Pelosi: Oil companies should pay royalties

[audtatious]

By Mike Soraghan Posted: 08/25/08 03:08 PM [ET] DENVER — House Speaker Nancy Pelosi indicated Monday that, if oil companies want to drill offshore, they should not bank on California’s coast and they'd better expect to pay more for the taxpayer-owned crude they do get.

“You want to talk about drilling offshore? Let’s talk about profits made by the oil companies without paying royalties,” Pelosi said Monday morning before members of the California delegation to the Democratic National Convention. “They’re taking your oil without paying any royalties.”

Pelosi and other Democratic House leaders are to announce their “comprehensive strategy for American energy independence” at a news conference later Monday in Denver.

Earlier this month, Pelosi announced that she could support including offshore drilling in a larger package of changes to the nation’s energy policies. She had resisted drilling as a “hoax” that wouldn’t lower prices. But she relented after she was pushed by Republican lawmakers and her party’s own vulnerable members, who’ve seen public support for drilling soar this summer along with gasoline prices.

To rousing applause, Pelosi told the roomful of Californians on Monday, “If folks say we need to drill offshore, don’t come around California.”

She’s already made it clear that in exchange for drilling off the coasts, she expected Republicans and the energy industry to accept measures they don’t like, such as a renewable portfolio standard and the Democrats’ signature “use it or lose it” legislation that would force energy companies to either start drilling on their federally leased land or give it back.

But her remarks Monday morning made it clear that she expects some renegotiation of what the federal government gets for its oil. Oil and gas offshore and under much of the nation’s public lands is owned by the government. The government grants private companies “leases” for the resources in exchange for a portion called a royalty.

Democrats have been clamoring for legislation that allowed oil companies drilling in the Gulf of Mexico in 1998 and 1999 to pay a reduced royalty even though the price of oil had risen substantially. The royalty break was an incentive to drill amid low oil prices. Democrats have suggested that companies be required to repay the back royalties if they want federal leases in the future. Republicans have called that a breach of contract with the drillers.

In addition, <em>The Denver Post</em> reported Sunday that federal investigators are preparing to release a report detailing improper relationships between Interior Department officials who oversee offshore drilling and oil executives, including golf outings, ski trips and romantic liaisons.

Also, Pelosi has been pushing to end tax breaks granted to oil companies. The tax breaks had been given to many firms, but oil companies were not included until Congress extended the breaks to them when it was under Republican control.

[Cold_Zero]

Nazi Pelosi would do well to remember that her Congress receives "Wind Fall Profits" from the American people every year via the IRS. And they squander that 'Wind Fall Profit' on pork barrel projects.

Also, being the Speaker of the House also does not mean that she is the authority on American Taxpayer Owned Land, whether or not it has oil. Last time I checked the US House was made up of 400+Representatives.bud

[audtatious]

Nazi Pelosi would do well to remember that her Congress receives "Wind Fall Profits" from the American people every year via the IRS. And they squander that 'Wind Fall Profit' on pork barrel projects.

Then wouldn't that mean that the $125 billion in taxes (not including the middle men, gas stations and those of us who purchase the gas) that Exxon paid the Gov based upon their $40 billion revenue is already a "WindFall Profit"?

Guess Pelosi simply wants to figure out new ways to make more money by changing their windfall profits tax to a "Royalties" penalty. Kinda like how organized crime is not extorting money from small businesses, they are protecting them.

[ishkabibble]

$125 billion in taxes (not including the middle men, gas stations and those of us who purchase the gas) that Exxon paid the Gov based upon their $40 billion revenue is already a "WindFall Profit"?

They ended up $85 billion in the hole? Something is wrong with your math.

I'm fine with rolling back the old lowered royalties and eliminating the tax break for oil companies. Neither is needed right now.

I'm not fine with trying to collect "back royalties". I agree that it seems ot be a breach of contract.

[rn79870]

If it were up to me, I'd nationalize all offshore oil and use it to pay off the national debt. Let the government go into the oil business and shove a sharp stick in the eyes of the private oil companies who manipulate the supply and demand anyway. (shutting down a refinery for yearly maintenance in the middle of the peak season) Mexico did it pretty successfully.

[OriginalWheelman]

But them wouldn't the oh so "corrupt" government just exploit the prices? Or is this just so you can have something to ***** about in 2020? I reiterate, i think the dems are all becoming socialists.

