This post got buried this weekend. I am reposting to address the windfall profits tax and how it can provide incentive to oil companies to control their prices and/or reinvest in oil exploration and drilling. And why they haven't been doing this all along.
It was a follow-up to three other blogs:
http://www.democrats.org/page/community/post/lauraschneider/CNNF
http://www.democrats.org/page/community/post/lauraschneider/CNNT
http://www.democrats.org/page/community/post/lauraschneider/CNN9
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In previous posts, I have talked about my economic theories based on pies:
Democratic/Distribution:
The "bigger pie theory" states that if we all want a bigger piece of the pie, we have to bake a larger pie (grow the economy).
Republican/Consolidation:
The "fixed pie theory" states that the pie is only so big, so in order for me to get a bigger piece, someone else's piece has to be smaller (consolidating wealth).
The oil companies use of stock buybacks (also called repurchases) takes this fixed pie theory to the ultimate extreme. By buying back its own stock, the company consolidates (concentrates) the wealth of the company to a fewer number of investors, which makes the dividends paid by the company larger for each investor. The smaller the number of investors, the larger their share of the profits (the amoung of profit in total remain the same).
To be fair, there are some positive aspects to buybacks.
Read More »There are a few agitators that are reconducting the primary campaign. It is quite a tribute to Hillary that you guys still are so intimidated by her. There is no doubt in my mind that she should have won the nomination and that she would have been a far better president than either Obama or McCain, but she is no longer running, and I can't have my first choice.
In light of the fact that she has committed her support to Obama, it seems like a moot issue at this point. So why the bashing today? It's like Groundhog Day, we keep having this same fight over and over and over..., but to what end?
Keep in mind that, since Hillary is an Obama supporter, when you bash Hillary, you discredit anyone she supports as well....
Watching the Hillary bashers go on and on about how there is no party unity is sort of like listening to Republicans complain about the big government they themselves created (just to prove that big government doesn't work).
Enough, already! There are far more important and worthwhile tasks at hand to be accomplished. Focus your energy on something positive and productive.
As Obama supporters we've rallied behind our candidate and are fighting the disinformation and lies. Following the last Presidential election we're ready for the challenge. However, we must remember that the other side are infectious termites and as such eat away at our foundation. I learned long ago that as with termites it's not a question of; "Is this house infected?" but how badly is it infected. Therefore we must not rest for the enemy never sleeps.
And aiding in their campaign to dissenfranchise Democratic voters and Republicans leaning blue on the net, Fox has begun a dissinformation campaign of it's own. A few of their 'Oops, sorry' but now the seed is planted gaffs have included, a paid FOX commentator accidentally confuseing "Obama" with "Osama" and then joking on the air about killing Obama, a FOX anchor saying a playful fist pound by Barack and Michelle Obama could be a "terrorist fist jab." And lastly (for the moment) on air talent calling Michelle Obama "Obama's baby mama" which is ghetto slang used to describe the unmarried mother of a man's child.
If we hope to keep this a campaign of issues and not insinuations we must all stand vigilant and active. Exercising your right to vote is not enough when the stakes are this high. Tell a friend to tell a friend and help light the fire of change and seat our man in Washington!
-Nick Danger
The chemical, nitrogen trifluoride (NF3), could be considered the "missing greenhouse gas," atmospheric chemists Michael J. Prather and Juno Hsu of UC Irvine wrote in a paper released June 26 in the journal Geophysical Research Letters. "With the surge in flat-panel displays, the market for NF3 has exploded."
Alarm bells have begun to ring in climate scientest quarters with the increased production. According to calculations by Chemists Proather and Hsu it has a life of 550 yeaers.
When the Kyoto Protocol, the 1997 international global warming treaty, was negotiated to control the rapid rise of planet-warming gases, NF3 was a niche product used in modest amounts in the semiconductor industry.
At the time, computer chip manufacturers used perfluorocarbons to clean the vacuum chambers where integrated circuits were made. But about two-thirds of the PFCs escaped into the atmosphere, contributing to the greenhouse effect, a warming of the Earth's surface.
Reacting to environmental concerns, the industry sought a substitute -- and estimated that NF3, was less likely to escape into the air though it had much greater potential for causing global warming. "The world's leading producer is air products in Allentown, PA stating they moved into the production of NF3 for environmental reasons. The company received a 2002 Climate Protection Award from the Environmental Protection Agency for its transition.
