Tag Archives: Oil

Oil CEOs testify before Senate Finance Committee

May 12, 2011 1:34 PM

Some sharp words exchanged here. Apparently Conoco put out a statement saying the removal of oil subsidies is “un-American.”

Schumer and Menendez asked the CEO to apologize but he refused to do so.

Lots of CAP research cited by Dems and serious spin by R’s. I almost feel bad for the CEOs – all of their Republican defenders are leaving for a deficit reduction meeting at the White House. Coincidence? Perhaps.

Rockefeller said that the CEOs are out of touch because they can’t identify with the average person at the pump (Said the pot!). Besides Schumer’s well-rehearsed populist outrage, I think the discussion is getting too wonky and the CEOs are winning by throwing out confusing numbers.

Cleantech saves soldiers’ lives

Apr 26, 2011 11:39 PM

The military is the one area where government spending on R&D is tolerated by the GOP. Republicans tried to gut the Department of Energy’s hugely successful ARPA-E program during the last budget fight, but left DoD’s DARPA virtually untouched. But Defense is picking up the slack by demonstrating a practical application of clean energy: to fight and win wars!

It’s fantastic to see the military take the lead on this when the rest of us in the clean energy space have had such difficulty. Using energy innovation to save the lives of American servicemen – that’s a proposition the Grand Oil Party can’t argue with.

Takeaways –

1.   One soldier is wounded or killed for every 50 convoys transporting fuel.

2. The U.S. military uses more energy than two-thirds of the world’s nations.

3. The military has demonstrated that clean energy can fully power the world’s most demanding endeavors. Three bases in Afghanistan run almost entirely on solar power.

The military has a history of technological innovation that has huge carry-on benefits for civilian uses (see the INTERNET, microwave etc.). Let’s hope their leadership on clean energy is a harbinger of broader acceptance stateside.


DoD official: Clean tech saves lives

By Darius Dixon

4/26/11 1:49 PM EDT

Clean energy development is a race to the battlefield as much as to the marketplace, a top Defense Department official said Tuesday.

Case in point: U.S. soldiers fighting in Afghanistan during routine patrols carry about 18 pounds of batteries apiece for radios and other equipment. That’s a burden they shouldn’t have to bear, Deputy Defense Secretary William Lynn III said during a White House panel discussion on energy security.

New energy technology and efficiency save lives along vulnerable U.S. supply lines by reducing fuel shipments that are prone to insurgents’ ambushes or bombing attacks, he said.

“More than 70 percent of the convoys in Afghanistan are used just for fuel or water,” Lynn said, adding that more than 3,000 troops and contractors have been killed or wounded protecting those types of convoys.

And the Pentagon’s $15 billion annual energy bill, one that “consumes more energy than is used by two-thirds of all the nations on earth,” is largely dependent on foreign sources, Lynn said.

Last year, the Pentagon and the Energy Department entered into a partnership to promote energy efficiency and clean technology throughout the U.S. military.

“Clean energy technology is one way to lighten the load and give our troops more capability,” Lynn said. He said marines in Afghanistan started deploying solar panels in Helmand Province last fall so that two bases in the region now run completely on solar power and a third cut its consumption of diesel fuel by more than 90 percent.

The deployment of flexible solar panels, he added, reduced soldiers’ need for battery resupply on extended missions.

Read the rest at Politico Pro (subscription required).

How oil companies recieve billions in tax breaks

President Obama proposed scrapping $4.5 billion in subsidies for oil companies in the State of the Union, suggesting the monies might be put to better use as incentives for clean energy. Presidents have been trying to do this for decades – even former oilman George W. Bush tried to shut off the spigot, but to no avail. “With $55 a gallon oil, we don’t need incentives for oil and gas companies to explore. There are plenty of incentives.”

With oil on its way back to ridiculous prices (last I checked, $92 a barrel for NYMEX Crude) oil companies are the last businesses worthy of subsidy. ExxonMobil announced profits of $9.7 billion in the fourth quarter of 2010 andChevron picked up $5.3 billion over the same time period. And these numbers are a continuation of a tremendously prosperous period for the petroleum sector: over the past decade, the top five American oil companies made nearly one trillion dollars in profits. Compared to those figures, a mere $4.5 billion dollars a year seems like a pittance. But the oil lobby is intent on fighting for every penny.

Here’s how it works: technically, the $4.5 billion isn’t a subsidy. It’s a clever accounting move that allows oil companies to disingenuously claim depreciation costs on bogus assets. On the Diane Rehm show today, oil industry lobbyist Jack Coleman argued that the tax credit oil companies receive is the same tax credit any other business can file for.

That’s partially true. The 1099 is a tax credit that any corporation can claim for depreciation of an asset. Under this provision, normal businesses are allowed to claim depreciation of equipment, property, machinery, or other business asset as the value of those assets falls with use.

The tax code allows oil companies to stretch the definition of “business asset” to include their oil wells. As they suck oil out of a well, the amount in the well decreases and depreciates the value of the well. Oil companies include this “depreciation,” or depletion, in their tax filings in order to save billions of dollars.

But what’s especially conniving is that the tax code allows them to fudge the numbers to maximize their deduction, well beyond its actual value. Say an oil well has 20 million barrels of recoverable oil. The oil company will estimate the value of the well using the the market price. According to Dan Weiss at CAP, they produce the barrel for around $10 and make a profit of $82. The tax law allows them to deduct the full market price on their taxes – imagine deducting $92 dollars on your taxes for something it took $10 to produce.

For a regular business that uses its assets to create products, the 1099 credit makes sense. But it doesn’t make a whit of sense for oil companies to receive tax deductions when asset depletion is the essential operation of their business. Why should they receive tax credits for it?

The reason the law is so stacked in favor of big oil is because it’s been on the books since 1913. The U.S. was headed to war and we needed all the oil we could get. Also, searching for oil back then was a very imprecise business – nothing like it is now. Prospectors would dig into the ground on a hunch and, more often than not, have nothing more than a really deep hole to show for it.

These days, oil exploration is nothing like the crapshoot it was in 1913. So call it a subsidy, call it a tax loophole, call it whatever you want. It’s wasteful and it needs to end. I’m certain the oilies will be fine without the help.