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As Oil Industry Fights a Tax, It Reaps Billions From Subsidies
David Kocieniewski, New York Times
When the Deepwater Horizon drilling platform set off the worst oil spill at sea in American history, it was flying the flag of the Marshall Islands. Registering there allowed the rig’s owner to significantly reduce its American taxes.
The owner, Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008, maneuvers that also helped it avoid taxes.
At the same time, BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.
With federal officials now considering a new tax on petroleum production to pay for the cleanup, the industry is fighting the measure, warning that it will lead to job losses and higher gasoline prices, as well as an increased dependence on foreign oil.
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.
(3 July 2010)
Oil in the veins of sub-Saharan Africa
Kristofer Jakobsson and Kjell Aleklett, New Routes
“Oil in the veins of sub-Saharan Africa” is an article that just have been published in the Magazine New Rouotes by Kristofer Jakobsson and Kjell Aleklett, Global Energy Systems at Uppsala University in Sweden.
Abstract:
Soaring world oil prices strike hard on everyday life in countries of Sub-Saharan Africa and further hamper the well-needed economic growth that could be a way out of poverty and underdevelopment. Nowhere else in the world does oil have a more dominant role as a commercial energy form. In order to promote economic growth, oil seems to be the most useful means for energy supply as of today.
Read the article in New Routes, 2010, Issue 2, Pages 21-24
In the magazine you also can find other interesting articles about diamonds, minerals and oil in Africa.
Read al the articles in New Routes, 2010, Issue 2
(1 July 2010)
Kjell Aleklett of ASPO-International is a regular contributor to Energy Bulletin.
What happens when coal is gone?
Mariette DiChristina, Scientific American Blog
LINDAU, Germany–What’s the best way to address a politically charged topic such as the future of energy? Remove the politics. “We’re going to skip over the politics,” Robert P. Laughlin, who won a Nobel Prize for physics in 1998, told a rapt audience of young scientists and others here at the 60th annual Nobel Laureate Lectures at Lindau. “I’m not interested in now but in the time of your children’s children’s children, six generations into the future and 200 years from now,” when all carbon burning has stopped because it’s been banned or none is left, he said. “Thinking about a problem this way is so simple. Instead of arguing about what to do now, I want to talk about what will happen when there’s no coal.”
In two centuries, people will still want to drive cars, fly in airplanes and have lighting in their houses. “Everybody I know thinks there will be big price increases with the end of easy oil and there’ll be a struggle over the resources,” he said Monday. The young scientists in the audience “need to figure out how to keep that struggle from turning into a hot war.”
Toward that end, Laughlin established some principles about hydrocarbons such as gas, oil and coal: everyone wants the cheapest gas possible; when oil runs out, prices will fluctuate but can be managed with technologies in development; and when coal ultimately runs out, further innovation will have to happen to keep society stable.
“Why not just use less coal?” he asked. He showed a graph that linked burning carbon with an increase in gross domestic product, or GDP, for several countries. “This is why nobody wants to go first” when it comes to cutting nationwide carbon use, he added. “We will never have a no-carbon economy.”
(29 June 2010)
Contributor tomcc notes:
“The meeting can be followed online at http://www.lindau-nobel.org ”
Pigs in Takoma Park highlight rise in suburban livestock
Miranda S. Spivack, Washington Post
Mark Parisi, who spent his boyhood on a Connecticut farm, thought it made perfect sense to put two pigs in his suburban Takoma Park back yard and raise them to become pork chops. But not everyone in the neighborhood was thrilled to see the porkers rolling around in the dirt. Soon, someone squealed, and the authorities came calling.
But when they arrived, time and again, they found nothing amiss on Parisi’s small plot of land. It turns out that pigs, chickens, goats and the occasional rooster are perfectly legal in Montgomery County and many other Washington suburbs. That puts the BlackBerry-obsessed region, partly by accident, partly by design, on the leading edge of a national “grow your own” movement that has evolved well beyond organic vegetables.
“Yes, some of my friends think I am crazy,” said Parisi, who works in sales for a construction firm, uses a BlackBerry and is the proud owner of 350-pound Myrtle and the more svelte Merrill, who last weighed in at 150 pounds. Parisi said his affinity for farm animals is akin to someone who might have a passion for $300 shoes. “Everyone has their own definition of ‘crazy,’ ” he said.
