3 Myths About the Oil and Gas Industry

I don't like the price of gas any more than the next guy, but is there really blame to be placed? Could the price of gas be simply a product of supply and demand? Why does congress feel it is necessary to call executives from oil companies in and talk to them like naughty children? Why does congress think it is correct to deny oil companies the same tax incentives than many other large corporations get? Is it really fair to single out one industry and penalize them for making a profit?

And the oil companies do make a profit, there is no doubt. But their profit margin is less than that of many other companies, like Walmart or Apple. Oil companies pay about 40% of their revenue in taxes, much more than a lot of other industries. Take General Electric for example, last year GE actually got more money back from the government than they paid in taxes. And the oil companies are the bad guys. It sure didn't hurt GE that their ceo at the time, jeffrey immelt, is an advisor to the crooked obama administration.

The "evil" big oil companies make less on a gallon of gas than the federal government, yet they are demonized by the left at every opportunity, and have been for years.

What do you think increasing taxes on oil companies will do to gas prices? I'm no rocket scientist, but I'm betting it would make prices go up by about the same amount as the tax increase.

Maybe if oil companies were allowed to do what they do best, drill for oil, supply and demand would equal out and we wouldn't be paying 4 bucks a gallon to go back and forth to work...

By Bob Beauprez - FoxNews

As voters around the country wince at rising gas prices, panicked Democrats, in a rush to cover the failure of their all-or-nothing bet on the alternative energy industry have started singing a familiar tune – blame the oil and gas industry. Instead of facing the reality of his owned failed policies, President Obama is calling for an end to the "tax giveaways" he claims amount to $4 billion in “subsidies” to the energy industry.

This tactic isn’t surprising given the effect that rising gas prices have on the president’s approval ratings and his obsession with re-election. But, less-than-truthful innuendos and political spin hardly helps America's working families who are getting hammered at the pump.

If our leaders are going to have an honest discussion about energy, it's important to clear up a few rumors, misconceptions and outright falsehoods being perpetrated about the oil and gas industry. Let's begin with three of the more common ones:

1. The industry doesn’t receive any taxpayer funded subsides. None.

2. Rampant speculation and Wall Street tricks aren’t driving up gas prices.

3. The oil and gas industry is not dodging the taxes they owe and withholding “their fair share.”

I'll say it again; contrary to popular opinion and the president's spin, the oil and gas industries do not receive any taxpayer funded subsidies. The tax code does allow them to claim certain tax credits and deductions to encourage continued investment in an industry that is heavily front-end loaded with capital expense.

These are the same kind of incentives available to Coca-Cola, General Electric, Ford, and Microsoft and other companies doing business in the U.S. Or, for that matter, like the deduction for mortgage interest payments enjoyed by homeowners. But, importantly these are tax credits, and markedly different from direct taxpayer cash subsidies like the 45 cent per gallon payment blenders get to put ethanol in fuel mixes.

When businesses invest in America, we all benefit. The oil and gas industry plows about $300 billion into domestic projects per year – that's 75 times more than Obama's phantom "taxpayer giveaways" amount -- and employees over 9 million people. Those are real numbers; not Washington spin, and if government would allow and encourage even more domestic production there would be more jobs and more investment – and more total taxes paid, too.

Another argument that often circulates when gas prices go up is that a phantom class of “Wall Street speculators” is to blame for the increase of prices. In 2008 this school of thought was so persuasive that President Bush commissioned an exhaustive review, via the Commodity Futures Trading Commission, looking into the effect that speculators had on market prices. Their conclusion was surprising, according to The Wall Street Journal, “The agency concluded that speculators—otherwise known as traders—were putting downward pressure on prices. The liquidity they provide helps to smooth volatility.”

Not satisfied with the 2008 study, President Obama recently resurrected this school of thought, even tapping Attorney General Eric Holder to police perceived illegal activity and price gouging. Yet within the presidents’ own administration, the Federal Trade Commission found that the recent spike in oil prices is due primarily to normal market forces, including booming demand from developing economies in India and China and not because of any questionable behavior from Wall Street.

