Should Big Oil Receive Taxpayer Subsidies? Still?
Speculators are Behind Sharply Rising Gasoline Prices
They’re drilling, baby, drilling –- and the cost of filling the gas tank is still going up. So why subsidize them? We excerpt two 2013 articles from (1) McClatchy Newspapers, Feb 19, on speculators by K. Hall; and (2) OpEdNews, Feb 16, on subsidies by M. Yerman (from Moms Clean Air Force).
by Kevin G. Hall and by Marcia G. Yerman
Speculators Behind Sharply Rising Oil and Gasoline Prices
The national average pump price hit $3.74 for a gallon of unleaded gasoline Tuesday, up a sharp 44 cents per gallon from just a month ago. It’s the 33rd day in a row that we’ve seen a consecutive increase in gasoline prices.
The rising gasoline prices come even as the United States now produces more than half the oil it consumes. In fact, the nearly 800,000 barrel per day increase in U.S. production output from 2011 to 2012 reflected the largest one-year jump since oil drilling began in 1859.
Gasoline expenditures as a percentage of U.S. household income hit three-decade highs in 2012, and the recent spike suggests 2013 might not be much better.
Commercial end-users of oil such as airlines and trucking companies who once dominated 70 percent of the market for market for future deliveries of oil now represent just 30 percent. Non-commercial financial speculators now dominate 70 percent of the market. The trading is dominated by Wall Street banks, hedge funds, and other financial institutions that have no intention to take delivery of the oil needed to make gasoline.
It is not a question to whether or not speculators are moving the market. Speculators are the market.
Nearly 1 million barrels a day of capacity has been turned off with eight refinery closures or announced closures on the U.S. East Coast and the Caribbean over the past year.
Another factor is that refiners that turn oil into gasoline have chosen to switch to their summer blends much earlier than normal. This switch, which stops or slows production for a period of time, usually happens closer to the Spring Break driving season in mid- to late March.
Last year, gasoline prices peaked on April 5 and 6, so an early switchover may also mean an early peak to gasoline prices and that they may tumble later in the year.
To read more
JJS: Inflated prices is one source of oil companies’ profits. Another is tax loopholes and some subsidies.
Should Big Oil Receive Taxpayer Subsidies?
In order to transition to renewable energies, it is essential to level the playing field. While oil and gas companies are receiving subsidies and are not being held to the same standards of accountability, that won't happen.
Many subsidies are tax breaks that have been in the tax code for one hundred years. The subsidies that were easy to enact have since become hard to take away.
Why our dollars are going to companies that are reaping billions in profits, contributing to health issues, as well as adding to what Kretzmann qualifies as "climate chaos"?
BP was able to deduct from its tax liability billions of dollars for certain costs related to remediation from the Gulf oil spill. Sen. Sanders' bill would ensure that corporations responsible for oil spill clean-up and damages do not get a tax break for paying to clean-up their mess.
To read more
JJS: Many reformers want to give public revenue to alternative energy, whoever they are. However politicians are not scientists nor investors; they pick insiders. And even if politicians did the best they could and gave away our money impartially, the process would still overlook some good ideas and be unfair to companies not given any public largesse.
A vastly superior system is to forget about trying to win enough political power to control government handouts to ideas you like (whoever they turn out to be) and instead use your voice to put an end to all that and just disburse public revenue to the citizenry equally. People in alternative energy will get their share plus others will invest theirs.
From where would the money come? From society’s spending for oil and other resources and land and airwaves and the whole rest of natural assets that exist and have value without anyone expending any labor or capital to create them. Government would redirect all that spending into the public treasury, using taxes, fees, leases, and dues, then back out again as equitable shares. Sort of like the Alaska oil dividend but on a much bigger scale.
And it gets better. When society recovers its socially-generated value of land, it spurs owners to use land more efficiently. When vacant lots get in-filled, that shortens trip distances and cuts demand for fuel.
It begins with understanding that the worth of Earth belongs to us all. Oil companies are ballistically rich because they capture money that does not belong to them, our common wealth. People must stand up for what’s theirs before they can ever win it.
Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .
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