Mr. Batdorf:
Are you now standing up for monopoly oil, extracting minerals from public lands and skizzling our nation on royalty payments?
Or is your stance against Congressman Kucinich simply a hastily constructed affective rant that joins aggressive militarism and low order conceptualization of economics?
The Feds are in because "this land is our land."
When you dismiss Congressman Kucinich with a blunt affect about capitalism and simplistic swipe about socialism, you cause the reader to overlook three elements any responsible congressional representative not in the pockets of Big Oil would consider in order to understand the current oil situation and the rights of our nation at stake in this game: 1) Monopoly; 2) Leasing of public lands and royalties paid for resources extracted; 3) Taxation Policy.
Are you in the pocket of Big Oil because you believe bigger is better because bigger is more powerful?
Here are more details:
Monopoly
I believe that you have grossly oversimplified the monopoly thrust of the current oil situation.
Do you dispute Ralph Nader and sit with the oil barons in your dubious praise of monopoly capitalism?
Here’s Nader:
“The claim by the oil barons that they're just responding to the marketplace of supply and demand is laughable. Why are they making double and triple profits? Why are their top executives tripling their own pay? Hard-pressed sellers of oil would not have such a luxurious profit and pay spiral. Hard-pressed sellers of oil would not have paid $144,000 every day to Exxon CEO, Lee Raymond since 1993 and then send him off with a $398 million retirement deal.
A competitive domestic oil industry would not be so able to close down scores of refineries and then turn "refinery shortages" into higher gas prices at the pump. Nor would competitive companies get away with a return on capital of 46 percent for upstream drilling and production operations, plus a 32 percent for refining and marketing. Washington Post business reporter, Steven Pearlstein, call these returns "hedge fund returns." Except with hedge funds there is a risk of losing from time to time. Not so with the corporate government of Big Oil.â€Â
Source:
http://www.counterpunch.org/nader04292006.html
Public Lands
You overlook the fact that federal corporate taxation is relevant to the congressman’s responsibilities. The minerals are being extracted from public lands.
Richard Steiner, University of Alaska, highlights some public policy considerations:
Oil Revenues to the U.S. Federal Government
The federal corporate taxation scheme in the U.S., particularly for oil companies, is exceptionally favorable to industry. It has been condemned by many as “a corporate welfare scheme†almost beyond imagination. The scheme was constructed very carefully by Congressional and Administration strategists in order to keep as much capital as possible in the hands and pockets of big business - their campaign financiers. The public policy implications of this, although “hotly†debated, should be obvious.
Federal income taxes paid by oil companies, though supposedly calculated on a basis of 35% of net revenue minus state income taxes, are generally far less when all deductions are taken. While some studies suggest that oil companies pay on the order of 23% in corporate income tax, other studies demonstrate a far worse situation. A recent study by the Institute on Taxation and Economic Policy (ITEP) in Washington D.C. reported that for the years 1996 – 1998, 41 large companies in the U.S., collectively with over $25 billion in pre-tax net profit, actually paid “less than zero†federal income tax. Rather than paying about $9 billion in federal tax (at the 35% rate), the Institute reported that they instead “enjoyed so many excess tax breaks that they received $3.2 billion in rebate checks from the U.S. Treasury.†These 41 companies include 12 oil companies such as Texaco, Chevron, Tosco, Enron, and Phillips Petroleum. The report goes on to state that “the large number of oil companies on the no-tax list reflects the fact that over the 1996 – 1998 period, petroleum was the lowest-taxed industry in America (emphasis added), with an effective tax rate of only 12.3%. In 1998, the tax rate for the 12 big oil companies in the ITEP study was an astonishing 5.7%.
The tax schemes used by these companies to lower their federal taxes to zero or below include: accelerated depreciation write-offs, tax credits for “research†and oil drilling, and deductions for exercising stock options - the difference between what is paid for the stock and what it is “worth.†Stock-option tax benefits are directly related to the amount that a company’s stock has increased in value, thus tax benefits for companies like Microsoft have been enormous – as much as $2.7 billion in the three-year period. On top of all of this, the U.S. Internal Revenue Service (IRS) has lost over 19,000 employees in the last 10 years, and thus the government’s ability to thoroughly audit tax returns from citizens and corporations alike is dramatically reduced. It is estimated that the IRS looses about $200 billion each year in underpaid taxes, primarily because they don’t have the capability to do the audits to ensure compliance. We are stealing ourselves blind. Anyone who thinks that the U.S. government is ‘letting market forces work’ when it comes to collecting revenues from common property oil resources is simply not well informed. And as stated by journalist Ida Tarbell back in 1902 regarding the Standard Oil monopoly of John D. Rockefeller: “I never had an animus against their size and wealth, never objected to their corporate form. I was willing that they should combine and grow as big and rich as they could, but only by legitimate means. But they had never played fair, and that ruined their greatness for me.â€Â
In addition to the federal corporate income tax collected (or not) by the federal government, the U.S. Minerals Management Service collects revenues from federal onshore and offshore oil and gas leases, and from Indian lands. In 1982, the Federal Oil and Gas Royalty Management Act (FOGRMA) established a comprehensive coordinated Royalty Management Program. MMS is responsible for collecting, accounting for, distributing, and valuing mineral production, including oil and gas, from federal lands and waters. And in 1996, this act was amended by the Federal Oil and Gas Royalty Simplification and Fairness Act (RSFA), which significantly changed their conventional operating assumptions and revenue processing methodology. Each year these leases generate over $4 billion to the federal treasury, one of the federal government’s largest sources of non-tax revenue. MMS reports that about $3.5 billion / year is collected from offshore leasing, of which $2.5 billion goes to the general federal and state treasuries, $900 million / year to the U.S. Land and Water Conservation Fund, and $150 million to the National Historic Preservation Fund. And about $1 billion / year is collected from federal onshore leases, half of which is distributed to the states. Between 1982 and 1998, approximately $98 billion has been collected by MMS from oil and gas leasing, which was distributed as follows: $61 billion (62.4%) to the federal treasury, $23 billion (23.7%) to the Land and Water Conservation Fund, $11 billion (11.2%) to 38 states, and $2.7 billion (2.7%) to Indian tribes.
