Wednesday, June 11, 2008

Windfall Profits Tax Killed By GOP, Give-Aways Continue Unmolested

Senate Republicans have once again protected their patrons in the oil industry from a windfall profits tax:

The Senate fell nine votes short of the 60 required to proceed to debate on the Democrat-sponsored energy measure, which would have erased $17 billion in tax breaks for oil companies over 10 years and created a levy on "unreasonable" profits collected by the five largest U.S. oil companies. Only six Republicans voted to move ahead.

Of course we'll have another bite at the apple next year, likely with an increased Senate majority and a President Obama, who's already promised to make the petro-kings pay:

I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills.

But for all the sturm und drang about the windfall profits tax, nobody is raising a peep about this $53 billion rip-off:

If oil and natural gas prices stay as high as they've been in recent months, the government could lose as much as $53 billion over the next 25 years in energy royalties because of an adverse court ruling, according to congressional auditors.

The Government Accountability Office said in a report released Thursday that the soaring price of crude oil and natural gas also means the windfall that companies will enjoy from the court ruling also could increase by billions of dollars.

In October 2007, a federal court ruled in a claim originally filed by Kerr McGee Corp. that the government cannot require companies that are exempt from paying royalties on oil and gas taken from federal land and waters to pay them if market prices reach a certain level.

And how did we get ourselves in such a ridiculous situation?

The case is based on a claim filed by Kerr-McGee, which was purchased by Anadarko Petroleum Corp., in 2006.

Anadarko had argued successfully that the Interior Department's Minerals Management Service had overstepped its authority when it imposed royalties on oil and gas taken from deep waters of the Gulf of Mexico under a royalty relief program enacted by Congress in 1995.

Congress at the time provided the royalty break for deepwater exploration to encourage energy development in those areas. The Interior Department contends it had the authority to lift that royalty relief once prices reached a certain level -- prices that are far below what crude oil and natural gas is now costing.

I'd like to see some legislative action to stop giving away publicly owned petroleum to the oil profiteers for free. How 'bout you?

Monday, April 28, 2008

The Oil Companies Should Pick Up the Tab, Not the Public

Markos rips into Clinton today for supporting McCain's idea of a "Summer Gas Tax Holiday":
Honestly, why take the 18 cents out of the federal budget? Why not take it out of the oil company profits? The $10 billion in revenue the federal government would lose, at a time when our roads are crumbling and bridges literally collapsing, is only a quarter of Exxon Mobil's annual profits...

And that's just Exxon Mobile, excluding every other Big Oil company. Add them all up, and $10 billion would be but a blip in their balance sheet. So why do McCain and Clinton want to penalize the federal government at a time of record oil profits?

One thing that Markos and almost every commenter is missing, is that the oil companies already owe the U.S. taxpayers more than $10 billion in uncollected royalties for petroleum removed from public lands.

And when you realize that some estimates put the figure at $31 billion it really makes you wonder, why don't we have a $0.36/gallon gas tax break and let the oil companies pay for it out of the money they already owe the taxpayers?

Monday, March 31, 2008

Presidential Campaign Oil Wrestling

Last week, the Obama campaign released a new TV spot for the Pennsylvania market slamming the oil companies' high prices and big profits. In the ad he touts his policy prescription: a windfall profits tax.

The Clinton campaign predictably fired back with charges that Obama "did so" take plenty of money from the oil industry. You can see a quick sound bite of Hillary bashing Obama's energy vote bill here.

Hillary Rodham Clinton's campaign was quick to send out an e-mail accusing Mr. Obama of making false statements in his ad, saying he has received more than $160,000 from the oil and gas companies. Phil Singer, deputy communications director for Mrs. Clinton, put out this statement: "It's unfortunate that Senator Obama is using false advertising to explain why he can be trusted to do something about energy prices. Senator Obama says he doesn't take campaign contributions from oil companies, but the reality is that Exxon Mobil, Shell and others are among his donors. I wonder if they'll fix the ad."
Obama's team quickly fired back with more of the "he said, she said":
Mr. Singer shouldn't hold his breath. Bill Burton, press secretary for the Obama campaign, reaffirmed the ad's message, saying "Senator Obama is the only candidate in the race who doesn't accept campaign contributions from special interests PACs and Washington lobbyists, and that includes oil companies and oil lobbyists." "The energy bill that Senator Clinton has already been criticized for misrepresenting -- one that Clinton supporters Representatives Murtha and Kanjorski also backed -- actually raised taxes on oil companies and made the largest investment in renewable energy in our nation's history," said Mr. Burton in a statement. "Instead of continuing with the negative and misleading tactics that voters everywhere are rejecting, Senator Clinton should get behind the Obama plan to ease the burden of rising gas prices on working families."
IMO, Obama's windfall profits tax idea is the definition of empty pandering. It didn't work for Jimmy Carter and there's no reason to believe it will work now. Sadly, all this finger pointing is ignoring a very obvious way to get more money out of the oil companies, money that they already owe the federal government. As I've been posting in this series, the Department of Interior has failed to collect more than $10 billion in revenues for petroleum removed from public lands. When will one of the candidates step up and promise to collect this outstanding debt?

