May 09, 2009

Team Obama Has No Fucking Clue What The Oil And Gas Market Is About

It appears as though Team Obama is set to give the Oil and Gas Industry the "Old In And Out" with his tax packages. Not only will top line taxes be increased on Oil and Gas companies, but secondary taxes will be increased as well.

Collections would begin in fiscal 2011. The White House projects that through 2019, total revenues would reach $13.3 billion from denying oil and gas companies the tax deduction available to other US manufacturers, $8.3 billion from repealing the percentage depletion allowance, and $5.3 billion from placing an excise tax on new Gulf of Mexico production. Another $3.3 billion would come from repealing expensing of intangible drilling costs, $1.2 billion from increasing independent producers' geophysical and geological amortization period to 7 from 5 years, $62 million from repealing the tertiary injectants deduction, and $49 million from repealing the passive loss exception for interests in oil and gas properties.

It also repeals the enhanced oil recovery credit and marginal oil and gas well tax credit. The Office of Management and Budget did not list revenues from either of these actions, probably because of price thresholds.

The budget also reinstates superfund taxes, which OMB projects would raise $6.7 billion during 2011-19. It establishes fees on nonproducing federal leases (the so-called "use it or lose it" concept) and reinstates permit fees that the 2005 Energy Policy Act prohibited at the US Department of the Interior. OMB projects $574 million of revenue during 2011-19 from the first action and $171 million from the second.

All in all, every layer of costs for the Oil and Gas Industry will go up big time. And this line from some Oil and Gas trade industry group nails the situation:
"Tax policies directly impact the decisions that are made regarding drilling, especially for smaller companies." "

More importantly, over 80% of the gas in the US is actually produced in this country. We are troubled that this administration has such a basic misunderstanding of how domestic gas markets will be impacted."

Damn skippy, pal. This is so inherently fucking stupid and pernicious on levels that could previously only be found by those snazzy telescopes that chat with space aliens. And the impact to the economy will be devastating. I mean, even a dumbass like me knows the following formula: when taxes and restrictions on companies and their means and ability to do business go up, output, productivity, profits, and (yes) tax revenues go down. How fucking complex is that? And besides, it's not as though taxes aren't already high on oil companies. All during a brutal recession. BRA-FUCKING-VO, Barry!

Does Team Obama know or care about the ripple effects we all know these taxes will have on everything, to include the economy, jobs, energy prices, cost of living, food, costs for businesses and so forth? And how are we to find a new source of energy that can compete with fossil fuels? So far, every fucking alternative, from wind to solar to hippie sweat to unicorn droppings, has not been able to fill the gap on a large enough scale at cost layers equal or better than oil. None. Are we to expect that this time, with Captain Bullshit at the helm , things will be better? I'll fit into my high school graduation tuxedo before that happens.

Oh, and national security is fucked over as well. Could you imagine allowing the oil ticks overseas to have even more power over the energy supply by tightening the screws even more on our own ability to keep our country in motion? All while shitbums from around the world are ramping up their asshole level to eleven because we have Hopenchange, Pluggy Joe, and Granny McBotox are more interested in God knows what than what they should care about. Well played, Dijon Man. Well played.

Jeebus fucking Christ! This pisses me off. Oh well, at least I have a lot of firewood and dead hobo parts to fuel my lifestyle.


Posted by: eddiebear at 12:12 AM | Comments (4) | Add Comment
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