Fausta's Blog

American and Latin American Politics, Society, and Culture

By

Increase revenues by drilling

Big Government has a post with an intriguing premise,
Drill More to Bring the Deficit Down

… two new studies indicate that if Obama wanted to boost revenues from the oil and gas industry, he would not need to do it via pursuing tax hikes.  Rather, according to a new studycommissioned by the Gulf Economic Survival Team (GEST), an organization dedicated to helping rebuild the Gulf Coast’s flagging economy, returning to normal drilling levels in Gulf waters would boost revenues demonstrably.

Since the BP Gulf Oil spill – which happened over one year ago – the Administration has been dragging its feet in allowing American companies to drill in American waters. Approvals for shallow- and deep-water exploration permits are down by over 50 percent and 80 percent respectively.  But a resumption of drilling would pour $44 billion into the American economy, create 230,000 jobs and, what’s more, increase tax revenues from American oil and natural gas companies by $12 billion, according to GEST.

This tallies with the overall conclusions of Dr. Joseph Mason, who considers that we could achieve $8 trillion in new economic output over the next 40 years, meaning $2.2 trillion in tax and royalty revenues, from new drilling.

At first glance, it looks like an excellent idea.

26957
Share

By

The curious case of the frozen windmills

Wind turbines are supposed to be a clean, efficient, green, environment-friendly way to generate the megawatts needed by industrial societies, or so the Quixotic idealists tell us.

Unfortunately they freeze (h/t Matt):

vA $200-million wind farm in northern New Brunswick is frozen solid, cutting off a supply of renewable energy for NB Power.

The 25-kilometre stretch of wind turbines, 70 kilometres northwest of Bathurst, has been shut down for several weeks due to heavy ice covering the blades. GDF Suez Energy, the company that owns and operates the site, is working to return the windmills to working order, a spokeswoman says.

That’s when they don’t fall apart,

In other energy news, Obama’s assault on our domestic energy now a 4-alarm fire. Go read about it.

25099
Share

By

Bye-bye, deepwater rigs

Deepwater rigs moved out of the Gulf of Mexico

Some of the 30-plus deepwater rigs that were in the Gulf of Mexico have moved to other markets, first because of a U.S. halt called last May after BP Plc’s (BP.L: Quote) well blowout, and then because of the lack of permits once the moratorium was lifted.

Where are they headed?

  • Egypt (!)
  • Angola (and scheduled to return to the US in October, maybe)
  • Nigeria
  • French Guiana
  • Mediterranean

Ready for higher energy prices?

24916
Share

By

Obama administration: collapsing small business in the Gulf of Mexico

I have posted in the past on how the USA is the only country in the world that forbids itself from exploring and exploiting its own natural resources of oil, shale, and natural gas.

This affects small business:
At NPR:
Lack Of Drilling Permits Hurts Small Energy Firms

Interior Secretary Ken Salazar will meet with oil industry executives in Houma, La., on Monday. The big topic will be the government’s slow pace in issuing drilling permits for the Gulf of Mexico, despite the Obama administration lifting its deep-water drilling moratorium last month and the shallow-water moratorium in May.

It’s not the big oil companies hurting now. The Gulf of Mexico is just one sliver of their worldwide portfolios. It’s the smaller companies that rely more heavily on the Gulf. Among them is Hercules Offshore.

About 25 miles from Aransas Pass, Texas, the huge Hercules 205 shallow-water jack-up rig is sitting in about 100 feet of water. It’s not drilling any wells right now because Hercules’ customers can’t get permits.
…
Historically the government approved 10 to 15 shallow-water drilling permits a month. But now, that number has fallen to almost none.

How so?

Hercules Offshore has lost more than half of its stock market value since BP’s Deepwater Horizon accident last April, though the work Hercules is doing here isn’t nearly as complicated as drilling in the deep waters of the Gulf.

“They’re natural gas wells, not oil wells,” says Jim Noe, senior vice president, general counsel and chief compliance officer at Hercules Offshore.

