Alan von Altendorf

A Natural Gas Centric Strategic Long-Term Comprehensive Energy Policy

Sorry about the double post. And there's a typo: MMS, not MMR.

A Natural Gas Centric Strategic Long-Term Comprehensive Energy Policy

@ frflyer, guarding the Persian Gulf, Indian Ocean, China Sea, etc serves Kuwait, Saudi Arabia, the Emirates, Germany, Japan, South Korea. It's a global geopolitical thing. I don't like it any more than you do. But it's not a subsidy, unless you want to debit Exxon a slice of the Strategic Air Command nuclear deterrent, Navy hunter-killer subs and a chunk of NASA for deploying geoimaging and communication satellites. Oops, I forgot USGS and MMR.

Sigh. Okay, let's agree it $39 billion. That's 2% of $2 trillion revenue and an incentive to explore marginal prospects. Between 1981 and 2006, U.S. Federal and state governments collected $1.65 trillion in total taxes after adjusting for inflation. That is 65 percent more than the combined earnings of the 16 largest domestic oil companies during the same period. These figures do not include income taxes paid to foreign governments on profits earned in those countries. EIA data indicates that domestic oil companies paid $518.9 billion in income taxes to foreign governments between 1981 and 2006.

Oil company 2008 earnings (net income/sales) averaged 5.7%. ROI underperformed S&P Industrials every year since 1986. If you tax oil or change the rules about writing off G&G and completion, the only thing you'll achieve is higher retail prices. The combined burden of federal, state and local gas taxes cost American drivers an average of 45.9 cents on every gallon purchased in 2006.

A Natural Gas Centric Strategic Long-Term Comprehensive Energy Policy

@ frflyer, guarding the Persian Gulf, Indian Ocean, China Sea, etc serves Kuwait, Saudi Arabia, the Emirates, Germany, Japan, South Korea. It's a global geopolitical thing. I don't like it any more than you do. But it's not a subsidy, unless you want to debit Exxon a slice of the Strategic Air Command nuclear deterrent, Navy hunter-killer subs and a chunk of NASA for deploying geoimaging and communication satellites. Oops, I forgot USGS and MMR.

Sigh. Okay, let's agree it $39 billion. That's 2% of $2 trillion revenue and an incentive to explore marginal prospects. Between 1981 and 2006, U.S. Federal and state governments collected $1.65 trillion in total taxes after adjusting for inflation. That is 65 percent more than the combined earnings of the 16 largest domestic oil companies during the same period. These figures do not include income taxes paid to foreign governments on profits earned in those countries. EIA data indicates that domestic oil companies paid $518.9 billion in income taxes to foreign governments between 1981 and 2006.

Oil company 2008 earnings (net income/sales) averaged 5.7%. ROI underperformed S&P Industrials every year since 1986. If you tax oil or change the rules about writing off G&G and completion, the only thing you'll achieve is higher retail prices. The combined burden of federal, state and local gas taxes cost American drivers an average of 45.9 cents on every gallon purchased in 2006.

A Natural Gas Centric Strategic Long-Term Comprehensive Energy Policy

Airplane, not airplanes (plural), and it flew on "standby" kerosene while pretending to demonstrate LNG that never worked. Low speed lifters in the Port of LA will operate in a small, flat, price-no-object setting. You could probably run them on used vegetable oil gathered from McDonalds (which btw is another local government wheeze, in New York, making the stinkiest biodiesel on earth at twice the price).

Michael, I don't fault you for pushing natgas as a transportation fuel. There's a large installed infrastructure of retail CNG in Holland and Belgium. I drove a gas-powered VW Golf. Worked fine on flat roads and short distances. I can see building out a similar retail network in Texas, Louisiana, parts of Indiana and Illinois. I think you might be successful in pushing policy (tax breaks) with Boone Pickens and the gas producers and pipeline companies on your side. The Battelle Memorial Institute is a resource. They're DOE experts on gas storage subsurface.

Conoco? Can't comment because of confidentiality.

A Natural Gas Centric Strategic Long-Term Comprehensive Energy Policy

"Oil gets $39 billion a year"

Please identify what the heck you're talking about?

A Natural Gas Centric Strategic Long-Term Comprehensive Energy Policy

Michael, I don't know what you mean about "subsidies for oil." It's the most heavily taxed and regulated industry in the world, from wellhead to retail gas pump.

CNG is okay for light passenger cars (assuming all the tax breaks and subsidies you indicated for infrastructure), but it can't power aircraft or heavy equipment.

Commercial oil companies, large and small, are plain old fashioned industrial enterprises. They are being shut out and squeezed by governments. Remaining potential exists in abundance, but no one wants to lose billions (again) in Russia.

The one and only cure for peak oil is to get government out of the way, let the market allocate investment. Obviously, that's not going to happen, so you're probably right -- the illogical solution will win.