4 ms·

What is the argument against this? Honestly asking. I do know that profit margins need to exceed cost of finding, extracting and refining the oil and US's natur

by _8j50 4y ago

What is the argument against this? Honestly asking. I do know that profit margins need to exceed cost of finding, extracting and refining the oil and US's natural gas was decimated because of saudi vs russia price wars in 2020 after covid hit because prices weren't high enough which meant shutting things down. Do subsidies artificially allow a good enough profit margine to continue operations? If so is it for crude, lng,etc...? Because if it means depending more on russia and venezuela I can see that argument being good. Also, why not get rid of farm subsidies or industry subsidies in general? Or is the point of this bill "oil bad" ? Because that would be silly, I mean sure it is bad but reducing supply just means it will be aquired elsewhere complicating the politics of switching to renewables. In other words, if the US used only its own fossil fuels it would be easier to regulate prices and such to make renewables more appealing, and russia,saudi and china getting more business means they are less motivated to reduce fossil fuel usage. But in general I agree with subsidies being a bad thing but with oil, I would rather have it in the US where we have control over the extraction and refinement process as well as distribution and ability to wind down dependence on it in a planned manner, but that doesn't mean they should be subsidized. I just don't know what the reasons are for keeping subsidies and I'm keeping an open mind.

TEP_Kim_Il_Sung 4y ago
Why not subsidize these in reverse; By not taxing energy- and food-production in the first place?
randomdata 4y ago
> Also, why not get rid of farm subsidies Most of farm subsidies that people talk about goes towards food stamp-type programs. Not wanting the poor to starve may be a good reason. And when people talk about product subsidies (like corn subsidies) they are referring to the insurance system operated by the government. Due to the nature of what is being insured (i.e. something that is likely to affect most policy holders when disaster strikes), it is difficult for private business to provide the necessary insurance. Traditional insurance products rely on only a few policy holders needing insurance each year. When mass disaster strikes, such as a hurricane destroying homes across a wide area, the government typically does step in to cover the difference. Since this is the norm for agriculture, the government stays at the ready. Farmers still have to maintain a paid policy to be participants in the insurance system. Perhaps insurance should be abandoned, but it's generally considered a social good.
- legitster 4y ago
  Not necessarily true. There are a few other notable sets of subsidies: - Irrigation water in the US is artificially cheap for farmers - The US offers several Export Credit Guarantee programs (the WTO has specifically found to be illegal internationally): https://www.fas.usda.gov/programs/export-credit-guarantee-program-gsm-102 https://www.fas.usda.gov/programs/export-credit-guarantee-pr... - There are amply funded Conservation programs - which can often involve payments to do nothing with certain pieces of land: https://www.fsa.usda.gov/programs-and-services/conservation-programs/ https://www.fsa.usda.gov/programs-and-services/conservation-... - And bigger than anything, over half of all direct payments to farms are from Commodity programs: https://en.wikipedia.org/wiki/Commodity_programs https://en.wikipedia.org/wiki/Commodity_programs https://farm.ewg.org/region.php https://farm.ewg.org/region.php
  - randomdata 4y ago