“We’re using technology that we’ve been using for decades — safely and without incident,” he says.

It looked like the Obama administration recognized this, too — at first. The shallow-water moratorium lasted less than a month.

“And yet we’ve been facing what we’ve called a de facto moratorium because the Obama bureaucrats won’t issue permits,” Noe says.

Historically the government approved 10 to 15 shallow-water drilling permits a month. But now, that number has fallen to almost none.

Conservation groups want “a complete stop with permitting offshore drilling.”

The Obama administration is also proposing two punitive measures against the US oil & gas industry,

two massive tax hikes. First, he’d ban oil and gas companies from using the “Section 199″ tax credit, a measure for domestic manufacturers enacted in 2004 to boost US employment. (The Senate is set to vote this week on its version of the ban.) Second, he wants to end “dual capacity” protection for US energy firms.

Without this shield against double taxation on foreign revenues, American companies would be competing on an uneven global playing field.

This gives an advantage to other countries that are already drilling in the gulf,

legislative proposals such as the possible tax changes could exacerbate disadvantages already experienced by U.S. companies, making them less competitive than companies from other countries analyzed in that report. Yergin and Hobbs say that is because companies from countries such as Canada, China, Italy, the Netherlands, Norway, Russia, and the United Kingdom pay less tax on repatriated income than do American companies. This in turn gives them a competitive advantage, which would presumably be expanded were the proposals being pursued in fact implemented.

while,

lawmakers would be slamming the very teachers, firemen and factory workers that they claim to want to help. And the fallout wouldn’t end there. Higher energy taxes would cost the US $341 billion in lost economic activity and $68 billion in wages over the next nine years.

Prof. Joseph Mason explains how this will cost the US over 150,000 jobs. Go read his articles here and here.

23956
Share

By

Energy policy? What energy policy?

IBD Editorial:

The administration lifts the Gulf drilling moratorium in time for the election, but it’s not as good as it sounds. Meanwhile, China buys up Texas oil land to develop the energy reserves we won’t.

What do you mean?

While we dawdle, state-owned Chinese energy giant CNOOC is buying a multibillion-dollar stake in 600,000 acres of South Texas oil and gas fields. CNOOC announced Monday that it would pay up to $2.2 billion for a one-third stake in Chesapeake Energy assets.

We’re in the best of Chinese hands: the debt, and now the oil and gas fields.

23537
Share

By

The Obama WH knew offshore drilling ban would cost 23,000 jobs

This is wrong every way you cut it,
U.S. Saw Drill Ban Killing Many Jobs

Senior Obama administration officials concluded the federal moratorium on deepwater oil drilling would cost roughly 23,000 jobs, but went ahead with the ban because they didn’t trust the industry’s safety equipment and the government’s own inspection process, according to previously undisclosed documents.

Let’s look at that paragraph again:

In the middle of a recession, and while the Gulf area was in the midst of a crisis, Obama still went ahead with the ban on offshore drilling, even when

Senior Obama administration officials concluded the federal moratorium on deepwater oil drilling would cost roughly 23,000 jobs

because not only

they didn’t trust the industry’s safety equipment

but also they didn’t trust

the government’s own inspection process

This is the same administration who just placed your healthcare on their hands and insists they can do a better job than you.

Go read the whole article.

22486
Share

By

Obama swims in the bay, not the gulf VIDEO

The White House released this photo,

If you go to the White House slideshow, the caption reads,

President Barack Obama and daughter Sasha swim at Alligator Point in Panama City Beach, Fla., Saturday, Aug.14, 2010. The President traveled to Panama City Beach with First Lady Michelle Obama and Sasha to meet with local business owners and officials and to encourage Americans to travel to the Gulf Coast beaches. August 14, 2010. (Official White House Photo by Pete Souza)

The UK Independent’s Guy Adams asks,
President goes for a swim in the Gulf – or does he?

The official picture was intended to provide evidence that the region’s beaches are back to normal. Yet it soon emerged that the private beach on which it was taken, off Alligator Point in St Andrew Bay, north-west Florida, isn’t technically in the gulf.