Last year, Air Products announced a major production expansion at its U.S. and Korean plants. About three-quarters of the chemical is now used to manufacture computer microchips; the rest is used to make liquid crystal display panels on flat-screen televisions, Painter said.
Overall, world production of NF3 is likely to reach 8,000 tons a year by 2010 as stated by an executive at AIr Products. That is the equivalent of more than 130 million metric tons of carbon dioxide. By comparison, according to the UC Irvine paper, a major coal-fired power plant producing 3,600 megawatts of electricity emits as much as 25 million metric tons of carbon dioxide a year.
Prather stated that about 2% of NF3 is emitted during manufacturing and that much of that is burned off before reaching the atmosphere. "a slippery gas" such as NF3 could easily leak out undetected during manufacture, transport, application or disposal. "We don't know if 1% is getting out or 20% is getting out. . . . But once you let the genie out of the bottle, you can't get it back in."
Prather also said UC Irvine researchers were working on a method to measure concentrations of the gas in the atmosphere so that industry emissions estimates would not be the only source of information.
Atmospheric scientists not connected with the paper said the authors had raised a significant issue for future climate negotiations.
"NF3 lives a very long time in the atmosphere," said Charles E. Kolb Jr., an IPCC scientist with Massachusetts-based Aerodyne Research Inc.
"We are having a hard enough time controlling carbon dioxide and methane -- we shouldn't be creating a new problem."
We need to know how much of these super-greenhouse gases are up there."
The Kyoto Protocol covered six greenhouse gases: carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, PFCs and sulfur hexafluoride.
Shouldn't the government be looking into this? Would this be an issue Barack Obama and the Democrats might sieze and take the lead on? Is it worth mentioning at all at this stage? And lastly, are there even any real answers for the public to discuss and consider?
-Nick Danger
"Joseph never came home."
Some mornings I remember what is really important, to day is one of them.
"Iraq Vet in Famous Press Photo Dies from Overdose" Read More »
I'm not willing to give up until the bitter end on this one. We still have a chance to turn this around.
Please call or e-mail your Senators today and tell them no telecom immunity. There is no crisis if this amendment doesn't pass. Better to wait and get a good amendment than pass a bad one.
You can use the Action-Write to Congress function on the menu to write your senators and representative from this blog site.
Today is Tuesday, July 8, 2008.
This is not a complete list, so if you or someone you know needs good vibes or prayer, please add them to the list in your comments and update us on their progress.
We still have two wars going on. Coalition forces have suffered 4,429 deaths in action. The official wounded count is 40,229, but the estimated is actually 23,000 to 100,000. Two soldiers have been killed this week so far.
320,000 Vets Have Brain Injuries
20,000 Vets' Brain Injuries Not Listed
THANKSGIVING:
We are thankful for our country, as imperfect as it is, it is the shining becon of hope for the world. We commit ourselves to working together to make this union more perfect every day.
We are thankful for those who are serving in the military and their families who are serving at home.
We are thankful for those veterans who have served in the military and their families who served at home. We remember those veterans who died so that we might live and enjoy our freedom. We know that freedom is not free.
We are thankful to our government servants, including our politicians, our career professionals, our diplomats and others, for their tireless, and sometimes thankless, service to our country and to ourselves.
We are thankful for our friends and allies throughout the world who work together with us to make the world a better place.
From Matty: Thank you for 0 deaths in Iraq last week.
PETITIONS:
We ask for peace with honor, so that our fighting men and women can come home to the families they love.
We ask for a full and speedy recovery for all those who are injured in body or spirit from their service.
We ask for the continued safety of our loved ones who are sound and fighting or serving abroad.
We ask for the citizens of the war-torn countries of Iraq and Afghanistan to live in peace and safety with hope of a better future.
We ask for comfort and aid to all those in the world who are suffering from oppression, starvation or disease.
We ask for the continued health, safety and well-being of our candidates, our leaders, our members and their families.
We ask for the safe return of the following missing/captured:
Spc. Alex R. Jimenez: Status - missing-captured
Pvt. Byron W. Fouty: Status - missing-captured
Read More »The argument has been made that the oil companies will avoid the windfall profits tax by reinvesting in further oil exploration and drilling, so it would not help the consumer.