    > over half of all direct payments to farms are from Commodity programs As you can see in your second link, the direct payments ended under Obama. All of the remaining programs for commodity producers are insurance-based. Perhaps what you are trying to say is that there are time travellers coming to us from the past to tell us about how things used to be (from our perspective)? But why would anyone listen to them?
    - legitster 4y ago
      The site still reports commodity payments for the last several years - I don't know where you are getting that from: https://farm.ewg.org/region.php?fips=00000&progcode=total&yr=2019 https://farm.ewg.org/region.php?fips=00000&progcode=total&yr... And it does seem the government continues to give direct payments to farmers - even though it is under the guise of the insurance program: https://www.fsa.usda.gov/news-room/news-releases/2021/usda-provides-1-8-billion-to-offset-market-fluctuations https://www.fsa.usda.gov/news-room/news-releases/2021/usda-p... I would also not call the price protection programs an insurance program. Being able to sell at a certain price seems like a pretty strong and direct subsidy. And the export credit, which is not overseen by the USDA at all, continues.
legitster 4y ago
Most of these are not so much "subsidies" so much as normal bookkeeping practices as employed by the oil industry. Developing a new copper mine would count as an R&D expense, but not a new oil well. Like it or not, the oil and gas industry are pretty dang critical to supplying strategic and economic needs of the US. Punishing them while still depending on them would be incredibly silly. Addressing climate change is first and foremost a consumption problem. Addressing it in a supply-side, trickle-down method should be self-evidently counter-productive.
- culi 4y ago
  > Most of these are not so much "subsidies" so much as normal bookkeeping practices as employed by the oil industry. Developing a new copper mine would count as an R&D expense, but not a new oil well. Which part specifically seems like "normal bookkeeping" to you? This bill: - repeals the tax credits for producing oil and gas from marginal wells and for enhanced oil recovery; - repeals the tax deduction for the intangible drilling and development costs of oil and gas wells; - repeals percentage depletion; - repeals the tax deduction for tertiary injectant expenses; - repeals the passive loss exception for working interests in oil and gas property; - denies the tax deduction for income attributable to domestic production activities for oil and gas activities; - prohibits the use of the last-in, first-out (LIFO) accounting method by major integrated oil companies; - limits the foreign tax credit for dual capacity taxpayers (i.e., taxpayers who are subject to a levy of a foreign country or U.S. possession and receive specific economic benefits from such country or possession); and - expands the definition of crude oil for purposes of the excise tax on petroleum and petroleum products to include any oil derived from a bitumen or bituminous mixture (tar sands), and any oil derived from kerogen-bearing sources (oil shale).
  - legitster 4y ago
    Nearly all of them? Except for the credits specifically for producing oil or the trade definition of crude oil. LIFO is illegal in some countries but is acceptable under GAAP. The Oil industry is not special here. Percentage depletion is the IRS standard for non-renewable resources. Again, oil is given the same percentage as copper: https://www.law.cornell.edu/uscode/text/26/613 https://www.law.cornell.edu/uscode/text/26/613 Passive loss exception is also standard: https://www.irs.gov/taxtopics/tc425 https://www.irs.gov/taxtopics/tc425 The IRS maintains a nicely detailed guide on how tax deductions work: https://www.irs.gov/publications/p535 https://www.irs.gov/publications/p535 Almost no one would say a business deducting COGS would be a "subsidy".

