Thinking of the conversation we started in your recent post on the American Oil Industry and "subsidies" and potential reinvestment opportunities. I propose we explore the topic of Renewable Energy. Wes having invested his career in the Oil Industry, deep water technology and exploration can offer an insiders perspective of the role of fossil fuels in meeting the worlds energy needs and the political, economic and environmental (gulf coast BP hitting close to home) dynamics of the industry and I would be interested in subjective thoughts on the future of energy. Comparing international investment in a RE future compared to the American short sited approach and the potentials of these new technologies. As we noted is greed the driving force of American culture , is Greed Good? ( reminded of Ayn Rand's philosophy of the individual, (Objectivism, Rand advocated reason as the only means of acquiring knowledge and rejected all forms of faith and religion. She supported rational egoism and rejected ethical altruism. In politics, she condemned the initiation of force as immoral and opposed all forms ofcollectivism and statism, instead supporting laissez-fairecapitalism, which she believed was the only social system that protected individual rights.) ( admittedly as an architect I empathize Rands hero in The Fountainhead in 1943, Howard Roark's ) as evidenced in Greenspan's view of unregulated corporations, debated against investment in social good. How can the Federal system best incentivize investment and innovation to promote long term prosperity? Certainly not by Subsidizing the Oil Industry. America needs a "New Deal" challenge.Although we don't need another military World War. We need an economic World War effort.
Quoting an article "Global Investments in Renewable Energy are expected to reach $653.35 billion by 2015
Investments in renewable energy increased from $39.24 billion in 2001 to $336.78 billion in 2009 at a CAGR of 30.8% during the period 2001-09. There is an increase in total investments in the renewable energy sector by 43.4% in 2009 from $283.11 billion in 2008.
Global Investments in the renewable energy industry are mainly driven by policies and incentives offered by the respective federal governments in different countries. The investments in the industry are mainly aimed at creating employment opportunities and driving away the clouds of economic downturn in many nations. Investments in the renewable energy industry are likely to increase in the forecast period 2009-15 and are expected to reach $653.35 billion by 2015.
A great place to start is RenewableEnergyWorld.com
...here is an excerpt from a recent email i wrote to Hanks...
Unless, we, as a nation, learn to conserve, our need for liquid fuels for transportation will continue to grow. Beyond our borders, in China they now are buying more cars than the US - more liquid fuel required, and you can imagine the rate of growth there, whether it is a house of cards or not is another story.
Solar and wind cannot do the job - great supplemental sources for the electrical grid - when it is daylight and when the wind blows - but, useless for transportation. A nation of electric powered vehicles is a great ambition, but the electrical infrastructure needs to be majorly upgraded, and, the electrical power needs an energy source - coal, nat gas, or nuclear. I think nuclear is the obvious choice, despite the horrific problems in Japan.
It could make sense to convert the long haul transportation fleet to run on nat gas.
These are big issues requiring big leadership, unfortunately Obama does not appear to be up to the task - maybe next term with nothing left to loose he will show some leadership on these sort of issues.
More aptly I would say , I don't think the American Congress is up to the task. http://www.renewableenergyworld.com/rea/news/article/2011/02/us-republicans-propose-inexplicable-cuts-to-renewable-energy
US Republicans Propose "Inexplicable" Cuts to Renewable Energy By Scott Sklar, The Stella Group February 16, 2011
Washington, D.C., United States – The Republican House Majority has begun their opening salvo on budget cutting. And if done honestly and equitably, I would have nothing to write about. But here's the recent proposal of cuts in the proposed FY'2011 Budget Continuing Resolution (CR) for the US Department of Energy:
Energy Efficiency and Renewable Energy -$899 million Electricity Delivery and Energy Reliability -$49 million Nuclear Energy -$169 million Fossil Energy Research -$31 million Clean Coal Technology -$18 million
agreed, but...who's in charge? amerika is a corprotacracy...no? big oil owns 'em, just as the TBTF big banks do...
