No Independence From Oil

by Bryan

7 comments

1 Kryten42 { 07.06.10 at 8:34 am }

I wasn’t going to post this originally… It was posted a couple days ago on TP, so you’ve probably seen it. Still, in case people haven’t seen this, and since there’s no comments here… *shrug* 😉

BP used oil industry tax break to write off its rent for Deepwater rig

And some complete morons people still think BP can be expected to ‘do the right thing’! (I don’t mean the politico’s… they are expected to lie about anything and everything. Their own tongues would choke them to death if they attempted to tell a truth!) 😆

I concluded a long time ago that most of (supposedly) educated humanity is pig ignorant and dumb as road kill. And it seems that the more *advanced* the Nation is, the truer that is. 🙂 I also concluded that education in some Western Nations is not actually designed to *educate*, but to ensure that the populace generally can’t actually *think* for themselves and will be easier to manipulate and to some extent, control. There are some exceptions of course, but they seem to be in the minority. 🙂 The Catholic Education system is a prime example of this BTW. I was essentially kicked out of the system (after about 8 years, 6 in primary and 2 in college) when it became obvious that I refused to be told how to think and annoyed instructors with questions they didn’t want asked (especially when I turned up in class with my grandmothers KJV and notes I’d written rather than the official Catholic variant), and they saw other students either becoming upset or starting to question and think also. 🙂

/rant! 😉 😛

2 Badtux { 07.06.10 at 12:16 pm }

Kryten, writing off rent of facilities necessary for doing business as a business expense is normal whether you are a sandwich shop in a strip mall or BP. I did it myself when I ran a business, it is allowed by our tax laws and is the same whether you are a sole proprietor or a large multi-national. So I fail to see the outrage.

Bryan, you are seeing the results of Reaganism writ large there in the South. Ronald Reagan told America, “you can have all the services you want from government, without paying for them!” Something for nothing, what a deal! Of course, as Reagan was also fond of pointing out, “there’s no such thing as a free lunch.” But as long as someone ELSE is paying for it, what’s the problem? Well, until the “someone else” cuts off the spigot, of course… which is where most of the South is, right now.

– Badtux the Tax Penguin

3 Bryan { 07.06.10 at 10:16 pm }

Kryten, the US tax laws dictate a lot of things, some of which are truly wasteful, like leasing equipment. Buying equipment is usually much cheaper than leasing, but once the tax differences and accounting costs enter into the equation, leasing is often a better deal. Corporations will often form a spin-off to buy or build facilities and lease them to the corporation because of the way the tax laws are written. I’m fairly certain that WalMart does it, based on what happens when they move stores.

Even one-man operations have to learn a lot about the tax code to survive in business in the US.

I assumed that BP corporate made the decision at some point that it was better for their bottom line to lease rigs, rather than owning them, and leases are expensed at 100% of cost, so taxpayers are picking up part of the cost in lost taxes.

4 Kryten42 { 07.08.10 at 6:34 am }

It can, and probably will, get much worse. 🙂

AP IMPACT: Gulf awash in 27,000 abandoned wells

More than 27,000 abandoned oil and gas wells lurk in the hard rock beneath the Gulf of Mexico, an environmental minefield that has been ignored for decades. No one — not industry, not government — is checking to see if they are leaking, an Associated Press investigation shows.

The oldest of these wells were abandoned in the late 1940s, raising the prospect that many deteriorating sealing jobs are already failing.

The AP investigation uncovered particular concern with 3,500 of the neglected wells — those characterized in federal government records as “temporarily abandoned.”

Regulations for temporarily abandoned wells require oil companies to present plans to reuse or permanently plug such wells within a year, but the AP found that the rule is routinely circumvented, and that more than 1,000 wells have lingered in that unfinished condition for more than a decade. About three-quarters of temporarily abandoned wells have been left in that status for more than a year, and many since the 1950s and 1960s — eveb though sealing procedures for temporary abandonment are not as stringent as those for permanent closures.

As a forceful reminder of the potential harm, the well beneath BP’s Deepwater Horizon rig was being sealed with cement for temporary abandonment when it blew April 20, leading to one of the worst environmental disasters in the nation’s history. BP alone has abandoned about 600 wells in the Gulf, according to government data.

