Oil Companies Reap Billions in U.S. Subsidies and Tax Breaks

By DAILYFINANCE STAFF Posted 7:40 PM 07/03/10 Energy, Economy, Green, BP

See full article from DailyFinance: http://srph.it/aULll8

Oil production is one of the most heavily subsidized businesses in America, with tax breaks available at almost every stage of the exploration and extraction process, according to an analysis by The New York Times. The tax breaks average about $4 billion a year, based on various government reports, and are preserved by the oil industry's massive political influence.

The many subsidies in BP's (BP) disastrous Deepwater Horizon drilling venture, which resulted in the worst offshore oil spill in U.S. history, are typical. Transocean (RIG), the owner of the Deepwater Horizon drilling platform, registered the rig in the Marshall Islands, where it is subject to lower taxes and less stringent safety regulations. The company moved its corporate headquarters overseas from Houston in 1999, saving $1.8 billion in taxes in its years abroad. It is headquartered in Switzerland now, where it has far fewer employees than in Houston.

BP also gained huge tax benefits in leasing the Deepwater Horizon rig, writing off 70% of the platform's rent -- a deduction of more than $225,000 a day since the lease began, according to a letter sent to the Senate Finance Committee.

Paying Much Lower Taxes Than Virtually Any Other Industry

The Times reports: "According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9%, significantly lower than the overall rate of 25% for businesses in general and lower than virtually any other industry."

For many small and midsize oil businesses, the tax on capital investments is so low that their returns on them are often higher after taxes than before.

The government is now considering a new tax on petroleum production to pay for the enormous Gulf oil spill cleanup. This, and attempts to curb the oil industry's tax breaks, are likely to encounter fierce opposition in Congress. The Times reports that the oil and natural gas industry has spent $340 million on lobbyists since 2008, according to the nonpartisan Center for Responsive Politics, which monitors political spending.

The oil industry claims that cutting the subsidies and tax breaks threatens jobs and oil production. But a Treasury Department economist cited in 2009 a study that found oil prices and potential profits were so high that eliminating the subsidies would decrease U.S. output by less than 0.5%.

Israeli-developed boiled potato batteries may provide cheap power

Study: Boiling potatoes increases electric power 10-fold; Potato battery 6 times more economical than kerosene lamp.

By Reuters 17.06.10 haaretz.com

An electric battery based on boiled potatoes could provide a cheap source of electricity in the developing world, according to the technology transfer company of the Hebrew University of Jerusalem.

Photo by: TheMarker

The treated potato battery generates energy that is five to 50 times cheaper than commercially available batteries, Yissum Research Development Co. said on Thursday. A light powered by the battery is at least six times more economical than kerosene lamps often used in the developing world.

"The ability to provide electrical power with such simple and natural means could benefit millions of people in the developing word, literally bringing light and telecommunication to their life in areas currently lacking electrical infrastructure," Yaacov Michlin, chief executive of Yissum, said in a statement.

The findings were published in the June issue of the Journal of Renewable and Sustainable Energy.

Haim Rabinowitch and research student Alex Golberg at Israel's Hebrew University jointly with Boris Rubinsky at the University of California at Berkeley discovered a new way to construct an efficient battery using zinc and copper electrodes and a slice of an ordinary potato.

They found that boiling the potato prior to use in electrolysis increased electric power up to 10-fold over the untreated potato and enabled the battery to work for days and even weeks.

Potatoes are produced in 130 countries over a wide range of climates and thus available year round. It is the world's number one non-grain starch food commodity.

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World oil demand to hit record high this year: IEA

Christopher Johnson

LONDON

Tue Apr 13, 2010 6:39am EDT

China National Offshore Oil Corporation's (CNOOC) oil rig in China's Bohai Sea is seen in this October 21, 2003 file photo.

Credit: Reuters/China Newsphoto/Files SUN/dh

LONDON (Reuters) - Global oil demand will hit a record high this year, the International Energy Agency (IEA) said on Tuesday, revising up consumption estimates as the world economy recovers from recession.

