OPEC member suggesting that oil might be a bit too high

[Martin Blank]

It's the official language of international air travel, so it just makes sense.

[Deacon]

Free market vs. social welfare. 'sink or swim on your own' vs. 'help those in need, even if it costs those in plenty'.

Your bias is showing. And hampering clear communication to a ridiculous degree.

[BtEO]

Anyone get this email?

[Martin Blank]

First I've heard of it, but I'll agree that it's a gutsy move. Perhaps it will get some action moving.

[collegestudent22]

It won't be enough, though. The speculators are just a symptom of a capitalist system. The only real solution would be to drill more in some (not necessarily all) of the currently-off-limits areas and invest the money made from that oil into renewable energy technology in order to get rid of the dependency on foreign oil to begin with and oil completely. The problem arises when the Dems refuse to drill and the Republicans refuse to do little else.... compromise is necessary, but with our fractured, immovable system none is likely to happen....

[Deacon]

Cs22, read this post.

[ShahinVahdat]

"The only real solution"? I don't think so. How about this for a compromise...oil companies get "government breaks" (i'll call them that instead of subsidies) on a myriad different things. How about we repeal those (not necessarily all, just some of them) and give them that money to develop the land they do have, which they say is too expensive to drill. If they're subsidized for that new drilling it won't be as expensive, right? Plus, the oil will get to market quicker b/c it's land they already lease rather than having to wait for Congress to repeal the federal ban, getting the states to repeal their bans, and then applying for permits.

[collegestudent22]

How about this for a compromise...oil companies get "government breaks" (i'll call them that instead of subsidies) on a myriad different things. How about we repeal those (not necessarily all, just some of them) and give them that money to develop the land they do have, which they say is too expensive to drill. If they're subsidized for that new drilling it won't be as expensive, right?

1) Uh, what? That's as may be, but their expenses in other areas would be increased due to the subsidies being removed. So they would still be less than willing to drill in the areas that have less oil as opposed to the areas that have more.

2) Drilling offshore may actually be good for the environment. Right now, earthquakes and other natural disasters underwater cause lots of seepage of oil into the water. I saw on the news that 1% of oil in the ocean comes from drilling, 4% from tanker spills, about 30% from runoff from streets and cities, and the rest from seepage from cracks in the crust. Removing the oil in as safe a manner as possible will actually reduce the amount that leaks out into the water...

The danger of such spills has been reduced so much that only 1 percent of the oil in North American waters comes from offshore oil wells -- most comes from natural seepage from the sea floor. And during Katrina and Rita, despite winds that reached 170 miles per hour and lashing waves that took out a quarter of America’s domestic energy production, no significant spills were reported.

[Deacon]

That's as may be, but their expenses in other areas would be increased due to the subsidies being removed. So they would still be less than willing to drill in the areas that have less oil as opposed to the areas that have more.

What if the subsidies were hinged on them doing that drilling?

[ShahinVahdat]

Plus, it was never an issue of whether there was less or more oil, but the expense to drill. If you're removing their subsidy money from one sector of the business to another, how are they losing money? If I say I'm taking your 100 million dollar subsidy from this part of your business to another part of your business, you still get the 100 million dollars, right?

[Martin Blank]

The oil companies shouldn't be getting any subsidies right now.

I'm against windfall taxes. The industry has seen substantial profits in the past as oil skyrocketed, but eventually it came to an end, and at one point there was talk of bailing out the oil companies because they were heading for significant, sustained losses. But that doesn't mean that subsidies can't be nixed while they're in the black. It's not going to hurt them substantially. Put it to a formula if necessary (after x quarters in the black at y% over the subsidy of the previous year, the subsidy is trimmed or removed). Subsidies are unnecessary at the current profit levels. They were largely unnecessary at $40 and up. Even for high-risk activities like ultra-deep drilling, they should be at least cut back.

I find myself in an odd position. No windfall taxes, but cut the subsidies. Allow drilling in ANWR, but it's up to the states to decide if drilling off the coasts should be allowed.

No friends in the middle ground. But I can't see myself siding completely with either extreme.

[StruckingFuggle]

Martin, can you briefly explain 'windfall taxes'?

[ShahinVahdat]

I'm not a fan of subsidies either, but I think that's a pretty good compromise...nix their current subsidies and give them subsidies for their leased acres. That way we can save ANWR and offshore sites, and oil companies get to drill current land at a reduced price.

[Martin Blank]

Martin, can you briefly explain 'windfall taxes'?

Windfall taxes are extra taxes placed on companies whose profits are deemed by the government to be too high, in essence. Right now, the oil companies are being targeted by some Democrats for windfall taxes, despite the fact that their net profits are hovering around the 10% level while several other companies are much higher; Microsoft posted a 27.5% net profit margin in 2007, and Google posted a 25.3% profit margin, and yet no one is talking about hitting the software industry with a windfall tax.

[Nebet]

extra taxes placed on companies whose profits are deemed by the government to be too high

wat

How does this make ANY kind of economic sense? "AMG, how dare you succeed at what you do! Quick, be more inefficient, or we'll take it away"? I mean...don't we want to encourage companies to do well? Doesn't that, I dunno, encourage innovation and stimulate the economy and stuff?