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economists, planners, technologists, politicians, and=20 --Apple-Mail-85-355721791 Content-Type: text/plain; charset=US-ASCII; format=flowed; delsp=yes Content-Transfer-Encoding: 7bit Hi Dave, On 6-Jul-12, at 11:18 AM, David & Alison Webster wrote: > Hi Chris & All, Jul 6, 2012 > Money talks but that works both ways. > > Back in the 70's (?) government incentives to promote oil > exploration and development, in the form of tax breaks, were so rich > that exploration and development were practically free of cost to > the companies. I suspect that the tar sands industry has been even > more heavily supported by tax dollars. > > If my suspicions are correct then an analysis of direct and > indirect taxpayer support of the petrochemical industry could > generate pressure to reduce this. Most people don't care about the > environment and will 'solve' global warming by buying a more > powerful airconditioner. But they might be prepared to push back if > they saw taxpayer funds being converted to petrochemical industry > profits. These are interesting questions. Bitumen sands (a.k.a., tar sands; oil sands) are receiving about CAD $1.2 billion a year from Canadians in tax dollars in the form of various subsidies. One of the better studies of this was done by KAIROS in 2008: http://www.tarsandswatch.org/files/PumpedUpInsides3.pdf Which may in some measure account for why in 2009, after receiving funding for 35 years from CIDA, the ecumenical (United Church, Anglican, Catholic, Lutheran, Society of Friends, and others) KAIROS was abruptly de-funded by Bev Oda (she of recent $16 glass of orange juice fame) by the insertion of the famous ^"NOT" into the recommendation by CIDA that KAIROS receive its $7 million in funding. Pointing out just how free (or actually, subsidized) a ride the oil industry was getting from the federal government may have proved a step too far for the Harper Conservatives. http://rabble.ca/blogs/bloggers/elizabeth-may/2012/07/defending-bev-oda-not-reasons-you-think You might think that with such massive upfront subsidies to developing the bitumen sands, that at least we'd be getting some of that back at the other end in terms of royalties -- but you'd be wrong. The Alberta government charges oil companies a 1 per cent royalty of sales until they recoup all their investments (thereafter a 25 per cent royalty rate kicks in). The Alberta government charges the lowest rates of almost any government in the world; its share of all oil revenues is only 39 per cent. Compare this to the 76 per cent that Norway collects (this information from Andrew Nikiforuk's book, "Tar Sands: Dirty Oil and the future of a Continent.") Moreover, as I point out in the postscript to my article, In the valley of the shadow of peak oil, the oil industry is currently collecting about $1.86 billion in extra profits a day as a result of the artificially high prices of oil that no one can adequately explain in terms of supply/demand market economics: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - "With what strikes me as some degree of bewilderment, Magueri reports, "At more than $100 per barrel, the international benchmark crude Brent is $20 to $25 above the marginal cost of oil production." In the hyper- free market world we inhabit, what can possibly explain this enormous (circa 25 per cent) disparity in what is arguably the most important commodity in the world? Struggling for an answer Magueri attempts to answer his own question: "Only geopolitical and psychological factors (above all, a major crisis related to Iran) and a still deep-rooted belief that oil is about to become a scarce commodity, can explain the departure of oil prices from economic fundamentals." Without descending into the wormhole of conspiracy theory, one might nonetheless with justification ask whose interests the promulgation of endless crises in the Middle East serves? How much extra money is being made daily as a result of the $20-25 differential between the marginal cost of oil and the current $100 per barrel price of Brent Crude? Considering that world oil production is now 93 mbd and multiplying by $20 per barrel (using the low end of the estimates) equals $1.86 billion in extra profits a day, and thus $680 billion in extra profits per year. Is this a tidy enough sum that it might incline petro-interests (national or corporate) to engage in some geo- political manipulation? I leave it to you, dear reader, to deliver a judgment. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - In this, I am reminded of the old adage that every dollar that someone has that they didn't earn, represents a dollar that someone earned, but didn't receive. At $680 billion a year, that's a sobering thought. Cheers! Chris In the valley of the shadow of peak oil http://rabble.ca/blogs/bloggers/christophermajka/2012/07/valley-shadow-peak-oil Christopher Majka 6252 Jubilee Rd., Halifax, Nova Scotia, Canada B3H 2G5 c.majka@ns.sympatico.ca It's true we're on the wrong track, but we're compensating for this short-coming by accelerating. - Stanislav Lec --Apple-Mail-85-355721791 Content-Type: text/html; charset=US-ASCII Content-Transfer-Encoding: quoted-printable <html><body style=3D"word-wrap: break-word; -webkit-nbsp-mode: space; = -webkit-line-break: after-white-space; ">Hi Dave,<div><br><div><div>On = 6-Jul-12, at 11:18 AM, David & Alison Webster wrote:</div><br = class=3D"Apple-interchange-newline"><blockquote type=3D"cite"><span = class=3D"Apple-style-span" style=3D"border-collapse: separate; color: = rgb(0, 0, 0); font-family: 'Times New Roman'; font-style: normal; = font-variant: normal; font-weight: normal; letter-spacing: normal; = line-height: normal; orphans: 2; text-align: -webkit-auto; text-indent: = 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: = 0px; -webkit-border-horizontal-spacing: 0px; = -webkit-border-vertical-spacing: 0px; = -webkit-text-decorations-in-effect: none; -webkit-text-size-adjust: = auto; -webkit-text-stroke-width: 0px; font-size: medium; "><div = bgcolor=3D"#ffffff" style=3D"word-wrap: break-word; -webkit-nbsp-mode: = space; -webkit-line-break: after-white-space; "><div><font size=3D"2">Hi = Chris & All, = Jul 6, 2012</font></div><div><font = size=3D"2"> Money talks but that works both = ways.</font></div><div><font size=3D"2"></font> </div><div><font = size=3D"2"> Back in the 70's (?) government incentives = to promote oil exploration and development, in the form of tax breaks, = were so rich that exploration and development were practically free of = cost to the companies. I suspect that the tar sands industry has = been even more heavily supported by tax = dollars.</font></div><div><font size=3D"2"></font> </div><div><font = size=3D"2"> If my suspicions are correct then an = analysis of direct and indirect taxpayer support of the petrochemical = industry could generate pressure to reduce this. Most people don't care = about the environment and will 'solve' global warming by buying a more = powerful airconditioner. But they might be prepared to push back if they = saw taxpayer funds being converted to petrochemical industry = profits.</font></div><div><font = size=3D"2"></font></div></div></span></blockquote></div><br></div><div>The= se are interesting questions. Bitumen sands (a.k.a., tar sands; oil = sands) are receiving about CAD $1.2 billion a year from Canadians in tax = dollars in the form of various subsidies. One of the better studies of = this was done by KAIROS in 2008:</div><div><br></div><div><span = class=3D"Apple-tab-span" style=3D"white-space:pre"> <a = href=3D"http://www.tarsandswatch.org/files/PumpedUpInsides3.pdf">http://ww= w.tarsandswatch.org/files/PumpedUpInsides3.pdf</a></span></div><div><br></= div><div>Which may in some measure account for why in 2009, after = receiving funding for 35 years from CIDA, the ecumenical (United Church, = Anglican, Catholic, Lutheran, Society of Friends, and others) KAIROS was = abruptly de-funded by Bev Oda (she of recent $16 glass of orange juice = fame) by the insertion of the famous ^"NOT" into the recommendation by = CIDA that KAIROS receive its $7 million in funding. Pointing = out just how free (or actually, subsidized) a ride the oil industry was = getting from the federal government may have proved a step too far for = the Harper Conservatives. </div><div><br></div><div><span = class=3D"Apple-tab-span" style=3D"white-space:pre"> <a = href=3D"http://rabble.ca/blogs/bloggers/elizabeth-may/2012/07/defending-be= v-oda-not-reasons-you-think">http://rabble.ca/blogs/bloggers/elizabeth-may= /2012/07/defending-bev-oda-not-reasons-you-think</a></span></div><div><br>= </div><div>You might think that with such massive upfront subsidies to = developing the bitumen sands, that at least we'd be getting some of that = back at the other end in terms of royalties -- but you'd be wrong. The = Alberta government charges oil companies a 1 per cent royalty of = sales until they recoup <i>all</i> their investments (thereafter a = 25 per cent royalty rate kicks in). The Alberta government charges the = lowest rates of almost any government in the world; its share of all oil = revenues is only 39 per cent. Compare this to the 76 per cent that = Norway collects (this information from Andrew Nikiforuk's book, "Tar = Sands: Dirty Oil and the future of a = Continent.")