RE: Clean, green and expensive
The oil industry tax breaks have always had two primary purposes:
1. To keep the cost of oil and oil-based products low.
2. To foster domestic exploration and production (E&P) by subsidizing its costs compared to cheaper foreign production.
This largely represents political decisions made during the 30s, 40s, and 50s (FDR, Truman, and Ike, plus the powerful congressional democrats from oil-producing states, like LBJ and Rayburn) that American industry and jobs would benefit from cheaper energy that would partly offset the greater internal distances that had to be covered here compared to Europe, and also that more domestic production would also create jobs. So, we ended up subsidizing oil while Europe taxed it.
As Reagan said, if you want less of something tax it, and if you want more of something subsidize it. Predictably, significantly cheaper energy here led to development of a lifestyle that depended far more than energy (we use somewhere between 1.5 to 2 times as much energy per capita, compared to European countries with per capita incomes around 90% of ours, or higher). Times have changed, and in this era of global warming, tension in areas that we depend upon for oil, and the economic drain of shipping so many dollars abroad, the policies of the 30s, 40s, and 50s need to be revisited.
Contrary to conventional wisdom, those tax breaks really don't impact oil company net incomes. Corporations just look at taxes as a cost of doing businesses and set prices to recover those costs plus their target margins, which in the energy industry tend to be fairly low, particularly considering the high risk level on the E&P side. So long as every company in the industry faces pretty much the same tax structure, whatever taxes they face (or escape) are just passed through to customers in the price of products. They'll pretty much still make the same profit no matter what; what will change is the price they sell it to us in order to make that profit.
If the tax breaks were removed tomorrow, we'd probably see substantially higher prices at the pump and some marginal reduction in consumption (which would be good things IMO, as we're not going to get to alternatives until the price of oil products rises appreciably), and a greater shift from domestic to foreign sources for what oil we do use (which would be bad from the economic, environmental, and defense/foreign policy standpoints). It's a bit of an art to traverse the mine field in a way that does more good than harm, but it is possible. If the negative economic impacts are offset by tax reductions elsewhere, and the offshoring of more E&P activities is not exacerbated, we could actually be better off. Over time, we would adapt to using oil in a more European fashion--more public transport, higher mileage cars, more alternative fuels, use of electric powered trains instead of diesel trains/trucks for more long-haul shipping, smaller houses, more tolerance for indoor temperature fluctuations, to name a few impacts.
The picture that is emerging from the Mississippi Canyon 252 hearings in congress is of a perfect storm of keystone kops errors. Everybody involved appears to have been ludicrously delinquent. I simply do not believe that the number and severity of errors could happen in a place like Norway or New Zealand or Brasil (which allow more offshore drilling than we do, under much tougher standards). We need to move more toward their approach. The worst thing we could do would be to let a what is looking more and more like the inevitable consequence of a rogue operation cause us to implement policies that will cripple us. Adoption of tougher standards will result in higher prices at the pump and will tend to push more production offshore. We need to allow the first to happen, and offset the second elsewhere.
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