In response to:

Obama's Interior Department Still Going Rogue

kgriggs Wrote: Jul 13, 2012 11:58 AM
What is the problem with making these wildly profitable, already taxpayer subsidized, multi-national oil companies competitively bid for these leases and pay top dollar, when we have deficits to reduce? While an "all of the above" energy policy is a good one, Increased oil production from U.S. lands in and of itself is not a path toward energy independence. Once the oil is out of the ground, it's part of the global market for this fungible commodity, so there's really no such thing as "domestic" or "foreign" oil, except for the domestic jobs, which are welcomed. A barrel of light sweet crude gets sold to the highest bidder, whether they be in the U.S. or China.
scott s. Wrote: Jul 14, 2012 3:35 AM
If that was true we wouldn't need the Keystone pipeline, would we? It's not fungible and transportation costs are not negligible. Why do you think there is such a big price spread between West Texas Intermediate at Chandler, OK, and Brent?
Reginald10 Wrote: Jul 13, 2012 3:48 PM
"Wildly profitable" - Good, my IRA has been hurting. My retirement savings need the money.
"Taxpayer subsidized" - Horsefeathers. They only have the usual tax deductions for business expenses.
"Multi-national" - Of course; the oil is there, the market is here. Ralph Lauren is multi-national, too.

And they do bid competitively for leases. It's called an auction. Please pay attention!
Bulldog74 Wrote: Jul 13, 2012 12:18 PM
If there are deficits to reduce, then the Federal Government should be going full-bore on lease sales.

Not only do they collect the winning bids, but if the leases ultimately produce, then they get royalties and taxes...oh yeah, and then they get to tax the finished product at the gas pump. And unlike the oil companies, they don't incur any technical, economic or political risk.

Nice little racket...
inkling_revival Wrote: Jul 13, 2012 12:27 PM
Got that right. If you examine the makeup of the price of a gallon of gasoline, as much of it is state and federal taxes as is the total cost of refining the product from crude, including all the profits made by the refiner (which isn't very much.) The impact of the taxes is almost double the impact of retailing the gasoline, including the total costs and profits of the gasoline stations.

The only thing that has more impact on the price of gasoline than taxes is the cost of the crude oil, itself. THAT actually represents something like 70% of the cost of a gallon of gas.
inkling_revival Wrote: Jul 13, 2012 12:16 PM
(cont.)
(4) Oil companies are not wildly profitable. Their profit margins are (a) sporadic, (b) determined by uncontrollable market forces, and (c) averaged around 6.5% between 2006 and 2010, according to Forbes, which is one of the lowest profit margins for a major industrial sector.
(5) Oil companies are not taxpayer subsidized. That's a myth created by Democratic party operatives, who are liars. More than 90% of the "subsidies" that "studies" of the topic identify are depletion allowances, which are not a subsidy in any sense of the word -- it's a standard, sensible accounting practice common to all mining operations.
(6) Oil companies already bid for the leases and pay top dollar -- except where they're forbidden by law from drilling.
inkling_revival Wrote: Jul 13, 2012 12:10 PM
You must be a liberal. I can tell by the flurry of truly enormous errors in your post.

(1) You overstate fungibility. Shipping cost is paid by the buyer, so the location of the oil is a pretty important part of the transaction. That's why we buy so much oil from Canada, Mexico, Venezuela, and Nigeria.
(2) The number and value of the domestic jobs are enormous, and they're not the only thing in the mix. Opening domestic production would also cut our $700 billion balance of trade deficit in half.
(3) "All of the above" does not describe the Obama administration's energy policy, it's just the deceptive verbiage they've chosen to employ. They are at war against fossil fuels.
(cont.)
kgriggs Wrote: Jul 13, 2012 2:27 PM
Inkling, thanks for the diligence. Always appreciated. Q1'12 margins for Exxon, Chevron, Shell, BP and Chesapeake were: 7.62%, 10.66%, 7.04%, 6.12% and 8.87%, for an unweighted average amongst them of 8.06%. Fair enough, not "wildly" profitable, but still doing well - a good thing for jobs, and 401(k)'s. My point was only that paying "top dollar" for the leases is perfectly ok and fair as well.

