I heard today that in order for the credit card Bill to get passed (making rules more stringent for credit card companies), they had to add a rider allowing guns to be carried in national parks. (I kid you not).

My interest in resource depletion and ecological overshoot has forced me to become aware/awake at how we are 'governed'. It is beyond my ken.

For all -- O&G tax rules are far from my realm but at first blush I doubt those changes highlighted in the report will change much in the future for the energy companies. Sure, some enhanced recovery projects will be shelved if they were already close to marginal value. But that will give a little boost in prices to the rest of us. And the other provision will have an impact on net income to some extent. But in general the public oils don’t pay a lot of taxes directly. The bulk of the income is taxed as it’s distributed to their shareholders as dividends or capital gains on the stock sales.

Yes…the oil patch is an easy target. But that’s old news to us. Just part of the price for doing business. The only big revenue generated I see is the report above is the excise tax. If the public is too foolish to not see that it would be a direct tax on them then they deserve what they get for supporting it. If ever crude oil seller has to pay the feds another $10/bbl for each they sell then it will be easy for all of us to bump the price up by the same amount. No competition pressure to not do so. The good news is that would raise the cost of all oil/NG products and thus might reduce consumption. The bad news is doing so might delay recovery from the current recession and add to inflation big time.

The one comment that still bothers me is that the industry doesn’t pay enough taxes. The public statements always seem the ignore the big tax we pay on the front end that no one calls a tax: 1/6 (the royalty payment) of every dollar earned from fed lease goes directly to the gov’t right off the top…no deductions…no hold backs. How much revenue has the public receive from just the OCS leases (not counting all the other onshore mineral royalties)? Between 1950 - 2000 the feds have received (based on $60/bbl oil and $3.50/mcf the cumulative amount has been $162 billion. That’s directly from the gov’t website. That number doesn’t included the 10’s of billion of $’s paid in lease bonuses. And yes…many other govt’s have received bigger royalties from operators. That’s one of the reasons much of the activity in the oil patch is over seas these days. Those resources were developed much slower in part because of higher royalty costs to the companies. In retrospect, it might have served the nation better had the gov’t been slower letting the OCS be developed. Our reserve base would be more intact today. OTOH, all that domestic energy did help fuel our economic growth to the #1 spot on the globe (at least until recently.

Don’t worry about the oil patch. It has survived all these years. The new rules might mean higher cost for the public and greater unemployment for our workers but ExxonMobil et al will keep marching forward towards that inevitable cliff or at least down that unending slope.