At present in the U.S., there is a dispute over whether or not to allow oil and gas exploration in the Arctic National Wildlife Refuge along the arctic coast of Alaska. One of the contentious issues is how royalties would be split between the state and the federal government. The State of Alaska contends that the Statehood Act, granting statehood in 1958, guarantees that the state would receive 90% of any mineral royalties from federal lands in Alaska. But although the State contends it deserves the 90/10 split, the Congressional legislation to open the refuge to drilling proposes a 50/50 split of the royalties between the state and federal governments. What is not being discussed however, is increasing the royalty and tax rates on industry which, to my mind, is considerably more important. Further, when balancing the long-term costs to ecological and intrinsic value in the wilderness area against what public revenue generated by a decade or so of oil extraction, many feel that the area is more valuable left alone. Many "non-economic" values are not captured by market capitalism, but nevertheless should be an important parameter in policy decisions.
Source:
http://www.greensalvation.org/English/F ... 271004.htm
Royalties
Are you saying that the government has no role to play in making sure the nation gets its dues from the monopoly oil capitalists?
Take a look at this:
U.S. May Lose Billions in Oil, Gas Royalties Because of Law
Associated Press
Wednesday, February 15, 2006; A09
Despite record profits, oil and gas producers may avoid billions of dollars in royalty payments to the government because of a decade-old law designed to spur production when energy prices are low.
The Interior Department estimates that as much as $66 billion worth of oil and natural gas taken from the Gulf of Mexico between now and 2011 will be exempt from government royalty payments. That could amount to the government losing an estimated $7 billion to $9.5 billion based on anticipated production and current price projections for oil and gas, according to an analysis in the department's five-year budget plan.
The analysis assumes oil prices will hover around $50 a barrel and natural gas around $8 to $9 per thousand cubic feet between now and 2011.
Johnnie Burton, head of the department's Minerals Management Service, said yesterday that the revenue losses would be subject to many variables, but that more than $7 billion was "in the range" of probability. The industry windfall was first reported by the New York Times.
The disclosure prompted calls in Congress yesterday to curtail or end the royalty relief that lawmakers made available in 1995.
"The American people are getting stood up and hung out to dry by an administration that favors sweetheart deals with Big Oil," said Rep. Edward J. Markey (Mass.), one of six Democrats who said they plan to introduce legislation to end the royalty relief.
Sen. John F. Kerry (D-Mass.) said he plans to introduce a resolution to put the Senate on record against the royalty break. "No one in their right mind thinks oil companies turning record-high profits and squeezing Americans at the pump should now get to keep $7 billion," he said.
Although Kerry was among those who voted for the royalty relief in 1995, when oil cost an average of $18.43 a barrel, his spokeswoman said the relief is no longer needed when oil prices are near $60 a barrel.
Source:
http://www.washingtonpost.com/wp-dyn/co ... 01773.html
How can you pipe the praise of capitalism, when the Oil monopoly is choking the people?
The triumph of the all or nothing affect over intellect won’t pass muster here.
At least Congressman Kucinich is giving the Lakewood homies and our countrymen some high value structures that take on Big monopoly oil.
Of course Bush team of oil crony capitalists helped the oil monopoly grab Iraq’s oil. And you tell us that’s capitalism and attempt to smear with the word socialism.
Can we agree to fight monopoly oil?
Or do you believe our military and blood is to be used in order to transfer the oil assets of Iraq to monopoly oil via production sharing agreements?
“At an oil price of $40 per barrel, Iraq stands to lose between $74 billion and $194 billion over the lifetime of the proposed contracts, from only the first 12 oilfields to be developed. These estimates, based on conservative assumptions, represent between two and seven times the current Iraqi government budget.â€Â
Source:
http://milfuegos.blogspot.com/2005_11_2 ... chive.html
Kenneth Warren
