US crude futures are nearing record levels as production grows and refineries undergo seasonal maintenance. The inland tank complex of Cushing, Oklahoma, contained 39.6m barrels last week, up 1.1m barrels from a week before and close to peak levels of one year ago, the US Energy Information Administration reported yesterday. The rise was part of an unexpectedly big 7.1m barrel increase in overall US crude stocks.
With rising gasoline prices fueling election-year political rhetoric, the Obama administration is accelerating moves it can paint as energy-friendly while putting the brakes on some environmental initiatives that opponents could blame for raising costs. Among the stalled proposals is a requirement that refiners make gasoline that emits 67 percent less sulfur – 10 parts per million down from the 30 ppm permitted now.
Rising gasoline prices have become a source of finger-pointing and political rhetoric – yet the economic reality for some refiners is that the price isn’t high enough.They say that gasoline prices, particularly on the East Coast, have been too low for them to operate successfully. Already, two refineries there have shut down completely and a third has gone idle as prices for fuel haven’t kept up with the surging cost of the raw material, crude oil.
3-29-12 opinion by Robert Dillon (NGP Photo). President Obama is doubling down on his bash-oil-companies rhetoric this morning, and reportedly plans to urge “Congress to vote to end the billions in taxpayer dollars handed out to oil companies every year” in his morning address from the Rose Garden.
There are no taxpayer dollars handed out to oil companies, but it is revealing of the president’s mindset when he refers to not taking even more of a company’s earnings as a “subsidy” and “handing out taxpayer dollars.” The attached article at the bottom of this email details what companies actually pay.
There’s no doubt that the Menendez bill will fail, as it did
last year. Even Senate Democrats agree that their tax hike proposal will do nothing to lower the price at the pump. As the bill’s sponsor, Sen. Menendez, made clear: “Nobody has made the claim that this bill is about reducing gas prices.”
So why are we wasting time on it when high gas prices are putting the squeeze on Americans? The administration’s own words show that this is about politics and not good policy: after taking office, it justified tax hikes on oil companies by claiming that the current tax code somehow led to the “overproduction” of domestic oil, and was therefore “
detrimental to long-term energy security” and “inconsistent” with the administration’s preferred cap-and-trade program.
When the president talks about “subsidies,” he’s apparently talking about the Manufacturing Tax Credit (the “199” provision). U.S. manufacturers of all types use this credit. By an overwhelming bipartisan vote of 92-5, the provision became law in 2004 after the Senate passed the Jumpstart Our Business Strength (JOBS) Act. .
The president repeatedly conflates not taking even more money from oil companies through higher taxes with actual subsidies such as the government giving cash to Solyndra. By this logic, any dollar earned but not seized by the government is a “subsidy” for which we should feel grateful.
This is surprising since in his State of the Union earlier this year, the president said: “if you’re an American manufacturer, you should get a bigger tax cut.” Apparently, he meant only certain favored manufacturers should get a tax cut – and it’ll be called a “subsidy” if you’re not on the list.
This isn’t about addressing gas prices. This is about President Obama and Majority Leader Reid trying to gain political advantage by claiming that by promoting increased supply and acknowledging basic economics, Republicans are defending Big Oil. That’s frustrating and disappointing because it reveals that Democrats have no real energy policy solutions to offer. Given the magnitude of the strain that rising energy prices are placing on American families – that’s downright scary.
This is the first and only time in this Congress that the Senate has taken up energy legislation on the floor. Republicans have not been allowed a single amendment to grant access to a single drop of oil – even though both the president and the bill’s sponsor have publicly conceded that increased domestic oil supply can help lower prices.
I’m sending along The Wall Street Journal opinion piece from earlier this month on the amount of money the oil industry pays the government. I sent this out previously, but it’s a good piece and a relevant one given today’s cloture vote on the Menendez bill and this morning’s hearing on gas price trends before the Senate Energy and Natural Resources Committee. The takeaway from the article is that the oil and gas industry paid some $35.7 billion in corporate income taxes in 2009. That alone is about 10 percent of non-defense discretionary spending. That figure also doesn't count excise taxes, state taxes and rents, royalties, fees and bonus payments. The overall take-away is that we owe it to the American consumer to increase supply, reduce demand, and hold down costs.
The industry sends more money to Washington than to shareholders
Wall Street Journal editorial
March 14, 2012
President Obama says he wants to end subsidies for what he calls "the fuel of the past," but lucky for him oil and gas will be the fuels of the future too. His budget-deficit blowout would be so much worse without Big Oil, because the truth is that this industry is subsidizing the government.
Much, much worse, actually. The federal Energy Information Administration reports that the industry paid some $35.7 billion in corporate income taxes in 2009, the latest year for which data are available. That alone is about 10% of non-defense discretionary spending—and it would cover a lot of Solyndras. That figure also doesn't count excise taxes, state taxes and rents, royalties, fees and bonus payments. All told, the government rakes in $86 million from oil and gas every day—far more than from any other business.
Not paying their "fair share"? Here's a staggering fact: The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders.
Exxon Mobil, the world's largest oil and gas company, says that in the five years prior to 2010 it paid about $59 billion in total U.S. taxes, while it earned . . . $40.5 billion domestically. Another way of putting it is that for every dollar of net U.S. profits between 2006 and 2010, the company incurred $1.45 in taxes. Exxon's 2010 tax bill was three times larger than its domestic profits. The company can stay in business because it operates globally and earned a total net income after tax of $30.5 billion in 2010 on revenues of $370.1 billion.
Meanwhile, Mr. Obama's 2013 budget—like its 2012, 2011 and 2010 vintages—includes a dozen-odd tax increases that would raise the industry's liability by $44 billion over the next decade, according to the White House, and by $85 billion, according to the trade group the American Petroleum Institute (API). At any rate, the President's economists ought to be weeping for joy for the revenue windfall from an industry that grew 4.5% in 2011, compared to overall GDP growth of 1.7%.
Crunching Compustat North America numbers, API estimates that the average effective tax rate for oil and gas companies is 41.1% for 2010—i.e., taxes as a share of net income. That is broadly in line with the Energy Information Administration's estimates for "major energy producers." By the same measure, other manufacturers on the S&P Industrial index pay an effective rate of 26.5%.
Specific oil and gas investments are also taxed at higher rates than other energy plays, which were surveyed in a 2009 paper by economist Gilbert Metcalf, now a deputy assistant Treasury secretary. He found that oil drilling (for an integrated company) clocks in at a 15.2% tax rate, refining at 19.1% and building a natural gas pipeline at 27%.
For comparison, nuclear power comes in at minus-99.5%, wind at minus-163.8% and solar thermal at minus-244.7%—and that's before the 2009 Obama-Pelosi stimulus. In other words, the taxpayer loses more the more each of these power sources produces.
As for the "subsidies" that Mr. Obama says the oil industry receives, these aren't direct cash handouts like those that go to the green lobby. They're deductions from taxes that cover the cost of doing business and earning income to tax in the first place. Most of them are available to other manufacturers.
What Mr. Obama really means is that he wants to put the risky and capital-intensive process of finding, extracting and producing oil and gas at a competitive disadvantage against other businesses. He does so because he ultimately wants to make them more expensive than his favorites in the wind, solar and ethanol industries.
Why he would still want to do this amid the political panic over $4 per gallon gasoline is a mystery. Even Mr. Obama now claims to want lower gas prices, commenting recently that "Do you think the President of the United States going into re-election wants gas prices to go up higher?" Too bad his every policy choice, and especially his tax agenda, would lead to higher prices.
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