WRONG!
The oil companies are currently using the majority of their profits to buy back their own stocks and pay their executive management bonuses in stock options, not in further exploration or drilling. Many companies are sitting on oil reserves. Why? Because further exploration and drilling would produce more oil supply and lower prices, which lowers their profit.
So, the question is how do you create incentives for further oil exploration and drilling and disincentives for price-gouging?
If they were to reinvest their profits into more oil exploration and drilling, that would lower the price of oil by increasing supply. It would be a way of ensuring they really invested their profits into providing more gasoline to consumers at more reasonable prices.
Currently, over 80% of the leases held by oil companies are not being explored or drilled. They don't tell you about this when they are bemoaning the need to open up ANWR or the continental shelf, because it would prove that there is no real emergency or need there.
Therefore, the windfall profits tax works to lower gas prices either way. It immediately lowers the price of oil by providing disincentives to price-gouge, or it provides companies incentive to invest in further oil exploration and drilling, which increases supply and as a result lowers the price of oil once again.
There is some misunderstanding of how windfall profits taxes work. The argument that it would raise the per unit price of any product, let's assume for the sake of this argument we are speaking of oil, is not accurate.
In the proposal that Obama is entertaining and that Hillary had incorporated into her plan for a gas tax holiday, the ceiling of the tax would be $80/barrel (the price of oil based on demand-supply, not overinflated speculation). If the company charged more than $80/barrel, the windfall profits tax would kick in on ALL THE PROFITS, including those below the ceiling. This, in essence, devalues the profits under the ceiling, so there is no incentive to raise prices, for it will only raise the profits and the resulting windfall profits tax will increase.
So, the next time you hear oil companies claiming that they would have to raise prices if the windfall profits tax is imposed. Don't believe it. It is just an attempt to scare you out of seeing reasonable controls placed on companies that are price-gouging you.
In previous posts, I have talked about my economic theories based on pies:
Democratic/Distribution:
The "bigger pie theory" states that if we all want a bigger piece of the pie, we have to make a larger pie (grow the economy).
Republican/Consolidation:
The "fixed pie theory" states that the pie is only so big, so in order for me to get a bigger piece, someone else's piece has to be smaller (consolidating wealth).
The oil companies use of stock buybacks (also called repurchases) takes this fixed pie theory to the ultimate extreme. By buying back its own stock, the company consolidates (concentrates) the wealth of the company to a fewer number of investors, which makes the dividends paid by the company larger for each investor. The smaller the number of investors, the larger their share of the profits (the amoung of profit in total remain the same).
To be fair, there are some positive aspects to buybacks.
Read More »In previous posts, I mentioned the fact that big oil was spending most of their profits buying back stock, which consolidates the wealth and dividends paid to a fewer number of investors. This belies their claim that it is costing them more to produce the petroleum products they sell or that they are having to invest more money in drilling and exploration. Therefore, their argument that opening up ANWR or the continental shelf to drilling is a fraud. Below is the best and most readable article I've seen on the subject:
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From the Desert Beacon:
http://desertbeacon.blogspot.com/
The next time someone wishes to argue with you about the “need” to drill the planet into swiss cheese because our ‘heroic’ oil companies are doing all they can to keep price increases at a minimum for Nevada drivers who are paying some of the highest retail prices at the pump in the nation – gently ask if the oil companies are as ‘broke as they sound’ and if they are truly doing all they can to produce more oil and gasoline.
Please remember that a previous post cautioned that there was a big difference between the numbers the oil giants use when talking to the press and the public (profit margins) and the numbers they haul out when talking to analysts and investors (ROCE).
The ROCE number is “a measure of the returns that a company is realizing from its capital. Calculated as profit before interest and tax divided by the difference between the total assets and current liabilities. The resulting ratio represents the efficiency with which capital is being utilized to generate revenue.” [InvWrds] Translation into plain English: The ROCE is a more accurate indication of what the company is really earning.
A reasonable person might also ask if the corporation is attending to exploration, development, and production with the same zeal as it sustains for its stock buy back programs, which are designed to reward fewer and fewer shareholders with greater and greater dividends.