[AZhitman]

I'd vote for Obama if he's promise to put Pelosi in a woodchipper feet-first.

The woman is quite simply deluded.

[srellim234]

Corporations don't pay royalties or taxes. Their customers do. In this instance the customers will pay more and politicians will waste the money on more pork-barrel garbage like they always do.

As for the government getting into the oil business, do you really think that the American taxpayer can afford what the inept people in Washington will do to that business? Who's going to get the oil out of the ground and refine it? The Democrats never will get it out of the ground. The Republicans will get it out by rewarding more "no-bid" contracts to their cronies so they can make themselves richer at America's expense.

The solution is to let the marketplace shake itself out. If oil goes to $10 a gallon through the free market process, so be it. It will make alternatives competitive and we'll see a huge shift to alternative fuels and more efficient engines. We're already seeing it with electric cars, fuel cell technologies and some new solar power plants scheduled to be built. Kind of like when petroleum (cars) replaced hay (horses) as a transportatin fuel. There really were electric cars at the time but petroleum won out over electricity as the car fuel of choice. Now maybe the pendulum will swing the other way due to new consumer demand.

[peetar]

Do you have some evidence to back up your claim that the oil companies manipulate the market? Oil is traded as a speculative commodity and the oil companies have been investigated 9 times by congress for price fixing/market manipulation. No single oil company has ever been found to be guilty of any crime or even guilty of soft price manipulation in general.

There are people in congress that want the heads of the biggest oil companies on a platter and would gladly do so if they had anything on them.

[Soravia]

Nancy should be Obama's VP picks. She is as much delusional as Obama and has no idea why the oil prices are high.

[OriginalWheelman]

Corporations don't pay royalties or taxes.

In the United States, the top marginal federal corporate rate for income over $18.3 million is 35% (it can be as low as 15% for income under $50,000). Most states also tax companies, but the state tax is a deductible expense in calculating federal tax, so the overall tax rate is not simply the sum of the two tax rates.

[srellim234]

The cost of doing business is factored into any company's pricing structure. Includes power plant, fuel cost, insurance, labor, taxes, royalties, whatever. If the profit goal is set at 5% of revenue, they raise prices accordingly as the costs go up. They don't lower the profit goal. Raise taxes, raise royalties, raise anything. The customers pay the additional costs in the form of higher prices.

[peetar]

The cost of doing business is factored into any company's pricing structure. Includes power plant, fuel cost, insurance, labor, taxes, royalties, whatever. If the profit goal is set at 5% of revenue, they raise prices accordingly as the costs go up. Raise taxes, raise royalties, raise anything. The customers pay the additional costs in the form of higher prices.

Precisely. Well put.

[AZhitman]

The cost of doing business is factored into any company's pricing structure. Includes power plant, fuel cost, insurance, labor, taxes, royalties, whatever. If the profit goal is set at 5% of revenue, they raise prices accordingly as the costs go up. They don't lower the profit goal. Raise taxes, raise royalties, raise anything. The customers pay the additional costs in the form of higher prices.

No offense, but Duh.

Why is everyone so dead-set on digging into the profit structure? Is this more "Robin Hood Econ" run amok?

Oh, and corporations DO pay taxes. Not sure where you got that incorrect info, but corporations pay income taxes on profits.

[srellim234]

No offense, but Duh.

Why is everyone so dead-set on digging into the profit structure? Is this more "Robin Hood Econ" run amok?

Oh, and corporations DO pay taxes. Not sure where you got that incorrect info, but corporations pay income taxes on profits.

Those taxes are factored into the cost of doing business. They are just passed along in the pricing structure.

[AZhitman]

And?

Thanks for the newsflash, but Econ 101 was a breeze for me. Tell me how this is a problem.

[Eikon]

I don't like the idea of taxing companies more simply because they earn large profits. That's pretty much the opposite of capitalism.

However... I do have a couple of issues with the oil industry.

First off... There is collusion going on in the market. Normal industries fight to keep prices down so that they can sell more product than there competition. In the oil business, the only time gas stations compete is in a gimmick price war that occurs just before the station owner goes out of business. Now I know it's not the local station owners that control prices more than a few cents, but why aren't Exxon, Mobile, Shell, BP, etc... fighting to cut each other to move more volume? Where's the competition. There is none, therefor, there is collusion, which is illegal. But perhaps they oil industry lobbyists have sufficiently lined the pockets of anyone who might pose a thread to investigate that issue.

