The Real Cost of Oil...

[etgryphon]

My sister-in-law sent me this link:

Real Cost of Oil

It is pretty good. Subsidies for Big Oil make me ill when they are making such record profits. And until the public at large realizes that this is the true cost of oil, we wont have change in the US energy policy.

That is why I think these skyrocketing oil prices are the best thing that has ever happened. I think we should decouple the artifical government depressent of the price of gasoline and see what really happens. We are hindering innovation by keep the price of oil down.

-Gryph

[FishHooks]

its really hard to read that for me at least, the print on that was so small it hurt my eyes. I'm someone who thinks this oil things isn't that big of a deal, comparing prices to the 70's 0r 80's were actually paying less if you adjust the prices for inflation. The big problem is the amount of taxes on the oil that the problem. I do agree that when prices get higher we will eventually start using better alternatives, most of which are available just not cost productive yet with oil prices not yet high enough to make alternative sources worth while for the public.

[etgryphon]

True.

It was the price hikes of the 70 and 80s that caused a lot of this artifical coupling in order to smooth the spikes.

So it ges down to the view that...Yeah it nice that we don't hurt the economy with the price hikes, but we are painting ourselves into a corner. And this coupling doesn't help innovation.

Discomfort does...

-Gryph

BTW: Yeah the typeface sucks on the page.

[adios]

Let's look at subsidies for a moment pre the new energy bill. This is a list of federal "subsidies" that I could find:

the Percentage Depletion Allowance (a subsidy of $784 million to $1 billion per year)

the Nonconventional Fuel Production Credit ($769 to $900 million)

immediate expensing of exploration and development costs ($200 to $255 million)

the Enhanced Oil Recovery Credit ($26.3 to $100 million)

foreign tax credits ($1.11 to $3.4 billion)

foreign income deferrals ($183 to $318 million)
accelerated depreciation allowances ($1.0 to $4.5 billion).

Total they add up to about $10 billion worst case I believe. I'd also question the notion of the following as a tax break:

that immediate expensing of exploration and development costs. It may be totally justified and even if not totally the taxes are deferred in essence not eliminated.

Acclerated depreciation. First this tax break was available to all companies as part of the legislation implementing fiscal policy to spur the economy. Second of all I question the notion that IRS depreciation schedules are totally accurate and always reflect reality. The truth of the matter is that long term depreciation schedules that are not warranted inhibit economic growth because they inhibit investment.

Foreign tax credits. These are due to the fact that companies paid taxes in other countries and thus had their income reduced by the amount of taxes already paid. It's a way to quelch double taxation of income.

Final point about subidies. This amount represents less than 6 months of Exxon-Mobile profits. Therefore these "subsidies" are a drop in the bucket so to speak.

I'd also point out that Exxon-Mobile has stated that their overall production next year will be flat to slightly down and that their cap ex spending will not rise significantly yet oil is at record highs or close to it.

[Il_Mostro]

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I do agree that when prices get higher we will eventually start using better alternatives, most of which are available just not cost productive yet

[/ QUOTE ]
Care to expand on which alternatives you see as being readily available on a scale to be compared to oil usage today?

As anyone who has followed my posts for the last year knows, I do not belive there is any alternatives that can even begin to make up for oil.

Ohh, and if you are about to say hydrogen, you have some studying to do.

[etgryphon]

[ QUOTE ]

As anyone who has followed my posts for the last year knows, I do not belive there is any alternatives that can even begin to make up for oil.


[/ QUOTE ]

Ever or just currently?

-Gryph

[FishHooks]

Electric cars are an alternitive right now. Reason why they sucked so bad was because all electric cars will little buggies and didn't run for a long time. They are now starting to produce 200+ HP cars now like SUV's and biggers cars that will start appeling to the mass public, rather than little tiny cars they used to make. Much research has been done on other alternitives as well, like hydrogen, some companies allready have hydrogen concept cars out so in the next 3-4 years that a possibility.

[adios]

Many doubt the efficacy of building an infrastructure to support hydrogen powered vehicles. Your point though is well taken, which to me is that technology will be a key factor in solving this problem. Good article in section C of todays WSJ about future supply and demand for oil.

[hurlyburly]

What's your position on ethanol?

[justin]

"Care to expand on which alternatives you see as being readily available on a scale to be compared to oil usage today?"

yeh how about hemp and other products that can be converted to ethanol, and yes very easily this could meet the demand for energy