I'm a little confused why you mentioned Nigeria in the same sentence as Canada, Mexico and Venezuela - it's in the Niger Delta in Africa, not in this hemisphere. Did I miss your point? In any event, the commodity is still largely fungible, even taking into account shipping costs, as the market price is driven by the global market.
kgriggs Wrote: Jul 13, 2012 2:30 PM
Inkling, thanks for the diligence. Always appreciated. Q1'12 margins for Exxon, Chevron, Shell, BP and Chesapeake were: 7.62%, 10.66%, 7.04%, 6.12% and 8.87%, for an unweighted average amongst them of 8.06%. Fair enough, not "wildly" profitable, but still doing well - a good thing for jobs, and 401(k)'s. My point was only that paying "top dollar" for the leases is perfectly ok and fair as well.

I'm a little confused why you mentioned Nigeria in the same sentence as Canada, Mexico and Venezuela - it's in the Niger Delta in Africa, not in this hemisphere. Did I miss your point? In any event, the commodity is still largely fungible, even taking into account shipping costs, as the market price is driven by the global market.
Reginald10 Wrote: Jul 13, 2012 3:51 PM
Psst - Nigeria IS in Africa - the part closest to the Americas.
Much closer than, say, the Arabian Peninsula.
DB07 Wrote: Jul 13, 2012 12:10 PM
You make a couple good points kgriggs, but show your bias (or ignorance) with the "wildly profitable" comment. Oil companies pretty average in terms of profit MARGINS, the only relevant measure. And their paying "top-dollar" for the leases benefits whom, precisely? The retirement plans and 401ks, of which virtually hold all energy sector investments? No, that will hit retirees pocketbooks. And if you do manage to cut oil companies profits with more expensive leases, you're ignoring that the 10s of billions the companies pay in income tax will be LOWERED. Lastly, you ignored the part of the story that discusses NO oil exploration, no matter what the potential benefits might be, including high-wage jobs.
inkling_revival Wrote: Jul 13, 2012 12:17 PM
He makes no good points at all, DB07. Read my post; nearly every word of his post is in error.
DB07 Wrote: Jul 13, 2012 12:27 PM
Ok, a "couple" good points was overstating. I was referring exclusively to his comment about fungibility, which was the only accurate point (limited, as you noted, by the costs of shipping).
inkling_revival Wrote: Jul 13, 2012 12:30 PM
And limited by the quality of the crude, itself. For instance, the crude from the Alaskan north slope is a heavy, sulfurous crude that can only be processed by certain refineries.
Pamela166 Wrote: Jul 13, 2012 2:59 PM
Actually, YOU have missed the point COMPLETELY; He said open all the FEDERAL Leases to Bidding- YThose leases are OWNED by the government, the money from the auction would go to ONLY the government. I wish you left winges would learn to read.
kgriggs Wrote: Jul 13, 2012 4:55 PM
No - I got that. I agree, open them all up to auction, and let the government take top dollar. Win/win, but still not a path to energy independence. It's been 40 years since the first energy "crisis," and we're still addicted. Need to get off the stuff.

The Obama administration's loathsome cowboy, Interior Secretary Ken Salazar, won't take no for an answer. He's been smacked down repeatedly by federal courts for imposing a draconian, junk science-based moratorium on the oil and gas industry. Yet, the job-killing zealot and his boss just introduced another ruinous offshore drilling ban two weeks ago.

The White House rationale for the renewed crackdown? Because we said so.

Thomas Pyle of the D.C.-based Institute for Energy Research reports that the Salazar scheme "reinstitutes a 30-year moratorium on offshore energy exploration that will keep our most promising resources locked away until long...