H.R. 6

[akarunway 1]

Been watching all this debate today on the bill. While you're pumping gas today and getting raped and oil companies are reaping record profits I was wondering what most people think about the bill. I pulled up the original (2005 BILL) and it will take a fucking week to read. No wonder congress is so fucked up>http://www.speaker.gov/legislation?id=0009 While I'm at it. Oil fell below $50 a barrel today on the day of the debate/vote. Coincidence? Just one of my conspiracy theories.

I hold it true, whate'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost
Than never to have loved at all.

[NCclimber 0]

Without knowing the particulars of this bill, I'll say any kind of retroactive measure to recoup royalties that some claim the governemtn should have been paid.

However, our leaders should now come up with a program that remedies this problem going forward.

While this is a prominent topic, I wonder if anyone in Congress will shed some light on why it took so long for this screwed up situation to get attention.

Crude was as high as $36.90 in 2000, $39.90 in 2003 and the last time crude was below the magical $34.00/barrel was in April 2004.

[akarunway 1]

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Without knowing the particulars of this bill, I'll say any kind of retroactive measure to recoup royalties that some claim the governemtn should have been paid.

However, our leaders should now come up with a program that remedies this problem going forward.

While this is a prominent topic, I wonder if anyone in Congress will shed some light on why it took so long for this screwed up situation to get attention.

Crude was as high as $36.90 in 2000, $39.90 in 2003 and the last time crude was below the magical $34.00/barrel was in April 2004.

A pretty interesting chart. I sure miss 99 cent a gallon gas in 98. What's up w/ that?>http://www.wtrg.com/oil_graphs/oilprice1947.gif

I hold it true, whate'er befall;
I feel it, when I sorrow most;
'Tis better to have loved and lost
Than never to have loved at all.

[lawrocket 3]

I personally have a BIG problem with this. This is similar to what the City of Eloy is trying to do to Skydive Arizona.

Here, the federal government signed leases in 1998-1999 with oil companies. See, the Interior Department (under the leadership of Bruce Babbit) sold these leases to 56 oil companies to allow deep-water oil drilling in the Gulf of Mexico. The government policy was that if the companies didn't have to pay royalties, they'd use the money for exploration of more oil (which they companies actually have done).

Back then, the price of oil was low. The problem was, the Interior Department didn't put language in the leases that would trigger the payment of royalities when the price of oil reached a certain threshhold.

So, when the price of oil started climbing, the oil companies kept the money instead of paying royalties to the US government that they were not obligated to pay.

No, the government HATES it when there is a revenue stream that they can't tap. Goddamn it, if the government isn't gonna get paid, then the entity who isn't paying shall be made to suffer. That's $10 billion dollars the government wants.

So, Congress is trying to PASS A LAW THAT NULLIFIES THOSE LEASES!
http://www.speaker.gov/pdf/HR6.pdf

They title this like, "End Subsidies for Big Oil" when it should be called, "Put a Tax on Big Oil that we Wish we had Included in our Leases Back Then."

Because the leases really can't be renegotiated, Congress is trying to pass a law that would suspend operations in the Gulf of Mexico or prevent the Secretary of the Interior from issuing leases to any compnay involved in the old leases unless the companies agree to renegotiate the leases to pay back fees that the government thinks it should have put in the original leases.

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SEC. 204. ELIGIBILITY FOR NEW LEASES AND THE TRANSFER OF LEASES; CONSERVATION OF RESOURCES FEES.
(a) ISSUANCE OF NEW LEASES.—
(1) IN GENERAL.—The Secretary shall not issue any new lease that authorizes the production of oil or natural gas in the Gulf of Mexico under the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) to a person described in paragraph (2) unless—
(A) the person has renegotiated each covered lease with respect to which the person is a lessee, to modify the payment responsibilities of the person to include price thresholds that are equal to or less than the price thresholds described in clauses (v) through (vii) of section 8(a)(3)(C) of the Outer Continental Shelf Lands Act (43 U.S.C. 1337(a)(3)(C)); or
(B) the person has—
(i) paid all fees established by the Secretary under subsection (b) that due with respect to each covered lease for which the person is a lessee; or (ii) entered into an agreement with the Secretary under which the person is obligated to pay such fees.

A similar arrangement was in a famous movie:
Michael: ...Well when Johnny was first starting out, he was signed to this contract with a big-band leader. And as his career got better and better he wanted to get out of it. Now, Johnny is my father's godson. My father went to see the bandleader, with a contract for $10,000 to let Johnny go, but the bandleader said no. So the next day, my father went to see the bandleader again, only this time with Luca Brasi. Within an hour, the bandleader signed the release, with a certified check of $1000.
Kay: How did he do that?
Michael: My father made him an offer he couldn't refuse.
Kay: What was it?
Michael: Luca Brasi held a gun to his head, and my father assured the bandleader, that either his signature or his brains would be on the contract."

Congress makes Big Oil an offer they can't refuse...

My wife is hotter than your wife.

[cameramonkey 0]

Just remember a basic rule of business that nobody seems to get. "Businesses DONT pay taxes" .

For those that arent quick enough to catch onto the theory... any tax you levvy on a business will IMMEDIATELY be passed on to Joe Customer. It wont come out of the corporate bottom line... its a cost of doing business, just the same as if the cost of the raw materials increased.


If only more people understood that reality...

Two wrongs don't make a right, however three lefts DO!

[nathaniel 0]

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I sure miss 99 cent a gallon gas in 98.

I bet you don't miss the deflation required to get you back there. Deflation is bad, mmkay?

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?

[dorbie 0]

Quote

Just remember a basic rule of business that nobody seems to get. "Businesses DONT pay taxes" .

For those that arent quick enough to catch onto the theory... any tax you levvy on a business will IMMEDIATELY be passed on to Joe Customer. It wont come out of the corporate bottom line... its a cost of doing business, just the same as if the cost of the raw materials increased.


If only more people understood that reality...

Rubbish, I could say similar silly things, like, companies don't make a profit, it is immediately passed onto the consumer. Or companies never go broke because they can charge whatever they like.

What determines price in the market is a complex thing and depends on the business, but taxes are not directly linked to price.

Companies who try to maximize profit (and most aspire to) cannot pass a tax hike to the customer, they must look at the impact of price on demand and optimize their volume * margins.

[billvon 3,070]

>Companies who try to maximize profit (and most aspire to)
>cannot pass a tax hike to the customer . . .

If the tax is applied equally (i.e. it does not give any one company a competitive advantage) then the tax is indeed passed on to the consumer. Companies try to maximize profit by balancing the benefit of a high per-unit profit against the increase in sales brought on by a reduction of per-unit profit (i.e. by underselling the competition.) This typically results in rather thin profit margins, with a few exceptions.

If you increase taxes on everyone in the industry, and that tweaked profit-per-unit stays the same, then the price of the item goes up by the amount of the tax. The alternative is to adjust profit to try to re-define the "new" ideal profit. However, in most cases the company has already arrived at that number, and it doesn't change just because there's a new tax.

The key for that to work is "applied equally." If you get a tax benefit for whatever reason (big campaign contributor, struggling new company, whatever) then the equation changes rather dramatically.

[nathaniel 0]

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If you increase taxes on everyone in the industry, and that tweaked profit-per-unit stays the same, then the price of the item goes up by the amount of the tax.

The price-elasticity of demand is missing from your analysis.

My advice is to do what your parents did; get a job, sir. The bums will always lose. Do you hear me, Lebowski?