Are Oil Companies Really Godzilla?

The administration and media gloat on saying we subsidize oil companies, when nothing could be farther from the truth.  It’s diatribe, at it’s worst.

What in fact are incentives to oil companies to produce—tax breaks that were proven to work under Reagan—the current administration calls subsidies, and his lap dogs on TV slather away beating his same old tired drum.  Speaking of “sameo,” it’s the same old lexicon game…call it what you know people hate, and they’ll hate it.  Call chocolate ice cream dog crap and you won’t sell much of it.  But the fact is, it’s still ice cream, cold and sweet on your tongue, and delicious.  If we’re calling tax breaks subsidies, then we have to call all green energy tax breaks subsidies.  We have to call your mortgage deduction, your prescription, your cost of heating your office, a subsidy. For you get to expense those items, just like an oil company should be able to expense the cost of drilling a well.

If we want oil companies to solve America’s energy problems, then we have to get out of their way.  Allowing a company to write off the cost of drilling a well in the year it’s drilled is not a subsidy, it’s a legitimate business expense for a company taking a huge risk.  It should never have been capitalized in the first instance.  We should be giving energy companies tax credits if we want them to reach hard to find new oil reserves, and all that amounts to is allowing them to expense in the year THEIR MONEY is expended: it’s not a subsidy.  The government does not reach in it’s pocket (yours and mine) and “give” the oil companies anything…they merely don’t require them to spread those development costs over a long period, or to capitalize them to use accounting lexicon, thus the expense goes against taxes due from the oil company on other profits.

Remember that as big and profitable ExxonMobile is, it’s only got 1/40 the reserves of oil as does Saudi Arabia, and there are dozens of countries with many multiple times more in reserve, and those reserves are “state owned”.  ExxonMobile or any other free enterprise stockholder company is not your “cost of gasoline” problem folks…in fact they, all American companies, are your best chance of keeping the cost of fuel low.  If only our own government, our current gaggle of socialists, would get out of the way.

You can call a pig a peacock and he’s still a pig.  You can call expenses in the year expended a subsidy, but it’s still merely an expense.  And in the case of oil companies and the highly, highly risky business of drilling for oil, it’s a route America must take.

If you want to look at ways to cut costs and save money, let’s look at the Department of Energy. In the last ten years the DOE has seen it’s budget increase by over eleven billion dollars.  An unbelievable 76%.  The role of the DOE has expanded to “basic research.”  When has the government ever been within an eon of being as efficient and effective in basic research as the private sector…usually an inventive and creative individual at work in his garage…think Thomas Edison.  Had Edison been funded by the DOE and burdened with dealing with government, we’d still be killing whales to light our homes…and there wouldn’t be a whale to be found.

“Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” U. S. Energy Secretary Steven Chu.

He said that in 2008 when appointed as Secretary of the Department of Energy, the DOE.  Then we were already astounded that the cost of a gallon of gasoline was $3.50 in the U.S., and the cost in Europe almost $7.00.  Today the cost in Europe is $8.67 for diesel and $8.54 for super.  But it seems Mr. Chu is getting his way, as we pull up to five dollar a gallon pumps.

What would european prices do to you budget, ladies and gentlemen?  When you fill that 20 gallon tank your credit card would he hit for $172.00.  That’s President Obama’s solution to solving the energy crisis.  If we had Secretary Chu’s solution, a minimum wage earner would have to work 23.72 hours to pay for a tank of gasoline if nothing was withheld from his paycheck.  Presuming he burns a tank a week, and works a 40 hour week, that’s almost 60% of his work week going to pay for his gasoline to and from his job…are we trying to drive everyone in this country onto the government dole?  That may be the intent.  And if so, it’s working.  Almost 13% of Americans are already on food stamps.  29,900,000  Americans receive some form of government assistance…and that number will skyrocket if Secretary Chu and President Obama have their way.  No matter what lip service they give to the contrary.

Well, you’re right, Secretary Chu, that would discourage energy consumption in the U.S.  It would also drive the cost of everything consumed through the roof at a time when government thinks printing money is the same as “making money” in the free enterprise sense.  Or maybe he’s forgotten that almost everything consumed in the U. S. is delivered by truck, and trucks are run on gasoline and more so on diesel.  And yes, it would make green projects more viable. Not that anyone could afford them, for we’d all be broke.

I personally love green projects, wind, solar, even geothermal, and yes, when traveling in Europe, particularly Germany, I saw home after home with solar arrays on their rooftops.  Commendable, except when you realize it was forced upon them because of the cost of hydrocarbon fuels.

You’re right Secretary Chu, gasoline prices equal to Europe would change things drastically in the U.S. …but not for the better.

If Secretary Chu get’s his way, I’m buying stock in Schwinn…of course that’s presuming I have a buck left to buy anything.

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