Read the rest at the link above...

Gas Bills Bloat Congress

What kind of an idiot would even begin to think taking tax breaks away from oil companies and giving them to "green energy" companies would lower gas prices? That's right, a democrat idiot. If you are looking for a sure fire way to raise the cost of a gallon of gas, take away any tax breaks to the oil companies. What they will pay in taxes will just be tacked on to the price we pay at the pump.

Increasing production is the answer to lower gas prices. And these clowns need to do something fast. Most of us can't afford what we are paying now, and any further hikes will be close to catastrophic for many.

It's sounds like instead of anybody doing anything, congress will just sit around blaming each other and hope for political points out of the deal.

I've had it with the whole bunch of them...

By Chris Stirewalt - FoxNews

GOP and Dems Trade Shots Over Gas Bills, But Which Plan Would Lower Costs? 

“What is more likely to lower gas prices: Raising taxes on oil companies or increasing oil production?”

-- Senate Republican aide talking to Power Play about competing energy legislation in Congress this week

With debt and budget negations stalled for the time being, members of Congress will instead turn to the business of assigning political blame over high gas prices.

Senate Majority Leader Harry Reid is expected this week to push forward a Democratic plan that would transfer tax breaks for American oil companies to approved green-energy firms.

House Speaker John Boehner, meanwhile, will bring up a series of votes on a suite of Republican legislation aimed at breaking President Obama’s clampdown on offshore drilling permits.

Even as recession fears force commodity prices downward, gas prices are expected to continue to rise above $4-per-gallon. Uncertainty abroad, rising global demand, a shattered U.S. dollar and decreased domestic production all mean prices will continue to increase for hard-pressed American consumers.

When it comes to high gas prices, the House Republican plan would do little to bring down short-term prices. Even if Senate Democrats and President Obama were to go along with the drilling, baby, drilling, it would take months for the new crude to hit refineries and increase domestic supplies. Any short-term reduction would come from speculators jumping out on the bet of increased future production.

The Democratic proposal, however, would almost certainly raise gasoline prices as companies compensated for $4 billion in increased federal taxes. The plan proposed by President Obama and subsequently championed by Reid and Finance Committee Chairman Max Baucus, D-Mont., is part of a multi-year effort to encourage green energy (in part by keeping energy prices high).

Last year, America’s largest oil company, Exxon, paid about $10 billion in federal taxes and made a profit of about $30 billion. If the tax bill had been $11 billion, it is unlikely that Exxon shareholders would have wanted the money to come out of profits. The money instead would have come from consumers.

While Democrats are betting that consumers would feel good about seeing politicians sticking it to big oil in the form of tax increases, American drivers (and voters) would likely understand the basic economics of taxation. Plus, gas prices are helping to stunt the already puny recovery. For middle-class consumers, high gas prices mean disposable income vanishes.

But the House would never let the Democratic plan through, either.

The real issue in Washington is about the budget deals that continue behind closed doors. The Gang of Six is shrouded in doubt as Gang member and Senate Budget Committee Chairman Kent Conrad is threatening to start pushing his own debt-reduction proposal.

Democrats are stalled on how to proceed on obtaining an increase in the federal government’s $14.3 trillion debt limit, and Republicans are mostly waiting to see how that plays out before getting too jiggy about a 2012 budget proposal.

Until the dam breaks, trying to score points on gas prices will have to suffice.

Obama's Scandalous War Against Domestic Oil

obama gets a pass where George W. Bush was crucified, big surprise there. It's funny how the hypocrisy works isn't it? Like the article says, obama's policies are actually contributing to the high fuel prices.

There is no section of our economy that isn't hurt by the high price of gas. Food prices go up because of transportation costs. The tourism (hotel, motel, restaurant, air travel, amusement parks, National Parks, on and on) industry suffers because people can't afford the fuel to travel.