...don't know the reliability or basis of the referenced material, but....these numbers are negligible in terms of the government budget...try defense cuts...that is where the big bucks and big benefits are easily and righteously found...
Big Oil needs no and deserves no special treatment...could not agree more...
The tax breaks that Obama wants to eliminate will cost the U.S. Treasury $44 billion over the next decade. A Senate proposal targets many of the same rules, but would eliminate them only for the five biggest oil companies: ExxonMobil, Chevron, BP, Royal Dutch Shell and ConocoPhillips.
Here is a look at the main tax breaks:
— The biggest is what's called the Domestic Manufacturing Deduction. It's a 2004 tax change meant to encourage companies to manufacture in the U.S.
It allows companies of almost any type to deduct from their taxable income up to 9 percent of profits from domestic manufacturing. Under the rule, oil and gas companies were classified as manufacturers, but their deduction was capped at 6 percent. This provision alone is expected to save the oil and gas industry $18.2 billion over the next ten years, or 42 percent of the $44 billion total.
The oil industry feels unfairly singled out. "It can't be good for some and not for others or it is just a punishment," says Stephen Comstock, the tax policy manager at the American Petroleum Institute, an oil industry lobbying group.
— Another subsidy, established in 1913 to encourage domestic drilling, allows oil companies to deduct more quickly all of the so-called intangible costs of preparing a site for drilling.
To accountants, intangible costs are costs for things that have no salvage value when the well runs dry, including clearing land and pouring concrete. Ordinarily, a business would have to deduct these costs over the life of the drilling site. Instead, small, independent drillers are allowed to deduct all of these expenses in the first year; major, so-called integrated companies like ExxonMobil can deduct 70 percent in the first year.
The break is worth $12.5 billion over the next ten years. Comstock compares the oil industry's ability to write off the cost of preparing a well to other companies' ability to write off research and development costs. Other tax experts say this is clearly a subsidy.
— A rule dating from 1926 that establishes how oil companies can depreciate the value of their wells allows drillers to deduct 15 percent of the well's revenue from its taxable income per year. This is instead of a more traditional depreciation scheme in which the cost of the well is depreciated over the well's life.
The tax break was created in part to simplify accounting, so companies wouldn't have to guess how long an oil or gas field would produce in order to calculate how to depreciate it. It can be a boon: The total of the deductions over the life of the well can sometimes be bigger than what the company actually spent on the well.
This provision was eliminated for major oil companies in 1975, but it continues for independent producers. The break is worth $11 billion over 10 years.
— Royalties that companies pay foreign governments for the oil they extract are not deductible from U.S taxes. But often the industry is allowed to claim royalties as foreign taxes, which are deductible. Obama and Senate Democrats call this a loophole, and want to close it. Obama doesn't include this in his $44 billion proposal, but Whitney Stanco, an analyst at MF Global, calculates that removing this benefit could cost the industry $8.5 billion over ten years.
Jonathan Fahey can be reached at http://www.facebook.com/Fahey.Jonathan.
Although we don't need another military World War. We need an economic World War effort.
...here is an excerpt from a recent email i wrote to Hanks...
ReplyDeleteUnless, we, as a nation, learn to conserve, our need for liquid fuels for transportation will continue to grow. Beyond our borders, in China they now are buying more cars than the US - more liquid fuel required, and you can imagine the rate of growth there, whether it is a house of cards or not is another story.
Solar and wind cannot do the job - great supplemental sources for the electrical grid - when it is daylight and when the wind blows - but, useless for transportation. A nation of electric powered vehicles is a great ambition, but the electrical infrastructure needs to be majorly upgraded, and, the electrical power needs an energy source - coal, nat gas, or nuclear. I think nuclear is the obvious choice, despite the horrific problems in Japan.
It could make sense to convert the long haul transportation fleet to run on nat gas.
These are big issues requiring big leadership, unfortunately Obama does not appear to be up to the task - maybe next term with nothing left to loose he will show some leadership on these sort of issues.