by _8j50 4y ago

TEP_Kim_Il_Sung 4y ago

Why not subsidize these in reverse; By not taxing energy- and food-production in the first place?

randomdata 4y ago

> Also, why not get rid of farm subsidies Most of farm subsidies that people talk about goes towards food stamp-type programs. Not wanting the poor to starve may be a good reason. And when people talk about product subsidies (like corn subsidies) they are referring to the insurance system operated by the government. Due to the nature of what is being insured (i.e. something that is likely to affect most policy holders when disaster strikes), it is difficult for private business to provide the necessary insurance. Traditional insurance products rely on only a few policy holders needing insurance each year. When mass disaster strikes, such as a hurricane destroying homes across a wide area, the government typically does step in to cover the difference. Since this is the norm for agriculture, the government stays at the ready. Farmers still have to maintain a paid policy to be participants in the insurance system. Perhaps insurance should be abandoned, but it's generally considered a social good.

legitster 4y ago
Not necessarily true. There are a few other notable sets of subsidies: - Irrigation water in the US is artificially cheap for farmers - The US offers several Export Credit Guarantee programs (the WTO has specifically found to be illegal internationally): https://www.fas.usda.gov/programs/export-credit-guarantee-program-gsm-102 https://www.fas.usda.gov/programs/export-credit-guarantee-pr... - There are amply funded Conservation programs - which can often involve payments to do nothing with certain pieces of land: https://www.fsa.usda.gov/programs-and-services/conservation-programs/ https://www.fsa.usda.gov/programs-and-services/conservation-... - And bigger than anything, over half of all direct payments to farms are from Commodity programs: https://en.wikipedia.org/wiki/Commodity_programs https://en.wikipedia.org/wiki/Commodity_programs https://farm.ewg.org/region.php https://farm.ewg.org/region.php
- randomdata 4y ago
  > over half of all direct payments to farms are from Commodity programs As you can see in your second link, the direct payments ended under Obama. All of the remaining programs for commodity producers are insurance-based. Perhaps what you are trying to say is that there are time travellers coming to us from the past to tell us about how things used to be (from our perspective)? But why would anyone listen to them?
  - legitster 4y ago
    The site still reports commodity payments for the last several years - I don't know where you are getting that from: https://farm.ewg.org/region.php?fips=00000&progcode=total&yr=2019 https://farm.ewg.org/region.php?fips=00000&progcode=total&yr... And it does seem the government continues to give direct payments to farmers - even though it is under the guise of the insurance program: https://www.fsa.usda.gov/news-room/news-releases/2021/usda-provides-1-8-billion-to-offset-market-fluctuations https://www.fsa.usda.gov/news-room/news-releases/2021/usda-p... I would also not call the price protection programs an insurance program. Being able to sell at a certain price seems like a pretty strong and direct subsidy. And the export credit, which is not overseen by the USDA at all, continues.

legitster 4y ago

Most of these are not so much "subsidies" so much as normal bookkeeping practices as employed by the oil industry. Developing a new copper mine would count as an R&D expense, but not a new oil well. Like it or not, the oil and gas industry are pretty dang critical to supplying strategic and economic needs of the US. Punishing them while still depending on them would be incredibly silly. Addressing climate change is first and foremost a consumption problem. Addressing it in a supply-side, trickle-down method should be self-evidently counter-productive.

culi 4y ago
> Most of these are not so much "subsidies" so much as normal bookkeeping practices as employed by the oil industry. Developing a new copper mine would count as an R&D expense, but not a new oil well. Which part specifically seems like "normal bookkeeping" to you? This bill: - repeals the tax credits for producing oil and gas from marginal wells and for enhanced oil recovery; - repeals the tax deduction for the intangible drilling and development costs of oil and gas wells; - repeals percentage depletion; - repeals the tax deduction for tertiary injectant expenses; - repeals the passive loss exception for working interests in oil and gas property; - denies the tax deduction for income attributable to domestic production activities for oil and gas activities; - prohibits the use of the last-in, first-out (LIFO) accounting method by major integrated oil companies; - limits the foreign tax credit for dual capacity taxpayers (i.e., taxpayers who are subject to a levy of a foreign country or U.S. possession and receive specific economic benefits from such country or possession); and - expands the definition of crude oil for purposes of the excise tax on petroleum and petroleum products to include any oil derived from a bitumen or bituminous mixture (tar sands), and any oil derived from kerogen-bearing sources (oil shale).
- legitster 4y ago
  Nearly all of them? Except for the credits specifically for producing oil or the trade definition of crude oil. LIFO is illegal in some countries but is acceptable under GAAP. The Oil industry is not special here. Percentage depletion is the IRS standard for non-renewable resources. Again, oil is given the same percentage as copper: https://www.law.cornell.edu/uscode/text/26/613 https://www.law.cornell.edu/uscode/text/26/613 Passive loss exception is also standard: https://www.irs.gov/taxtopics/tc425 https://www.irs.gov/taxtopics/tc425 The IRS maintains a nicely detailed guide on how tax deductions work: https://www.irs.gov/publications/p535 https://www.irs.gov/publications/p535 Almost no one would say a business deducting COGS would be a "subsidy".