Tax breaks for "Big Oil" / President Obama's statements today 6-29-11

President Obama stated today:
"The tax cuts I'm proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund companies and jet owners,"
(at least he didn't say "oil subsidies" today, as he has repeatedly referred to said tax breaks in the past)

What is being continuously ignored is the fact that the majority of these tax breaks are afforded to the individual investors whom, in aggregate, provide the vast majority of capital for domestic drilling. When I say "investors" , I am not referring to wealthy individuals, day traders that invest for a living, or huge hedge funds,  I am talking about working class people, blue-collar workers, single parents, retired people, almost anyone with a 401k or other retirement vehicle.

Drilling new wells , even in proven areas, is risky business, there are no "sure things" and the risk capital expended to drill with typically comes, in aggregate,  from individual  investors , even when it is a major oil company doing the drilling.

Oil is a volatile commodity and oil which costs $60. per bbl to produce that is selling for $80. per bbl today might well be selling for $40. per bbl tomorrow, it is unpredictable and government intervention does not help to stabilize the marketplace. Investors are allowed a tax deduction for the portion of their total investment that is considered to be IDCs (intangible drilling costs) , these are the unrecoverable expenses associated with drilling a new well (rig time,cement, fuel, drilling mud, etc. items paid for which cannot be recovered, salvaged and/or resold-reused ) .

 According to 612 of IRS code, Intangible Drilling Cost (IDCs) may be deducted in the year paid, rather than capitalized and depreciated. This is the same federal tax treatment extended to the "risk capital" portion of any other domestic business investment and without an IDC deduction allowed, there would be no incentive for people to invest in something as inherently risky , yet necessary, as domestic oil & gas drilling.

For the federal government to single out investors in any particular industry (such as oil & gas) simply because the Obama administration admittedly "does not like them" or they are presently "making too much profit" is flat-out wrong, it is no different from stating certain people must pay more tax because of their skin color or religion.

It is easy in times of high oil prices for the administration to attack the industry so as to evoke class warfare and make people believe they are looking out for the citizens, when, in fact, it is primarily the citizens they are going after.

 The bottom line is that if investment capital for domestic drilling is harder to come by, it translates to less market stability, decreased national security, and higher fuel prices for us all.  If President Obama were being completely honest and forthright with us today , instead of proposing that we "get rid of tax breaks for oil companies" , he would have said

"Today, I have um-uh called on uh congress erh-uh to pass a law preventing U.S. um citizens from investing in domestic energy and-um, uh furthermore,  I have directed my um staff to begin collecting $1.00 per uh gallon of um-er-uh additional federal fuel taxes."
Decisions are presently being made that will have long-standing consequences for all of us. We had better wake up and hold our government and our media accountable for their actions and the propaganda that is being used to make those actions seem more palatable to us all.

Comment by SAMMY BELL on June 29, 2011 at 10:52pm

God help us if we have to put up with Obama another 4 years!

He hates the oil & gas industry and all it stands for. We are headed straight to hell if he stays in office.

 All of us that own intrest or work in the oilfield industry have got to stick togather while this moron is in office.

 We need an organization like theNRA that protects our right to bear arms. If we let Obama disarm us the trip into hell will happen overnight.

 I guess he thinks oil comes out of a can,If Obama is talking he is telling another lie. We need to set the slips on him and jet his sorry b***!


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