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April 23, 2011 – Comments (15)

"think you moron"  when someone suggests that solar and wind and renewables are not good investments because they depend upon Government subsidys to compete, when I consider fossil fuel's tax breaks for exploration, the passed on costs of spill cleanup, a war in Iraq, all military costs in the middle east, the strategic petroleum reserve, automobile emissions controls, as only some of the subsidys that fossil fuels depend upon.

And then I remember that most people don't think. They repeat tired narratives, grunt in all knowing agreement, and run up the prices of companys with declining resources and increasing costs, dependent upon ever greater subsidys and Government investment every year.

And I think to myself that it was smart to subsidize the oil industry in 1930 and 40 and 50. But it is really not smart to continue to do so now that the cost of those subsidies is so out of control and cheaper and safer alternatives for energy exist.

If subsidys make renewables a bad investment, it is only because of the crippling power a dependency upon the oil industry allows them to inflict on us.

Best wishes,

Steven

15 Comments – Post Your Own

#1) On April 23, 2011 at 9:39 PM, buffalonate (94.17) wrote:

Oil companies pay the highest tax rate of any industry.  Wind and solar aren't great investments right now but they are getting very close to being great investments.  I think GE will dominate both markets because they have the best technology.  GE is going to production with the most efficient thin film solar array on the market.  They waited to go to production until they knew it was economically viable.  GE also has a new crane system for putting up wind turbines which will bring down costs substantially.  The biggest problem with both technologies is storing the energy.  I think the government is going to have to subsidize the storage or neither of them will ever be big contributors to our energy supply. 

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#2) On April 23, 2011 at 10:04 PM, LouieJunior (23.34) wrote:

For electricity generation, Wind and Solar are expensive and immaterial sources. We better not bet too much on these...

Coal = 1,946 Billion KWH with subsidy of $0.44 / mwh

Nuclear = 794 Billion KWH with subsidy of $1.59 / mwh

Natural Gas = 919 Billion KWH with subsidy of $0.25 / mwh

Solar = 1 Billion KWH with subsidy of $24.34 / mwh

Wind = 31 Billion KWH with subsidy of $23.37 / mwh

Let's eliminate all subsidies and let the market decide the best energy sources.

Let's also eliminate the Department of Energy.

As far as Petroleum goes, next to geothermal, it receives the smallest subsidy of all energy sources -- only 3 cents per million BTU.

http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/execsum.pdf

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#3) On April 23, 2011 at 10:33 PM, Valyooo (99.38) wrote:

Declining resources?  We have more proven reserves of oil than ever in history.

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#4) On April 23, 2011 at 11:58 PM, devoish (98.36) wrote:

Louie,

How much to clean up after BP?, how much to pay for asthma and heart disease?

Valyoo,

Resources that you cannot get cheap enough to compete unless they are removed from iraq or iran. 40 years of "proven" reserves is really not a very long time.

buffalonate,

BP got a tax deduction to clean up its mess in the Gulf, the force of the United States military to help them negotiate for Iraqi oil and after that misguided gift, we still have to pay again to get the oil from them.

regardless, either you or I have been misinformed.

When Senator Alexander asked for that report, he restricted its scope pretty severely. for example estimates of healthcare costs and military expenses were not included. Tax deductions for production, consumption and conservation were included, whereas tax deductions for waste cleanups were not.

But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process.

According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.

And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by var-ious credits. These companies’ returns on those investments are often higher after taxes than before.

However it would certanly be silly to have dismissed oil as an investment because of its dependence on subsidys. 

Best wishes,

Steven

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#5) On April 24, 2011 at 1:20 AM, buffalonate (94.17) wrote:

Oil will be used for a long time.  The U.S. is expected to increase oil supplies 40% over the next 10 years due to the hydraulic fracturing of oil shale.  Brazil has huge oil reserves off of its coast.  Iraq claims it will be the largest producer of oil in the world in 10 years.  The Oil Industry pays an effective tax rate of 38%.http://www.taxfoundation.org/news/show/1321.html  You claim that paying oil field leases and buying drilling equipment are profit.  They are expenses that can be written off like any other business expense. The subsidies people talk about are from the 2005 energy bill and they were for nuclear energy and efficient cars.  The bill actually raised taxes on oil producers.  http://www.factcheck.org/askfactcheck/what_kind_of_tax_breaks_does_the.html

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#6) On April 24, 2011 at 1:25 AM, buffalonate (94.17) wrote:

Chevron's tax rate was 46% in 2008.  http://www.bnet.com/blog/sec-filings/chevron-8217s-tax-rate-is-47-percent-8212-with-no-windfall-tax/224  That doesn't sound like anything was subsidized to me. 

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#7) On April 24, 2011 at 3:45 AM, FleaBagger (28.98) wrote:

Steven - Your point about hidden subsidies is well taken. As someone else has said in this thread, let's eliminate all subsidies and let the market decide. But to be fair, government needs to stop sucking resources out of the private sector and taxing corporations so much. Except solar/wind corporations like GE: they're already paying the correct tax rate.

I would love for the solar, wind, coal, oil, and nuclear industries to be unsubsidized, unprotected from liability, and untaxed (or taxed at a negligible rate). I still think solar and wind would have a hard time competing. But if not, wonderful. 

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#8) On April 24, 2011 at 8:02 AM, devoish (98.36) wrote:

Fleabagger,

Actually, Government needs to embrace its ability to promote the general welfare and stop abdicating responsibility.

Best wishes,

Steven

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#9) On April 24, 2011 at 9:45 AM, Valyooo (99.38) wrote:

The fact that it seems all governments have a problem embracing their ability to promote the general warfare, is exactly why a free market should allow things to play out naturally.....because clearly the government has not and will not make the right choice

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#10) On April 24, 2011 at 9:57 AM, mhy729 (31.21) wrote:

haha...Freudian slip there Valyooo?

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#11) On April 24, 2011 at 10:06 AM, devoish (98.36) wrote:

Valyooo,

Governments have made the right choices in the past, and sometimes continue to do so. It is time to stop hobbling our Democracy by abdicating our responsibilities to our selves and our children to a "free market" that has never existed.

Best wishes,

Steven

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#12) On April 24, 2011 at 2:08 PM, JaysRage (89.31) wrote:

I tend to agree with buffalonate.    There is a LOT of oil available through oil shale.    It hasn't been cost effective with low oil prices, but with oil at 100 a barrel, it's already being harvested.  

That said, I also think the oil companies getting extra money is ridiculous.   Their profits speak for themselves.   They no longer need a crutch. 

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#13) On April 24, 2011 at 2:57 PM, OneLegged (< 20) wrote:

GE's paying the correct tax rate?  They paid 0% last year.  That's the way it should be?  Hilarious.

 

Wind and solar will never replace fossil fuels.  The former are not nearly energy-dense enough.  We need more nukes.  Thorium not uranium though.

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#14) On April 26, 2011 at 12:26 PM, mtf00l (45.83) wrote:

As a reminder businesses pay taxes after expenses unlike you and I who pay taxes before expenses.

If I can show that after I paid my self a ginormous bonus that the business made little or no money, you can tax my business at 100% and I'll still pay next to nothing.

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#15) On April 26, 2011 at 12:35 PM, chk999 (99.97) wrote:

Actually, Government needs to embrace its ability to promote the general welfare and stop abdicating responsibility.

Your understanding of this phrase and my understanding of it have remarkably little in common.  

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