It certainly is many miles away from the most affected areas off the Louisiana coast.

Michelle Malkin looks at how the media reported the swim,

Reuters: Obama swims in Gulf, says beaches open for business

AFP: Obama, daughter swim in Gulf in act of reassurance

CNN: Obama takes plunge, swims in Gulf

An Associated Press writer was one of the few to notice or care about the difference between the Gulf and the Bay:

The president’s dip happened away from the media. The White House released an official photo, but The Associated Press does not publish such handout images. According to the White House, the Obamas swam off Alligator Point, which is in Saint Andrew Bay, not the Gulf.

TOTUS went along and, as Michelle said, the Gulf was open for scripted rhetoric;

Obama read off the TOTUS,

I also want to point out that as a result of the cleanup effort, beaches all along the Gulf coast are clean, they are safe, and they are open for business.”

Especially private beaches in Alligator Point off Panama City.

But fret not, Emboldened by ‘Gulf Swim’, Obama Mulls Dip in Economy

And,
Yes, I mind very much when Presidents use their children for disingenuous photo ops.
I wonder what Jim has to say about swimming on Alligator Point, though.

22329
Share

By

The Chavez bailout

Exactly what the US doesn’t need,
Congress’s Hugo Chávez Bailout Bill
Proposed changes to the tax code would cost U.S. jobs and strengthen foreign competitors like China and Venezuela.

Research I’ve recently published indicates that under the administration’s six-month moratorium, set to last until Nov. 30, the Gulf Coast region will lose more than 8,000 jobs, nearly $500 million in wages, over $2.1 billion in economic activity, and nearly $100 million in state and local tax revenue. Taking into account the effects outside of the Gulf Coast, the moratorium will cost the United States 12,000 jobs and nearly $3 billion, including almost $200 million in federal tax revenues.

If the moratorium lasts six to 12 months longer, as many pundits expect, some 36,000 jobs could be lost across the country. Under the worst case scenario—a permanent moratorium on all oil and natural gas production in the Gulf of Mexico—nationwide economic losses would exceed $95 billion and more than 400,000 jobs.

This is bad enough. But earlier this week, both the House and Senate proposed new energy bills that will cost $25 billion and $15 billion, respectively—and the government wants the energy sector to pay the tab. The administration and its congressional allies are considering two changes to the tax code that would put U.S. energy companies at a competitive disadvantage to foreign-owned behemoths like BP, China’s Sinopec and Hugo Chávez’s Citgo. These constraints on the energy sector would handcuff domestic energy development, reduce future resources, and kill even more jobs.

In his 2011 budget proposal to Congress, President Obama seeks to repeal the “dual capacity” tax credit, under which American businesses with operations overseas receive a deduction on their U.S. taxes relative to the amount of taxes they have already paid other countries. This credit guarantees that the revenues of U.S. companies aren’t taxed twice. The U.S. is the only country that taxes foreign revenues in the first place, so the dual capacity credit allows U.S. companies to compete fairly against foreign competitors. Doing away with it would dramatically disadvantage American firms relative to their foreign rivals.

Mr. Obama’s budget, as well as the bills under consideration in the House and Senate, would further hurt the energy sector by excluding it from a critical tax deduction, known as Section 199, which allows firms to deduct a percentage of domestic production activity each year. Enacted in 2004 as part of the American Jobs Creation Act, Section 199 was meant to encourage employment across the entire manufacturing sector, including oil and gas. Under Mr. Obama’s budget, however, Section 199 would no longer apply to oil and gas companies.

According to analysis conducted for the Institute for Energy Research by the economist Andrew Chamberlain, this repeal would cause the U.S. to increase its reliance on imported oil from politically unstable nations, cost the economy 637,000 jobs, and reduce household earnings by nearly $35 billion over the next decade. As the Congressional Research Service recently put it, repeal would “adversely affect domestic production and increase imports.”

Change.
You asked for it, you got it.

(thanks to Emily & Maggie for the link)

21986
Share