Even attractions local to people will suffer because they don't have the disposable income to go to the movie theater, or McDonald's. When people spend every extra dollar they have on gasoline to get back and forth to work, it does damage to every part of our economy...

by  David Limbaugh - Human Events

Do you remember the terrible things the left was saying about President George W. Bush when gas prices soared under his watch? Yet President Obama, whose policies and actions are actually contributing to rocketing gas prices today, gets the usual mainstream media pass.

Is it that the liberal media exempt Obama from accountability because they're on his team in general? Is it because they think he's blameless in the equation even though they sprang to the unfounded conclusion that Bush was culpable? Or could it be that they aren't critical because they share his bias against conventional energy and believe the pain caused by his policies is necessary to move us toward alternative energy sources?

During Bush's term, gas prices went down 9 percent, adjusted for inflation. Yet, preposterously, he was excoriated for allegedly colluding with "big oil" to drive up prices. When prices spiked later in his term, he took proactive steps to increase our supply and reduce prices, and they worked. But Obama has taken action to impede conventional energy sources and shove us into alternative ones. Even so, liberals ignore any possible causal links.

Obama told us he would bankrupt the coal industry. He's pushing high-speed rail down our throats despite the lack of public demand for it and our inability to finance it. Transportation Secretary Ray LaHood said the administration intended to coerce us out of our cars. Energy Secretary Steven Chu said, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe."

In view of exploding gas prices, why aren't these statements seen as scandalous? Where are the calls for investigations?

Obama demeans "big oil," pushes alternative energy every time he gets a chance and does everything in his power to suppress domestic oil production, then looks us in the face and tells us he's increasing domestic production -- kind of like how he says his budget won't add a penny to the national debt. The audacity is of Hollywood magnitude, and so is the lack of scrutiny that enables it.

Behind the smoke and mirrors of his rhetoric, it's hard not to conclude that Obama's on a mission to suppress or shut down the existing oil infrastructure in the United States in pursuit of his stated alternative priorities.

The Heritage Foundation's Rory Cooper reports that, as of February 2011, at least 103 permits were awaiting review by the Bureau of Ocean Energy Management, Regulation and Enforcement. And since February, the administration has issued on average only 1.3 permits a month, a 78 percent reduction in the monthly average according to the latest Gulf Permit Index.

Obama even reversed an earlier decision to open access to coastal waters for exploration, placing a seven-year ban on drilling in the Atlantic and Pacific Coasts and in the eastern Gulf of Mexico. Oil production in the Gulf is expected to drop by 220 thousand barrels per day in 2011, which is going to cost the U.S. some $1.35 billion in revenues in 2011.

Not only are we losing oil production and revenues, the administration's actions are destroying jobs in the oil industry and elsewhere. Many companies are going out of business. The Heritage Foundation reports that Seahawk Drilling, of Houston, laid off 632 employees before recently filing for bankruptcy as a direct result of Obama's moratorium and subsequent "permitorium." Seahawk owned and operated 20 shallow-water rigs in the Gulf. Randall Stilley, president and CEO of Seahawk, said, "As an American, you never want to look at your own government and say they're hurting you personally, they're hurting your business and they're doing it in a way that's irresponsible. I'm not very proud of our government right now and the way they handled this."

Read the rest at the link above...

House Bucks Obama: Bill Jump-Starts Gulf Oil Production

The cost of going to work every day has doubled for my family. I'm sure you all have the same experience. If gas prices continue to rise, it almost won't be worth going to work. democrats don't understand that out here in the real world, these things have consequences. When the government refuse to allow our oil comapnies to do their job, we all pay for it. We pay for it at the pump and we pay for it in national security concerns. It just doesn't seem like a great idea to me to buy oil from countries that hate us. How exactly, is that good business?

"Drill baby Drill" does make a good bumper sticker. And American companies drilling oil in our own Country is good, sound, energy policy. Buying oil from hugo chavez is poor policy...

by Audrey Hudson - Human Events

Republicans are banking on a measure approved by the House on Thursday to lower gasoline prices by accelerating offshore lease sales in the Gulf of Mexico.