Friday, February 29, 2008

"Going After" the Oil Companies

Earlier this week the Wall Street Journal reported that House and Senate Democrats were "going after" U.S. petroleum companies.

As early as today, the House of Representatives is expected to approve a measure that would eliminate roughly $18 billion in tax incentives for oil and gas companies, and use the savings to fund tax credits and other incentives for renewable energy.

It isn't expected to become law, but it is one of several recent attempts by Democrats to keep President Bush and Republicans on the defensive.The measure comes as high energy prices put increased pressure on consumers. ...

Senate Democrats also held a hearing yesterday to put new pressure on the administration to take a tougher line against the industry in a dispute over royalties for leases issued in the late 1990s. Assistant Secretary of the Interior Stephen Allred told a Senate Appropriations subcommittee that as much as $31 billion is at stake in the dispute, which centers on leases issued to oil and gas companies for the right to drill in the Gulf of Mexico from 1996 to 2000.

The House bill, though facing an uncertain future in the Senate and an almost certain veto from President Bush, is pretty good. From another WSJ piece:

The House of Representatives voted to repeal $18 billion of tax breaks for oil and gas producers, and to use the savings to finance tax incentives for wind-power projects, solar panels and more energy-efficient cars. ...

Under the bill, Congress would extend through 2011 tax credits for newly built wind farms and other facilities that generate power from renewable sources such as landfills. The government estimates the cost at $6.6 billion over 10 years, making it the single most expensive tax break in the legislation. Congress would also extend, through 2016, the tax credit of 30% that companies may claim for investments in solar products and so-called fuel cells. Fuel cells convert fuel into electrical energy without any combustion, thereby minimizing pollution.

Consumers would gain new tax breaks for buying plug-in hybrid cars.

Oil and gas companies would lose some $13.6 billion in tax breaks granted in 2004 for domestically produced goods. Exxon Mobil Corp., Chevron Corp., ConocoPhillips, Royal Dutch Shell PLC and BP PLC would lose the tax breaks entirely. The deduction would be frozen at 6% for smaller oil and gas companies. That deduction had been scheduled to jump to 9% in 2010.

Oil companies would also lose another $4.1 billion under provisions that provide less-favorable tax treatment for certain kinds of foreign income.

And how is the Senate "going after" the oil companies? Well, aside from the fact that very similar legislation failed BY ONE VOTE last year, Senator Feinstein is trying to get them to pay for petroleum they've already taken from public lands -- $31 billion worth:

A U.S. Interior Department official said today that the government may have a hard time collecting as much as $31 billion in royalty payments for leases issued in the late 1990s unless a court decision that rejected the government's right to the payments is reversed.

The warning from Assistant Secretary Stephen Allred came at a hearing aimed at keeping visibility on disputed royalty payments for deepwater drilling. Sen. Dianne Feinstein, D-Calif., has been pressing oil companies to make the payments, and promised to try again with legislation that would ban oil companies from participating in sales of new leases unless they pay royalties on a set of leases issued in 1998 and 1999.

That's not even mentioning the $10 billion the oil companies are shorting the American taxpayer because they're still paying royalties for the oil they take from public lands at a rate of $36/barrel. It's all pretty unbelievable to me, but I'm glad that our Democratic Represenatives and Senators are trying to do something about the endless boondoggles and ripoffs the Bush administration and oil companies have colluded to perpetrate against the American taxpayer. Next question -- why aren't we hearing more about this from the Democratic presidential candidates?

I've got a theory on that, and I'll be posting about it next week.

In the meantime -- remember that one vote that prevented the legislation to redirect oil company tax breaks to renewable energy from passing in the Senate last year? Well it belonged to John McCain who didn't even bother to vote, choosing instead to kill the bill quietly and without getting his fingerprints on it.

Monday, February 4, 2008

A New Fox in the Henhouse

Big Oil advocate and Baker Botts attorney, Gregory Copeland has just been nominated to serve as General Counsel for the Department of Energy. A brief look at his bio on the Baker Botts web site confirms that he has spent his career defending the interests of Big Oil. You'll note his representation of Marathon Oil in multiple cases.

