Obama renews call for oil taxes in 2011 budget

"For our members—the small businessmen and women of our nation's oil and gas industry—this is a knockout blow," Somerlyn Cothran, executive director of the National Stripper Well Association in Tulsa, said on Feb. 2. "Implementation of this budget proposal would mean a significant loss of jobs and a dramatic loss of tax revenues for each of the 35 states where our members are productive, contributing businesses. Plus, the resulting decrease in oil production will serve only to make America even more dependent upon foreign oil."

Cothran noted that while a marginal, or stripper, well produces 15 b/d or less of oil, US stripper wells collectively produce 20% of the country's oil or 1.2 million b/d—as much as the US imports from Saudi Arabia.

"There is a shocking difference between the 'big oil' companies and the little guys, who are Rotary Club and PTA members in their respective hometowns," Cothran emphasized. "There should absolutely be a structural and financial difference in relation to tax subsidies between the large-scale, international oil companies and small, independent operators. This is the only way to ensure the survival of our industry's small businesses."

OIL FUTURES: Oil Drops Steeply, Breaking Key Support Level

Crude oil futures fell sharply for the second day in a row Friday after breaking through a key support level that traders had been watching for a sign of whether the energy markets would continue to trend lower. The drop in crude prices spurred losses for other commodities, which worsened as the U.S. dollar gained strength.

Crude futures, which had been little changed throughout the morning after the release of anxiously awaited U.S. jobs data, fell below their January low of $72.43, which triggered further selling that pushed the benchmark March contract below $70 for the first time since mid December. Light, sweet crude for March delivery settled down 2.7% at $71.19 on the New York Mercantile Exchange. Brent crude on the ICE futures exchange closed down 3.8% at $69.36 a barrel.

"Instead of the news making the price, it's the price making the news," said Tim Evans, an analyst at Citi Futures Perspective in New York. Evans said it was clear that crude's drop to a session low of $69.50 was triggered by a glut of pre-programmed orders to sell oil if it broke significantly below the January low support level.

When oil or any other financial asset marks a particular low price repeatedly, traders refer to it as a "support level," because it indicates that there are lots of buyers willing to buy at that level, often using pre-programmed trading strategies. But when an asset falls through a key support level - as oil did Friday - it indicates many buyers are no longer interested in buying at that price, triggering a sharp drop to the next support level down. For oil, this is around $70 a barrel.

Beyond the black stuff: Big Oil is being forced rethink its future (Economist)

In the long term, however, the firms’ success depends on sustaining reserves. The big western oil companies are trying to expand through acquisitions and investment, but the opportunities do so are becoming scarcer. The firms are spending where they can. Exxon Mobil, the biggest listed oil company, says that exploration and capital spending hit $27.1 billion in 2009, 4% higher than in 2008. The company expects to spend $25 billion to $30 billion annually to the same end over the next five years. BP intends to spend some $20 billion this year on investment in new projects and drilling, roughly the same level as last year.

But there are limits to what money can buy.

Open Letter to President Obama

Dear President Obama,

Your State of the Union speech last week laudably referenced clean tech and renewable energy several times. We ask that you follow your words with action, by leading the transition to a post-carbon economy and a healthier world.

You also spoke of our need to face hard truths.

Hard truth: Our continued, willful reliance on fossil fuels is making our planet uninhabitable. We are evicting ourselves from the only paradise we’ve ever known.

Hard truth: No combination of current and anticipated renewable sources can maintain our profligate energy usage as the global supply of fossil fuels heads for terminal decline.