Parisi is hardly alone in raising suburban livestock. Around the Beltway, where farmland has given way to suburbia in the past four decades, the rules of the roost range.
(26 June 2010)
Titanic Syndrome
Robert “Doc” Hall, Compression
Bad news from the Gulf continues to flow. Much of it is about which culprits to blame and who pays. Stock caps, bonuses, and dividends are at risk. Liability lawyers circle their own version of black gold. This fiasco point up how a huge economic superstructure is built on the ability of direct workers to do the right thing at the right time. Reporting is like barroom rants on a team losing a game that it should have won: Shall we blame the coach, the players, the referees, or the general management?
Industry optimists suffered from “Titanic Syndrome,” disbelief that a big, state-of-the-art rig had sunk, and that disaster was real. If oil flow keeps flowing and hurricanes roil it, it will get worse before it gets better. Everybody loses. Our seafood supply is curtailed indefinitely. No one knows what will happen from goo deep in the ocean for decades.
Money can’t restore the Gulf. It can only pay for partial remediation. Then nature must heal itself if it can, over many years. Nobody can pay for this; not BP; not the federal government or any other government, no matter what taxes are paid, debt incurred, or speed of monetary disbursement.
Now that oil is loosed, the only people actually doing anything are on the scene, on boats or rigs, or along the shoreline. They and everyone directly supporting them are working at it, effectively or not. All the rest of us are mere bystanders.
Before the blowout, the only people who could have prevented it were directly involved at the drill site, or supporting them with what they need to do the work. Executives, regulators, financiers, experts, politicians, or pundits weren’t there. If the workers do not understand the technology, and do the right thing at the right time, all else is useless. The best that any higher organization can do is to prepare direct workers to take this responsibility, including go or no-go decisions.
… This situation illustrates that companies like BP or Transocean have a social mission to provide energy without a screw up that affects everybody and everything. Such organizations are too important to fail. They don’t have to be big (think health care). Banks become too important to fail only when their size or interlocking trades affects almost everyone; then failure is catastrophic.
This undermines basic corporate logic – wealth maximization and limited liability. Corporations descended from limited liability chartered companies employed in colonial times to motivate investing in risky ventures that few individuals would dare take alone. If the ship from your venture sank, your money went with it, but you lost no more. That assumed a nearly infinite world to be conquered and expanded into. Adventurers assumed the risks of fate and a cruel nature. Loss of 18th century ships didn’t affect nature very much.
Now we must question 20th century business and economic thinking built on these basics. The scale of energy and material usage is enormous by comparison. Adventurers can damage nature irreparably in far more ways than by oil in the sea or exhaust fumes in the air. We don’t know the toxicity of many chemicals in use. A small concentration can have big unintended consequences. Those emotionally immune to the Titanic Syndrome stay aware of how much we don’t know. They don’t party on, ignoring icebergs.
Complacent optimism in high-tech tools, corporate logic, or bureaucratic dictums increases the chances of blowout. Vigorous learning organizations dedicated to a social mission are less likely to suffer from Titanic Syndrome. From fire departments to fertilizer companies, our most vital work organizations have a responsibility bigger than “maximum profit with minimum liability,” or “making budget.” Ideological debate about whether government or “free enterprise” is more competent doesn’t lead anywhere. We need to re-frame our view of a world very different from the 18th century. …
(15 June 2010)
Contributor David M. adds:
What makes Robert “Doc” Hall’s approach unique is that, from his background as a founding member of the Association for Manufacturing Excellence, he focuses on how our work organizations might evolve to meet the challenge of coming to terms with finite resources. His approach is outlined in his book and website: “Compression – Meeting the Challenges of Sustainability Through Vigorous Learning Enterprises” (http://www.compression.org).
He builds on lean manufacturing ideas, but emphasizes we must go much further as we turn from expansion thinking toward compression thinking. An abridged version of his book is available for free download at his website, as are the extended footnotes. See also his exercise for businesses anticipating compression (http://www.compression.org/review-exercise-anticipating-compression/).