Secondly... I think all profits earned within the US should be taxed and paid within the US. Seems to me that a ton of large companies and small ones for that matter or headquartered in other more tax friendly nations and thus do not pay even a fraction of the taxes they should pay. This is especially true in the oil industry from what I've read.

Thirdly.. Why don't we all just put more air in our tires?

[audtatious]

They ended up $85 billion in the hole? Something is wrong with your math.

You're right, it was 102 billion, not 125

ExxonMobil 2007Revenue $404.6 BillionProfit $40.6 Billion (10.0%)Taxes $102.5 Billion (25.3%)

Sales-Based taxes $31.728BOther taxes and duties $40.953BIncome taxes $29.864B

[srellim234]

I don't see it as a problem. I do believe people need to be aware of it. Politicians like Pelosi think the corporations will magically absorb higher costs without raising prices at the pump. They intentionally leave that part of the equation out of what they reveal to the public. Unlike you and me, the majority of people in this country haven't taken Econ 101 to understand that. They just listen to the political rhetoric and fall for it.

Yes, it's simple, basic and should be a given but we can't assume everyone understands it. I've seen some pretty wild ideas spread by teachers who don't have a clue about business.

[AZhitman]

Ah, I gotcha. Sorry if I was curt.

I agree, but I don't think it's necessarily a negative thing like Phailosi makes it out to be.

[szh]

The woman is quite simply deluded.

She has been smoking that California weed for far too long a time ...

... ah, dang. I forgot. That is a different thread.

Z

[Cold_Zero]

Maybe someone can explain to me why the price of gasoline that is already drilled, refined and shipped to the local gas station changes twice a day? I mean the price of Milk at Kroger stays the same all week.

I realize that the price of corn fluctuates through out the day at the Chicago market but the Sodexo food services doesn't change the price of cornbread twice during the day.bud

[audtatious]

That's probably true. She speaks out of both sides of her mouth as well. She seems to be for unions (most Dems seem to be) unless it is her business which she will not let unionize.

Follow what she says as it's better for all of you as long as you don't follow what she does which is better for her.

[Cold_Zero]

Follow what she says as it's better for all of you as long as you don't follow what she does which is better for her.

Welcome to ever progressive moment there ever was. So, true Matt, so true.

[smockers83]

Nanci Pelosi can go shoot herself (FBI is probably watching me now). Everything she says makes everyone around her dumber, more so than W. She is a bigger failure, too. I cannot stand her for the life of me. Whoever voted her for Speaker should resign. I have yet to hear one thing out of her mouth that makes any sense or has any hint of intelligence behind it.

This is a question that is asked all the time, "How come gas goes up 10 cents in one day, but when it falls it only drops a couple of cents?" Well, think about it. If you were delivered gas to sell at $4 and prices dropped to $3.90, you can't drop it down to $3.90 for a huge loss. Stations are already losing $2000/month on gas. Why they change twice a day, there could be a lot of reasons. Why does milk change every so often? Because the dairy industry is regulated in that prices are determined by dairy farmers.

Good to see some others who have some sort of economic background.

[ishkabibble]

Oh, and corporations DO pay taxes. Not sure where you got that incorrect info, but corporations pay income taxes on profits.

Don't something like 2/3 of corps pay no taxes?

[smockers83]

Collusion is also illegal in that collusion leads to price manipulation (anyone remember the collusion scandal for memory chips). Several investigations have proven no market manipulation.

[audtatious]

Where did you get that from?

[ishkabibble]

The GAO. But I interpreted it incorrectly - they presented the data in a goofy way ("no tax liability in at least 1 year out of the past 8" - or something like that). So, scratch what I said.

http://www.gao.gov/new.items/d08957.pdf if you're interested.

[Soravia]

OPEC and Russia aren't being held accountable for that. That's where the gas price comes from. Oil companies just make more profit because their profit margins are adjusted by percentage of the initial buying and final sales prices.

If I were Exxon, I could sell all the stuff to the OPEC nations and then fire all the workers and redo the company into another line of business.

What would the bitchy liberals do when the only oil they can get is imported from OPEC?