“The situation we find ourselves in today is detrimental to everyone who goes to the pump to fill their cars,” said Rep. Rob Bishop (R.-Utah). “The cost of gas increases, and continues to increase because of the inaction of this administration.”

The de facto moratorium on offshore drilling imposed by President Obama after the Deepwater Horizon tragedy last year has forced the importation of an additional 130,000 barrels of oil a day to make up for the lost production, Republicans say.

Democrats argued that the bill would lead to future environmental tragedies and insisted that more oil is being safely produced under President Obama than in President Bush’s administration.

Republicans countered that Americans are expected to spend an additional $700 on gasoline this year.

“The administration’s strategy is to cut the standard of living … and beg Saudi Arabia to be nice to us,” Bishop said.

The legislation is the first of several measures Republicans will act on in the next week, and imposes strict time lines on the Obama administration to sell leases in the Gulf of Mexico and offshore from Virginia.

President Obama has since lifted the moratorium, but few permits are actually being approved, Republicans said.

“Unfortunately, the administration turned the tragedy into a catastrophe … one that destroys jobs,” Bishop said.

HR 1230, the Restarting American Offshore Leasing Now Act, passed the House by a vote of 266 to 149, with 233 Republicans and 33 Democrats supporting the measure.

The Office of Management and Budget said in a statement that it opposes the legislation because it would undermine environmental protections and workplace safety.

The key measures are sponsored by Rep. Richard “Doc” Hastings (R.-Wash.), chairman of the House Energy Committee. The House on Tuesday will vote on HR 1229, which ends the moratorium and establishes new safety reviews.

“Continued tensions in the Middle East serve as a reminder that increased American energy production is as much of a national security issue as it is about jobs and lowering gasoline prices,” Hastings said.

“The United States has the most energy resources in the world and the American people are demanding that we utilize them to lower energy prices, create jobs, and make American less dependent on unstable foreign energy,” Hastings said.

Democrats said the measure reinforces the “myth” that America can drill itself out of foreign dependency.

“ 'Drill baby drill’ may look good on a bumper sticker, but it is not a sound energy policy,” said Jared Polis (D.-Colo.).

“This does not make filling up at the pump any more affordable to Americans at all,” Polis said.

Read the rest at the link above...

Why won't our economy recover?

A big part of our economy revolves around disposable income. People use the money they have left over after the bills are paid, disposable income, to eat at McDonald's, go to the movies, buy flat screen TVs at Walmart, take a vacation, stay at hotels, etc.

Every one of these activities stimulates our economy. These activities enable places like McDonald's and Walmart to hire more help, which also helps our economy grow, and results in more tax paying citizens. Those additional tax paying citizens spend their disposable income, further growing the economy.

When gas prices go through the roof, like they are now, take a guess at where people spend the income they would otherwise use to eat out or buy other goods and services. You got it, at the gas pump. In an economy that is already in the toilet, the effects are even worse.

So while obama sits around with his thumb in his ass, gas prices continue to rise and our economy continues to decline. Until the oil companies in this Country are allowed to do what they do best, drill for oil, it will be impossible for a recovery to take place.

As far as the profits of the evil oil companies are concerned, keep this in mind, the government makes more on a gallon of gasoline than the oil companies. Also, unlike obama's pet company, GE, the oil companies actually pay taxes, a lot of taxes. Some oil companies pay more in taxes than they make in profit. And don't forget that oil companies pour much of their profits back into the company in the form of exploration, research and development.

For a further look at oil company profits, see the post by Joe Texan below.

Obama’s Blame Game Continues: Who’s Behind Oil Price Rise?

obama is a master of a couple of things, blame and lies. Oh, and making bullshit commissions, can't forget that. If you have no clue how to solve a problem and don't want to be stuck with having to answer for it later, vote present and then form a commission.