More aptly I would say , I don't think the American Congress is up to the task.
ReplyDeletehttp://www.renewableenergyworld.com/rea/news/article/2011/02/us-republicans-propose-inexplicable-cuts-to-renewable-energy
US Republicans Propose "Inexplicable" Cuts to Renewable Energy
By Scott Sklar, The Stella Group
February 16, 2011
Washington, D.C., United States – The Republican House Majority has begun their opening salvo on budget cutting. And if done honestly and equitably, I would have nothing to write about. But here's the recent proposal of cuts in the proposed FY'2011 Budget Continuing Resolution (CR) for the US Department of Energy:
Energy Efficiency and Renewable Energy -$899 million
Electricity Delivery and Energy Reliability -$49 million
Nuclear Energy -$169 million
Fossil Energy Research -$31 million
Clean Coal Technology -$18 million
agreed, but...who's in charge? amerika is a corprotacracy...no? big oil owns 'em, just as the TBTF big banks do...
ReplyDelete...don't know the reliability or basis of the referenced material, but....these numbers are negligible in terms of the government budget...try defense cuts...that is where the big bucks and big benefits are easily and righteously found...
Big Oil needs no and deserves no special treatment...could not agree more...
The tax breaks that Obama wants to eliminate will cost the U.S. Treasury $44 billion over the next decade. A Senate proposal targets many of the same rules, but would eliminate them only for the five biggest oil companies: ExxonMobil, Chevron, BP, Royal Dutch Shell and ConocoPhillips.
ReplyDeleteHere is a look at the main tax breaks:
— The biggest is what's called the Domestic Manufacturing Deduction. It's a 2004 tax change meant to encourage companies to manufacture in the U.S.
It allows companies of almost any type to deduct from their taxable income up to 9 percent of profits from domestic manufacturing. Under the rule, oil and gas companies were classified as manufacturers, but their deduction was capped at 6 percent.
This provision alone is expected to save the oil and gas industry $18.2 billion over the next ten years, or 42 percent of the $44 billion total.
The oil industry feels unfairly singled out. "It can't be good for some and not for others or it is just a punishment," says Stephen Comstock, the tax policy manager at the American Petroleum Institute, an oil industry lobbying group.
— Another subsidy, established in 1913 to encourage domestic drilling, allows oil companies to deduct more quickly all of the so-called intangible costs of preparing a site for drilling.
To accountants, intangible costs are costs for things that have no salvage value when the well runs dry, including clearing land and pouring concrete. Ordinarily, a business would have to deduct these costs over the life of the drilling site. Instead, small, independent drillers are allowed to deduct all of these expenses in the first year; major, so-called integrated companies like ExxonMobil can deduct 70 percent in the first year.
The break is worth $12.5 billion over the next ten years.
Comstock compares the oil industry's ability to write off the cost of preparing a well to other companies' ability to write off research and development costs. Other tax experts say this is clearly a subsidy.
— A rule dating from 1926 that establishes how oil companies can depreciate the value of their wells allows drillers to deduct 15 percent of the well's revenue from its taxable income per year. This is instead of a more traditional depreciation scheme in which the cost of the well is depreciated over the well's life.
The tax break was created in part to simplify accounting, so companies wouldn't have to guess how long an oil or gas field would produce in order to calculate how to depreciate it. It can be a boon: The total of the deductions over the life of the well can sometimes be bigger than what the company actually spent on the well.
This provision was eliminated for major oil companies in 1975, but it continues for independent producers. The break is worth $11 billion over 10 years.
— Royalties that companies pay foreign governments for the oil they extract are not deductible from U.S taxes. But often the industry is allowed to claim royalties as foreign taxes, which are deductible. Obama and Senate Democrats call this a loophole, and want to close it. Obama doesn't include this in his $44 billion proposal, but Whitney Stanco, an analyst at MF Global, calculates that removing this benefit could cost the industry $8.5 billion over ten years.
Jonathan Fahey can be reached at http://www.facebook.com/Fahey.Jonathan.