There’s ample reason for worry about all permanently and temporarily abandoned wells — history shows that at least on land, they often leak. Wells are sealed underwater much as they are on land. And wells on land and in water face similar risk of failure. Plus, records reviewed by the AP show that some offshore wells have failed.

Experts say such wells can repressurize, much like a dormant volcano can awaken. And years of exposure to sea water and underground pressure can cause cementing and piping to corrode and weaken.
…

5 Bryan { 07.08.10 at 10:27 pm }

The Gulf has always had a certain amount of natural leakage because of the geology. The problem has always been there, it’s just that people are now looking at it. Drilling in the floor of the Gulf is risky because the rock is apt to shatter.

The real problem is that we are drilling in water that men can’t reach themselves and have to depend on ROVs to do anything. If there’s a problem, the fix is slow and expensive.

If you are going to do it, regulations and safe-guards have to be in place. If nothing else good comes out of this mess, maybe people will finally realize that you can’t let industries regulate themselves – they won’t do it.

6 Badtux { 07.08.10 at 10:57 pm }

Not to mention that it isn’t 100% certain that the capped wells will ever leak. I lived in Shreveport, Louisiana, for a while. Their water source is Cross Lake, which dams one of the local tributaries of the Red River (the water from the Red River itself is semi-potable but somewhat salty and nasty-tasting). And before the dam was placed across the outlet of this tributary in 1926 to build the lake (the dam was partially paid for by the T&P railroad as their railbed too, which adds its own little bit of Russian roulette to Shreveport’s water supply since toxic chemicals on rail cars cross that dam regularly) guess what most of the current lakebed was? Err… correct. An oilfield, all of whose wells were capped in the early 1920’s as they were depleted. Indeed, when they built the I220 loop over Cross Lake, one of the big concerns was that they were going to disrupt one of the old oil wells and pollute the city’s water supply. It didn’t happen, though, they mapped the lakebed thoroughly and avoided the wells and nothing has happened since other than the seasonal droughts that have been occurring due to global warming which have reduced the lake level drastically in some years (but of course the residents of Shreveport, being good Rush Limbaugh followers, don’t believe in global warming 😉 ).

So anyhow — yes, old oil fields can slowly repressurize as natural gas seeps up from deeper in the Earth. But usually any leakage is going to be slow and indistinguishable from the natural seeps (or in the case of Shreveport, from oil washed down into the lake by rainfall on local streets). This is especially true since all those old oil fields have now been thoroughly re-explored via modern directional drilling techniques to capture any remaining dribbles of oil, leaving very little indeed to seep up through old cement jobs.

Back to the whole rent/lease vs. own, this tax issue is also why business condos are almost unheard of here in the United States. Virtually no business actually owns its commercial space, the U.S. tax codes simply do not support that, since rent can be written off 100% while mortgage payments cannot. The only cases where businesses do own their own facilities tend to be where it is impossible to find suitable space otherwise, such as an auto company that needs a test track (you simply can’t find a test track outside a typical office building, heh!). My understanding is that business condos (commercial office space actually owned, rather than rented, by the companies that occupy it) are much more common outside the USA, for better or for worse…

– Badtux the Business Penguin

7 Bryan { 07.09.10 at 9:48 pm }

I would put my concern on the current problem and future problems with new wells before using limited resources on old wells. We need more and better capabilities to monitor the off-shore wells, and to clean up the messes. This is just another example of privatizing profits and socializing risks, which I am really tired of paying for.

I rented space in California from the owner of a business condo. He had the space because he needed more than one unit, but not two complete units. My rent paid the condo fees for both units.

The decision to buy the condos had more to do with his personal finances that his business finances, and he may have been leasing the part he used to his business. I didn’t do his accounting software, so I don’t know for sure.

There was a software company in the complex that had one of the chess games, and that’s what they were doing. One of their programmers was from Russia, and he asked me about it. He thought there was something strange going on. I think they had profit sharing, and he was suspicious about expenses that reduced profit.

It’s not the taxes that drive you nuts, it’s the exemptions.