Say Anything Blog

This has been in the works for 15 years. The Interior Dept. has been using a scale for calc-ing royalties for oil,mining,timbering, and cattle/sheep grazing that was set in the ‘70s.

The problem with these royalties is that they vanish into Interior and no one can account for where and what happens to them. This money is supposed to be used to maintain roads,bridges,power lines and to reclaim land that was stripmined prior to 1950. Funny, money has to be budgeted from the General Fund to do all these things. Where is the royalty money that is supposed to cover these expenditures?

Una Salus Victus Nullam Sperare Salutem

I read an interesting article on the logging roads.

How can the Forestry department build roads that cost 10 times what they bill for them.

If that was a private company the owners would be out of business.

But in government the forestry department get’s 10% from the logging companies and 100% from Congress.  If they didn’t build the road they’d make nothing.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

And far from being a tax on the oil companies they are yet another tax you and I end up paying at the pump.

Actually, I believe the price of oil is determined in the world market, and these royalties will have no effect on that market.

Does the government really need this additional revenue from these royalties?

Yes.  The federal deficit has ballooned since Bush took office.

Will said:

Actually, I believe the price of oil is determined in the world market, and these royalties will have no effect on that market.

Oh, please. Like any other business with a “fixed cost” item to pay for that royalty will be passed on to the consumer through higher prices at the pump. World markets determine the bottom line for oil prices, yes, but the price at the pump is determined by the businesses involved.

To think otherwise is naive.

The future ain’t what it used to be.....

I don’t know what happened to the above post, but the post starting with “oh, please,” is my statement, not Will’s. Only the first part is his.

The future ain’t what it used to be.....

Pilgrim,

Better to know what you’re talking about and misspeak, than to habitually make an ass of yourself by persistently demonstrating your appalling ignorance.

What Will actually knows about corporate taxes and world markets would fit comfortably on the front of a 3X5 card… in crayon.

Incidentally, if big oil companies should be taxed on their “windfall profits” then shouldn’t they be entitled to subsidies when they operate at a loss?

“Poverty of goods is easily cured; poverty of the mind is irreparable.”

One might argue over whether a fee for drilling/oil rigs in the Gulf is a fee or a tax, but one thing that appears indisputable (except among the Kos crowd and the like-mindless) is that the feds appear to be re-negotiating in mid-stream. 

For reference, the Gulf of Mexico is about 25% of domestic oil production, or equivalent to something like 20 billion gallons of gasoline--say $20 billion dollars’ worth.  So at around 25% of revenue, it’s a significant but not oppressive fee.

Will said, Actually, I believe the price of oil is determined in the world market, and these royalties will have no effect on that market.

The cost of doing business goes up and it has no effect on the world market?

You’re unintentionally funny Will.

Pilgrim - I fixed your quote tag.

Actually, what is going to happen is this. The costs in conducting exploration in the US lease zones will go up. This will effect the ecconomics of exploration, drilling and production in the gulf. As a result only the larger companies and the larger independents will be able to offset the ding to their production economics when planning exploration and drilling programs. Due to this, exploration in international plays will be more economic while the exploration of domestic oil will drop in the gulf waters.

Will it effect the price at the pump? Probably not much, if at all, in the short run. What it will do is retard the exploration of the resources that we have in the gulf and extend our reliance on OPEC sources. This will also limit the number of companies in leasing and exploration on federal lands, which will limit tax dollars to some degree.
For example, if the federal royality rate is 37% and most private landowners accept royalties of 25% it’s not hard to guess where you’ll explore first.

While this might be a good strategy for limiting the production of our national resources for another day or for limiting the possibility of enviromental impact of offshore mishaps, it does limit the energy flexibilty of the US.

Considering that most people don’t understand the economics of exploration and production in oil and gas, I’m sure this will be seen popularly as sticking it to the oil companies, but from an Oil and gas interior standpoint it’s placing another hurdle toward a comprehensive energy plan the this country sorely needs and totally lacks.

This plan limits future options for energy production at a time that we are active engaged in military opertations in the middle east. It’s isn’t impossible to imagine a senerio in which OPEC pulls the rug out from under the US and we are limited by our own legal system from brigding the gap of oil we need because the time and cost of exploration hasn’t allowed for the work to be done that provides for the fuels we need.

If we had a nationalized oil company this move would make sense but, considering that we provided energy by for-profit companies in a free market, this is a shortsighted move.

Way to go Rob B.  Using facts and economics to explain the problem.

You know when you challenge collectivists with the facts they get a bit goofy.

What’s going to happen to US industry when the global warming extremists like John McCain double the price of electricity?  I would think all these factories will close and set up in countries where they aren’t scared of technology.

Good point, Rob B.,

When oil and gas companies profits are minimized to whatever degree exploration and development are affected.

Somehow the fact that exploring and developing new oil reserves takes BIG bucks seems to escape the “tax the rich” crowd. If they’d take the time to truly examine the idea the libs would see that their own logic turns on them in cases like this. Be energy independent! But...tax the crap out of the oil companies, thus effectively hobbling them. Lower gas prices! But...tax the oil companies so that they have to raise prices at the pumps to offset the loss like any other business.

Libs, please, for just once get a grip.

The future ain’t what it used to be.....