This asshole has no intention of doing anything about fuel prices, but his commission will draw attention away from that fact for a little while. It will take our focus away from the fact that he is completely incompetent for a brief period so he can make some campaign stops.

I am sick to death of this guy and his bullshit games. Even the liberals should be able to see through him. How is it possible that there is a single person still supporting him? Supporters are getting less and less though, his poll numbers are in the toilet...

By Liz Peek - FoxNews

President Obama is at it again. Soaring gasoline prices are hitting Americans where it hurts, and threatening to undermine our fragile recovery. With oil hitting $111 today, and gasoline topping $4 a gallon in many markets, economists are beginning to ratchet down their GDP forecasts, boding ill for continued job growth. Meanwhile, and not coincidentally, the nation is souring on our elected officials, and on the president, whose approval ratings are sinking like a failed soufflé. A staggering 70% of the nation thinks we’re headed in the wrong direction. What’s Obama’s solution? Find someone to blame.

To show he’s on top of our energy crisis, the president has…created yet another commission! This one – a task force from the Justice Department - is charged with ferreting out the scoundrels behind the jump in gasoline prices – surely there must be some nefarious speculators or market manipulators who can be hauled before Congress in one of those satisfying and cathartic inquiries that, at the end, yield almost nothing. But, these hard-light investigations do provide plenty of room for posturing and prime-time sound bites.

President Obama has resorted to the blame-game throughout his presidency. GW Bush was responsible for the recession, the budget deficit, extravagant healthcare costs, the quagmire in Afghanistan, potholes, global warming and quite possibly Charlie Sheen’s meltdown. Wall Street fat cats brought on the banking crisis (not aided and abetted by Barney Frank et al), insurance miscreants are to blame for soaring healthcare expenses, oil companies are guilty of sitting on leases, pharmaceutical companies should be taken out and shot and Republicans have been mulishly resistant to even the most winning proposals. Now, rascals are at work pumping up gasoline prices; what is a president to do?

On oil prices, the president is vulnerable. First, the administration is accused by U.S. oil explorers of issuing misleading information about why offshore drilling is not moving forward. At the moment, the number of rigs operating in the Gulf of Mexico is about half the level of a year ago; the head of the Independent Petroleum Association of America has said that the government has dragged its feet in issuing the permits necessary for work to move forward.

President Obama dismisses these allegations, pointing out that domestic oil production was up last year. He didn’t mention that when oil prices move dramatically higher, production always increases, as marginally profitable wells are brought on stream. Our output would have been even higher if offshore development had moved forward as planned. Instead, the new organization charged with issuing permits is like a deer in the headlights – panicked that they will approve a drilling project that will one day go awry. No one doubts the need to buttress our safety standards, and especially in deep waters, where failed technology led to the Deepwater Horizon blowout. Still, with the impact of climbing oil prices becoming all too visible, no one should prevent us from ramping up domestic supply as quickly as possible.

Also, economists worldwide are blaming the loose monetary policies of Fed Chair Ben Bernanke for having helped unleash commodity price inflation around the globe. Though Mr. Bernanke denies that the quantitative easing programs in the U.S. are boosting the prices of gold, corn, cotton, copper and oil, to name but a few, his is quickly becoming the minority position. The U.S. dollar is sinking and excess liquidity is flowing into commodities markets. Bernanke is singularly focused on preventing deflation; that global food and raw materials prices have climbed as much as 40% to 50% over the past year and that inflation is creeping higher seems to have eluded his gaze.

Finally, Americans may connect the rise in oil prices with disruptions in the Middle East. Though no one can hold President Obama responsible for the popular uprisings in Tunisia or Egypt, our disconnected and inconsistent response has heightened uncertainty in the region. Confusion is the enemy of price stability.

Mr. Obama’s blame game is quickly losing favor. Americans are now ready to hold President Obama responsible for their problems, recognizing that he has had two years in which he and his party were in charge. He needs to channel Harry S. Truman and acknowledge: “ the buck stops here.”