The Paris-based adviser to industrialized economies raised its forecast for world oil demand growth this year to 1.67 million barrels per day (bpd), up 100,000 bpd.

The agency said in its monthly Oil Market Report that world oil demand would reach an average of 86.60 million bpd this year, up from 84.93 million in 2009.

The previous record high for world oil demand was 86.5 million bpd in 2007 before the onset of the global financial crisis and economic slowdown.

"There are signs of oil demand picking up in North America and the Pacific, Asia and the Middle East although consumption in Europe still looks weak," David Fyfe, head of the IEA's Oil Industry and Markets Division, told Reuters.

But the extra demand will largely be met by production from outside the Organization of the Petroleum Exporting Countries.

The IEA raised its forecast for non-OPEC output in 2010 by 220,000 bpd to around 52.0 million bpd due to higher output by OECD countries. Overall, non-OPEC supply is expected to rise by around 500,000 bpd this year.

As a result, the IEA estimated demand this year for OPEC crude and stocks would fall by 200,000 bpd to 29.1 million bpd.

OPEC COMPLIANCE FALLS

Oil prices were largely steady after the IEA report, with benchmark U.S. crude oil futures for May trading around $83.63 per barrel, down 71 cents, by 6:06 a.m. ET.

The IEA noted that oil prices, which hit an 18-month high above $87 last week, had risen above the range of $60 to $80 per barrel that OPEC and many industrialized countries see as ideal for producers and consumers.

It said oil prices could stifle world economic growth if they were allowed to rise too far.

"Ultimately, things might turn messy for producers if $80-$100 per barrel is merely seen as the new $60-$80, stunting economic recovery while prompting resurgent non-oil and non-OPEC supply investment," the IEA report said.

Total OPEC production declined in March, the IEA said, but this was largely due to a fall in production by Iraq, which is not bound by OPEC output targets.

It said production by the 11 OPEC countries bound by OPEC output targets rose by 30,000 bpd, taking their compliance as a group with promised output cuts to around 55 percent at the end of March, down from its previous estimate of 56 percent at the end of February.

Oil stocks in industrialized countries that are members of the Organization for Economic Cooperation and Development (OECD) rose to around 60 days of forward demand at the end of February from about 59.5 days at the end of January, the IEA said.

The IEA said refineries around the world would process nearly 1 million bpd more oil in the second quarter than in the same period last year with China and Asian countries raising output most. This is up 300,000 bpd over the last estimate.

"The return of economic growth and hence oil demand growth is fuelling the increase," the report said.

China's refinery output will jump by 900,000 bpd from a year ago, helping to offset a fall of 440,000 bpd in OECD countries.

(Additional reporting by David Sheppard)

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Gov't Exercise: Tests Emergency Evacuation to Judea and Samaria

IDF Emergency Drill (illustrative)

Israel News Photo

03/09/10, 9:49 PM

by Malkah Fleisher

(IsraelNN.com) A Home Front (Civil Defense) Command drill which tested the home front's readiness to endure an attack, included the possibility of absorbing refugee residents of central Israel into the towns of Judea and Samaria.

Avi Roeh, head of the Binyamin Regional Council, commented on the exercises and their outcome.

"It became clear to us during the drill that [in Judea and Samaria] there are warm and good people who are ready to absorb citizens. The state, the Emergency Economy Program and the National Emergency Management Services understood that such absorption would be part of the wartime reality, and that it is necessary to prepare for the evacuation of large communities," Roeh said.

He emphasized that the needs of the communities that are interested in taking in citizens during an emergency should be examined and provided for, including various assistance measures and housing options which are planned for in advance, instead of just counting on volunteerism in the moment of crisis.

Roeh said that while data regarding the emergency capacity of Jewish towns in the biblical heartland have not been disclosed, thousands of families are ready to take in their brothers and sisters from the coastal and central areas of Israel. "These areas are densely populated and therefore most vulnerable to missile or rocket attacks.

As an aside, Roeh referred to the building of new Palestinian Authority town Rawabi in the Binyamin Region as a potential security threat to Jewish citizens in the area, and a development that will lead to serious transportation and environmental issues

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