</div><div><br></div><div>Moreover, as I point out in the = postscript to my article,<i> <span class=3D"Apple-tab-span" = style=3D"white-space: pre; ">In the valley of the shadow of peak = oil</span></i>, the oil industry is currently collecting about = $1.86 billion in <i>extra</i> profits<i> a day</i> as a result of the = artificially high prices of oil that no one can adequately explain in = terms of supply/demand market economics:</div><div><br></div><div>- - - = - - - - - - - - - - - - - - - - - - - - - - - - - - - - - = - - - - - - - - - - - - - - - - - - - - - - - - - - - - - = - - - - - - - - - - - </div><div><br></div><div><div = align=3D"">"With what strikes me as some degree of bewilderment, Magueri reports, "At more = than $100 per barrel, the international benchmark crude Brent is $20 to $25 = above the marginal cost of oil production." In the hyper-free market world we inhabit, what can possibly explain this enormous (circa 25 per cent) = disparity in what is arguably the most important commodity in the world? = Struggling for an answer Magueri attempts to answer his own question: "Only = geopolitical and psychological factors (above all, a major crisis related to Iran) = and a still deep-rooted belief that oil is about to become a scarce commodity, = can explain the departure of oil prices from economic fundamentals."</div> = <div align=3D""> </div> Without descending into the wormhole of = conspiracy theory, one might nonetheless with justification ask whose interests the promulgation of = endless crises in the Middle East serves? How much extra money is being made daily as a result of the $20-25 differential between = the marginal cost of oil and the current $100 per barrel price of Brent = Crude? Considering that world oil production is now 93 mbd and multiplying by = $20 per barrel (using the low end of the estimates) equals $1.86 billion in = <i>extra</i> profits a day, and thus $680 billion in <i>extra</i> profits per year. Is this a tidy enough sum that it might incline petro-interests (national or corporate) to engage in some geo-political = manipulation? I leave it to you, dear reader, to deliver a = judgment. </div><div><br></div><div>- - - - - - - - - - - - - = - - - - - - - - - - - - - - - - - - - - - - - - - - - - - = - - - - - - - - - - - - - - - - - - - - - - - - - - - - - = - </div><div><br></div><div>In this, I am reminded of the old adage = that every dollar that someone has that they didn't earn, represents a = dollar that someone earned, but didn't receive. At $680 billion a year, = that's a sobering = thought.</div><div><br></div><div>Cheers!</div><div><br></div><div>Chris</= div><div><br></div><div><div><span class=3D"Apple-tab-span" = style=3D"white-space: pre; "><b> In the valley of the shadow of = peak oil</b></span></div><div><span class=3D"Apple-tab-span" = style=3D"white-space: pre; "> <a = href=3D"http://rabble.ca/blogs/bloggers/christophermajka/2012/07/valley-sh= adow-peak-oil">http://rabble.ca/blogs/bloggers/christophermajka/2012/07/va= lley-shadow-peak-oil</a></span></div><div><br></div><br></div><br><br><div= apple-content-edited=3D"true"> <div style=3D"word-wrap: break-word; = -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; = "><div><div style=3D"font-size: 14px; ">Christopher Majka</div><div = style=3D"font-size: 14px; ">6252 Jubilee Rd., Halifax, Nova Scotia, = Canada B3H 2G5</div><div style=3D"font-size: 14px; "><a = href=3D"mailto:c.majka@ns.sympatico.ca">c.majka@ns.sympatico.ca</a></div><= div style=3D"font-size: 14px; "><br></div><div style=3D"font-size: 14px; = "><span class=3D"Apple-style-span" style=3D"font-size: medium; "><i>It's = true we're on the wrong track, but we're compensating for this = short-coming by accelerating</i>. - Stanislav = Lec</span></div></div><div><br></div></div><br = class=3D"Apple-interchange-newline"> </div><br></body></html>= --Apple-Mail-85-355721791--
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