It's ironic that, having defended Marathon against charges that they systematically underpaid royalties owed to the Department of Interior/Minerals Management Service (MMS), he is now seen fit by George Bush to perform "public service".

Iowa Congressman Bruce Braley spoke out about the cozy connections between the oil companies and those government officials who are supposed to enforce the laws and ensure oil companies pay for drilling on public lands:

“Unfortunately, evidence suggests that the cozy relationships between MMS officials and oil and gas companies have allowed these companies to underreport the resources they remove from federal lands and underpay the royalties they owe to the federal government. Evidence that MMS has failed to detect and pursue these violations by oil and gas companies is especially troubling as gas prices continue to rise, corporations make record profits and average American are struggling to fill their gas tanks and make ends meet.”

Not to mention that the "cost" our government charges the oil companies for oil taken from public lands is far from the true cost of that oil, as Darksyde wrote on DailyKos:

What is the true cost of a barrel of oil or a tank of gas for US consumers? Difficult to say. But any holistic number would have to partially factor in the damage done to local and regional water tables from refineries and storage facilities, the gigatons of greenhouse gases and other pollutants released, and the hundreds of billions of tax payer dollars and thousands of lives spent in Iraq and elsewhere in the Middle East to secure cheap oil. Adding insult to injury, consider the lavish tax breaks and sweetheart subsidies the oil industry and Exxon specifically have received from the Bush-Cheney administration courtesy of We the People.

When the U.S. Government prices oil for sale it's already dramatically undervalued, making the systemic failure to collect what the oil companies owe doubly bad. Bringing another big oil company lawyer to the table -- to represent "We the People" of all things -- is certainly not going to tip the scales to the side of justice.

And in case you forgot, Copeland's firm, Baker Botts, are the people who represented Bush in Bush v Gore, the case that stole the Presidency from the American people.

Thursday, January 31, 2008

Shell's Profits Called "Obscene", Shell Exec Promises to Do Better

The Guardian (UK) reports on the record profits the oil companies are making. Nevertheless, Shell's CEO is promising investors he's working on plans to keep increasing their slice of the pie. Too much is never enough.

Shell was today accused of making "obscene" profits at a time when pensioners, motorists and industry are struggling with higher energy prices when it unveiled annual earnings of $27.6bn.

The oil major has made British corporate history with the record figures, which are equivalent to more than ($3 an hour) and come at the end of a three month period when crude prices have averaged over $90 a barrel.

Jeroen van der Veer, chief executive of Royal Dutch Shell, described the performance as "satisfactory" and admitted that overall production for the year had actually dropped 2%.

He said the company had benefited from launching new oil and gas projects but had suffered in the last quarter from weak refining margins.

"We are proceeding with the rejuvenation of our portfolio with investment in new legacy assets and through disposals. The execution of our strategy is on track."

But Tony Woodley, joint general secretary of Unite the union, Britain's largest trade union said a windfall tax should be imposed on "greedy" companies such as Shell whose profits are more than four times higher than retailer, Tesco.

"Shell shareholders are doing very nicely whilst the rest of us, the stakeholders, are paying the price and struggling," said Mr. Woodley. "Record profits of over thirteen and a half billion pounds at Shell and cumulative oil industry profits in excess of fifty billion in the last three years are, quite frankly, obscene. It is time the government acted."

Wednesday, January 23, 2008

Where Do Oil Company Profits Go?

Raw Story reports on the surging profits enjoyed by oil companies even as the economy slides into recession.

Unlike oil companies, who take a percentage of pump prices, government gas taxes are fixed so the government does not profit from rising prices, Krullwich reports. Gas taxes make up about a quarter of that extra dollar spent for a gallon of gas, he says. The rest is split among refineries, tankers, pipelines, traders and others who get oil to consumers.

The record prices of 2007, though, were not accompanied by fears of a US recession that are currently reverberating through the global economy. Those fears triggered a drop in oil prices Tuesday to $89.85 a barrel, the lowest it has been for more than a month.

They also feature an enlightening video from ABC News:

Companies expecting record profits, but recession fears cause decrease in oil prices

In an animated Web video that plays a bit like "School House Rock" without the catchy theme song, ABC News explains where the extra money Americans are putting into their gas tanks actually goes.

"Compared to three years ago, Americans are now paying an extra dollar for every gallon of gas, and if you're wondering where those extra dollars go, well for every dollar you pay, about half goes to the oil company that pumped the oil," reports correspondent Robert Krulwich. Accompanying animation shows a suit-wearing, suspicious looking "oil company guy" tearing away half of a dollar bill.

The short feature is indicative of Krulwich's style; he's been called "the man who simplifies without being simple," by New York magazine.