Oil & Gas Technology

At the same time the oil companies have been recording record profits. Corporate welfare indeed.

If you then factor in the costs for a global military presence required to keep the supplies of foreign oil flowing and fight against enemies funded by oil export revenues, the subsidies are even more scandalous. The huge profits combined with the subsidies create a huge slush fund that can be used to buy or manipulate our government officials into providing even more favors to the industry, with plenty left over to bamboozle gullible members of the public into thinking that alternative energy is for sissies and commies.

Interesting point. And if you factor in the misery that usually comes with a state funded by petrodollars it becomes rather obvious that alternate energy sources are a dire necessity and that any oil subsidies should be stopped so that the true costs are better accounted for.

Yes, I'd call my Senators and congressman again, but they already agree on this. 98 senators and 434 representatives to go. This would be a no-brainer, but money clouds judgement.

Right, so it seems that you would rather rely on foreign oil and gas to power our country. The majority of wells are drilled by small companies who could not afford to drill w/o the tax break. You may call it subsidy but the reality is far different from the picture that has been painted for you. It will change the way business is done allright, we will end up importing more oil and gas from countries who really don't like us, until our renewable sources put out enough power.. say 70-100 years from now. Looking forward to the good times, I will be leaving and becoming an expat, because we have lost common sense here in the states.

Yes, I have an understanding provided by the profit statements and the subsidies paid to the major oil companies. I don't know what the situation is for small drilling companies. Perhaps you can provide the data? I'm not even sure who those companies are or what percentage of the crude they are responsible for.

I get the feeling that the majors are profiting from a plan that was supposed to help the little guys. Sort of the way Archer Daniel Midland gets all sorts of agro subsidies that were supposed to go to small farmers. They have a bunch of "small" farmers that work for them.....

I would suggest putting this in perspective and looking at what the oil companies paid in taxes. Would it surprise you to find that they pay enormous amounts, so much that when prices go down many cities budgets must be cut? The economic impact that exploration has on a community and economy is staggering in its breadth. The majority of "profit" is put back into the business and the economy. This reminds me of the joke about the guys buying beer. Pretty soon the guy making the cash will be leaving.

I've asked for data on your previous assertion that the "little guys" needed subsidies and instead you've shifted gears and are now saying that since the oil companies pay taxes the subsidies somehow have intrinsic value. That's a sophistry.

As was pointed out, subsidies distort markets and cause misallocation of resources. While the oil companies are getting money other more worthwhile endeavours are not. This is also a redistribution of wealth from the people who are paying the taxes to the investors and employees of a specific industry - also not a good allocation of resources.

Subsidies are rarely a good thing. Oil company subsidies are definately not helping either US energy independence or the public in general.

Got any data to refute that?

Hi Guest,

I call it a subsidy, because it is a subsidy. You may argue that this subsidy is a good subsidy, because without it our modest levels of oil production would be even lower, making us even more dependent on foreign imports. You are of course free to make that case, but it is still a subsidy, and subsidies distort markets. A system where buyers get the benefits of fossil energy without paying the full price artificially encourages its overuse, and artificially makes the alternatives appear to be more expensive.

We got our wake-up call in the 70's, when OPEC first started flexing its economic muscles. We hit the snooze button, and lost several decades. We did this partly out of hubris, and partly because our political system was paralyzed by the constant supply of campaign funds and advertising from big oil. So now, rather than being well on our way to making serious use of alternatives, we are as you say a long long way from that goal.

The fact is that we are now in a serious bind, and no amount of complaining and finger pointing can change that. But the finger pointing is still valuable because it helps the public identify those players who may have put corporate self interest ahead of the national interest, giving the public reason to treat the current and future pronouncements of those players (the oil industry) with skepticism.

With regard to your assertion that most 'wells are drilled by small companies who could not afford to drill w/o the tax break', to me this seems like another example of subsidies distorting markets. Given the choice between risking their own money drilling, or letting others take those (subsidized) risks and just reaping the profits, it's not surprising that the major oil companies choose the second option.

I'm not opposed to subsidies, since they can be useful if applied wisely. But part of deciding what is wise and what is foolish is to understand that subsidies distort markets and that these distortions usually have unintended (or perhaps intended) consequences.

By the way, where are you heading?