To the editor:
Your Sunday editorial on Big Oil “subsidies” contained a few misrepresentations — or, at least, incomplete explanations — by Stephen Comstock of the American Petroleum Institute. When the facts are distorted, wrong conclusions can be reached.
1. Recovery of labor costs of drilling a non-productive well. The truth is, 70 percent of these capital costs can be deducted from taxable income in the same year they were incurred on any well, productive or not. This can amount to several million dollars per well. I know of no other industries that are allowed to recover their capital on their principal investments that quickly.
2. Mr. Comstock says the industry’s effective tax rate is 41 percent. This is a gross distortion caused by much higher overseas tax rates. In some overseas jurisdictions, the government’s “take” can be up to 95 percent. In the United States, it is far lower. A 2008 GAO study showed that in the Gulf of Mexico, the U.S. government’s “take” ranked 93 out of 104 jurisdictions, near the bottom, worldwide. The United States is indeed a very friendly investment climate.
It means to me there is room for increasing the “take,” or rents, the U.S. government charges for the exploitation of the American people’s resources. Several overseas jurisdictions that I am familiar with will vary their “take” based on oil price. This protects the oil companies’ profits when prices are low, but returns to the host government revenues that were not earned through investment, but rather through the good fortune of rising oil prices. This has been recommended by the GAO many times, but the industry has always bottled it up in Congress.
There are other misstatements or distortions commonly made by the API, but we don’t have room to enumerate them here. I know because I used to be part of the problem and used their statistics and talking points to try to escape taxation in several locations. One of their statements that the Review-Journal omitted, however, certainly defuses all of their arguments that they are over-taxed. The API’s own study, published in 2007, showed that from 2000 to 2005, the average return on investment for oil and gas production was about 61 percent higher than for the Standard & Poor’s (S&P) industries.
In short, you shouldn’t have much sympathy for Big Oil. An old oil industry joke goes like this: “The most profitable business in the world is a well-run oil company. The second most profitable business is a poorly run oil company.”
Religion and politics
To the editor:
In his Friday column, Byron York opposed the questioning of political candidates about their membership in organizations (e.g. the Dominionists) that have openly expressed their goal of turning this country into a theocracy.
He also asserts that questioning a scientifically illiterate candidate who thinks that evolution is just a theory that’s “out there” and should be taught in schools along with creationism, constitutes a bias against Christianity.
Why does Mr. York think that these questions have no place in determining the qualifications of presidential candidates? The beliefs of candidates who blatantly acknowledge that their religion would guide their actions as president are certainly relevant.
Bringing their religion into a government office is unconstitutional, and whether or not a candidate would do this is a valid question for a candidate required (if elected) to take an oath to uphold the Constitution.
The writer is vice president of the Humanist Association of Las Vegas.
To the editor:
I’m rather confused. President Obama and his Taxocrats are all over the GOP and the terrorist tea party fanatics for trying to balance the budget by controlling the costs of entitlements and cutting spending. But now Mr. Obama is saying he will create jobs and improve the economy by cutting payroll taxes — taxes that support the entitlement program called Social Security. Say what?
As a private-sector worker nearing the age where I’ll be able to start receiving this, now it will be defunded. How does this save it for future generations? How does this improve anything? Is it supposed to keep the elderly dependent on the government, rather than allow them as much independence as possible?
Say it isn’t so.
We are constantly being told by politicians — except Sen. Harry Reid and the general media, as well as economic talking heads — that Social Security is in financial trouble. Now Mr. Obama is going to save it, and us, by cutting its funding and somehow creating jobs and saving the economy? The very same economy he ignored in 2009 while ramming a costly health care plan down our throats?
Mr. Obama wasted a whole year with continued job losses and economic decline. Now it’s jobs, jobs and jobs. I’m really confused, but if I don’t think about it maybe I will vote for him in 2012.
Not. Say NObama in 2012.