The following are the facts as reported to date, use them at your pleasure:
ExxonMobil shared financial data with analysts on March 7, 2008 reporting net income of $39 billion, and a ROCE of 32%. ExxonMobil was pleased to tell the analysts that it had “reduced shares outstanding by 16% since the beginning of 2002.” [Scribd] ExxonMobil is buying back about $7 billion of its stock each quarter. [NYT]
ConocoPhillips’ report for the 4th quarter 2007 earnings call noted a 15% ROCE for the annualized 4th quarter. “With respect to our share repurchases, we will be repurchasing between $2 billion and $3 billion in the first quarter. Remember we've got a remaining $10 billion on our program that we have for 2008.” [SkgA] ConocoPhillips said last July that it would spend $15 billion repurchasing shares through 2008. [NYT]
Shell announced its ROCE for the first quarter of 2008 at 24.5% [Shell] On May 9, 2008 Shell announced that it had bought back 750,000 “B” shares of its own stock. [StIn]
Chevron reported to its investors a 23% ROCE for 2007 during its March 2008 meeting. [Chev] Chevron’s stock buy back plan calls for repurchasing $5 billion in shares per year during 2005, 2006, and 2007. [NYT] The $5 billion buy back plan announced in September 2007 turned out to be an actual buy back of $7 billion in 2007. [Chev]
British Petroleum (BP) shows a 21.8% ROCE in its latest financial reports. [DigLk] BP announced on July 1, 2008 that it had repurchased 1,200,000 shares of common stock. [DigLk]
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Read More »According to a CNN/Opinion Research poll, 49% of Americans say protection of the environment should be given priority, even at the risk of curbing economic growth. That compares to 44% of those surveyed who said the economy is the top priority, and the government should focus on economic growth even at the expense of the environment.
1. Enact legislation to outlaw presidential signing statements, restrict the use of Executive Orders and state of national emergencies, reverse some of Patriot Act and FISA Amendment (will not exempt telecoms from immunity). Close Gitmo. End military tribunals and route all terrorist cases through the FISA or Federal Court system. Outlaw rendition. Outlaw torture in any form for any reason. Outlaw use of CIA safe houses for detention purposes. Restore writ of habeas corpus. Restore wire-tapping requiring a warrant as in original FISA.
2. End war in Iraq. Win war in Afghanistan. Prevent war in Iran.
3. Launch Manhattan Project style mission to become completely oil independent by 2012.
4. End Global Warming (through #3).
5. Universal single-payer Healthcare.
6. Create jobs (#3, #5 and #7 will help).
7. End Bush's tax cuts permanently. Create a Progressive Tax Code with no loopholes for corporations to move jobs or operations overseas. End corporate welfare (especially oil and corporate agriculture).
8. Stop making more national debt (#2, #3, #5, #6, #7 above) and pay down national debt.
9. Increase the size of the Consumer Product Safety Commission (CPSC), Make all regulatory agencies more robust and vigorous.
10. Enlarge federally backed grants and loans for college education. End No Child Left Behind. Increase funding for public schools. End funding for private schools (vouchers).
Today is July 7, 2008.
This is not a complete list, so if you or someone you know needs good vibes or prayer, please add them to the list in your comments and update us on their progress.
Hope you all enjoyed celebrating our country's birthday this past weekend. We still have two wars going on.
THANKSGIVING:
We are thankful for our country, as imperfect as it is, it is the shining becon of hope for the world. We commit ourselves to working together to make this union more perfect every day.
We are thankful for those who are serving in the military and their families who are serving at home.
We are thankful for those veterans who have served in the military and their families who served at home. We remember those veterans who died so that we might live and enjoy our freedom. We know that freedom is not free.
We are thankful to our government servants, including our politicians, our career professionals, our diplomats and others, for their tireless, and sometimes thankless, service to our country and to ourselves.
We are thankful for our friends and allies throughout the world who work together with us to make the world a better place.
PETITIONS:
We ask for peace with honor, so that our fighting men and women can come home to the families they love.
We ask for a full and speedy recovery for all those who are injured in body or spirit from their service.
We ask for the continued safety of our loved ones who are sound and fighting or serving abroad.
We ask for the citizens of the war-torn countries of Iraq and Afghanistan to live in peace and safety with hope of a better future.
We ask for comfort and aid to all those in the world who are suffering from oppression, starvation or disease.
We ask for the continued health, safety and well-being of our candidates, our leaders, our members and their families.
Read More »