Whatever happened to the water-fueled engine?

please add the costs for the restoration of land and waterways from the "coal barron days". ASCE estimated this to be about one or two Trillion back in 1995.

Are you in the least concerned about the immunity of oil and gas from CWA and CAA and Superfund? Whose ging to step up to the plate and restore the land and water?
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These are "hidden" subsidies (Besides depletion allowances and accelerated expensing)

I believe we are comparing apples and pomegranates here unless you do it by "life cycle" costing.

No real argument there except that (1) the oil depletion allowance is not a subsidy, instead it is an accurate accounting measure of a declining asset. (2) 86% of out total energy consumption (including electrical power) comes from fossil fuels; just under 9% from nuclear; and the rest mostly from dams. Other renewables are under 1% of the total (even though we, along with China, are the world's leading producer of wind power).

EPA appears determined to shut down the 22% of the total that comes from coal. How will we replace it? We could double our consumption of natural gas (it is currently about equal to coal), but we both know what that will involve. There's no prospect of renewables doing the job, and the paralysis in the permitting process effectively allows only gas turbine plants to be built - and them only reluctantly.

We live in a world of imperfect alternatives. Which would you choose?

By the way, as I'm sure you know, nuclear power alone includes most life cycle costs in its current rates, and is still cheaper than coal or (barely) gas. Utilities must prefund plant decommissioning and cleanup during their active operations, and are still taxed by the Feds for the design and construction of a permanent fuel repository (even though they have already paid for Yucca Mountain and the government has no alternative plan).

Totally wrong. The depletion allowance is a subsidy, because companies can (and do) get more back than they ever originally invested in the field itself. In some cases, far more.

Cycloptichorn

I think it is evident you don't know much about either accounting or tax law.

Why? Because you declare that to be the case? Please.

Do you disagree that a depletion allowance which allows companies to recoup far more money than they originally spent on the resource is in fact a subsidy? Or are you just more interested in ad hominem attacks than actually discussing the issue?

Cycloptichorn

One can buy an existing, well-defined oil field for a price based on its known or estimated reserves. However, how do you calculate the cost of initially discovering and estimating an oilfield? Do you include the substantial costs of preliminary wide area surveys and the many wells that produce nothing at all? The fact is that petroleum companies continuously spend money in efforts to replenish continuously depleting inventories of operable reserves. The depletion allowance is a reasonable approximation of the declining value attendant to this continuous process, and certainly far more accurate than the tabulation of the specific costs attendant to a successful drilling.

I notive that the advocates of mandated purchases of stipulated percentages of renewable power by electrical utilities and distributors are careful to emphasize that these are not subsidies.

Which advocates? Those most certainly ARE subsidies. We're free to argue whether it's wise to subsidize renewable energy (you can certainly make a better case for it than traditional energy), but I don't know anyone who argues that these aren't subsidies to those companies.

I would also state that companies who profit in the tens of billions of dollars per quarter need no incentive to continue to do their business. Removing the depletion allowance subsidy wouldn't hamper their operations for two seconds, given the current price of oil - which is only going to keep rising as demand rises and resources become more scarce.

Cycloptichorn

You can certainy make a legal argument for raising the taxes on oil companies. The taxing power granted the government under the constitution is very broad. However, the current oil depletion allowance is indeed a reasonable and defensible accounting measure for deductable costs permitted under existing tax law.

I agree with you about the renewable mandates - they are subsidies, in that utilities are also required by law to charge their customers based on the average cost of power generation. However, I have repeatedly heard and read arguments that implicitly (and in a few cases explicitly) treated it as though it was not.

Read anything about oil production and the depletion "allowances"and the expending of intangible drilling costs were put into place to expand and increase the rate of achieving profitability for oil and gas. It was jacked up during the first oil crisis from a formula that was first put into effect in the 20's. M K Hubbert, one of the reigning experts on O$G was even a greater conservative than many of you guys here on the boards and he was appalled at the Federal LArgess that was cranked up for the subsidizing of the oil industry. Remember, the oil and gas industry)ThroughDupont ), the car manufacturers (GM) and the Rubber Mfgers were all a big hydra headed consortium with much influence in the 1920;s congress.

Gas producers do not have to follow ANMY regulations thanks to Cheney in 2005

I don't argue with that. However, the fact remains that the depletion allowance was a solution to an accounting issue created by the corporate tax law. If it is abolished then another formula will be required, perhaps one that might provide for lower levels of amortization than the depletion allowance, but certainly not zero.

The fact is the taxing power is quite broad and if one wishes to apply higher taxes to the industry, that would be very easy to do, with or without the depletion allowance.

In New Mexico at least, the do have to "prefund" the plugging and abandonment process. I think it's an actual deposit, but may just be an accounting reserve. The reasoning is that while we have more wells than the entire Middle East, some of them are not especially productive, and many change ownership several times during the life of the well. This may be regulation from NM Oil and Gas Conservation Dept.

The company I worked for had a nice year working for OCD on a series of wells named Orphan (followed by number designations. The photos of three of them showed nothing but water bubbling out of the ground. Not a resounding industry endorsement, but at least the state had collected something towards the P&A job.

Yeh but you must agree that both aspects were just emplaced to accelerate any profits into the years of drilling. After all, drilling is expensed so any NIT's would never be collected and the first several years of production can be classed as "Test production "(same issue as research production) and would be trax exempt. Thats a subsidy in my world.

Shale gas production is almost a fraudulent enterprise the way its being excused from any financial or environmental oversight.

Where is the need for financial regulation? Should your business be subject to special financial regulation? What makes theirs need it? In any event the track record for government financial regulators is pretty dismal, though they can gum up the works with bureaucratic nonsense. The crooks are almost always smarter and more creative.

My impression is that the drillers get lots of environmental oversight, though it varies from state to state. New York has virtually shut gas exploration down entirely. In other cases accessible water resources is fast becoming a severely limiting factor.

Meanwhile EPA is doing their best to shut down coal plants (the source of 23% of our total energy consumed). We had better find something with which to replace it before we freeze in the dark.

Did you read about the "no show" for the expected 11 year cycle increase in solar flare activity? Now astrophysicists are forecasting a repeat of the Maunder Minimum that caused the "mini ice age" of the 17th & 18th centuries. Get ready for global cooling.

If you want to see just how well a tank of petrol explodes, just google 'buncefield explosion'. When this fuel storage depot went bang, we heard the explosion 190 miles away in Essex.

i think you need to actually do some research into this before you talk like this. its true, the chain reaction thing, but not only is there so much water we couldent possibly use it all, whenever the water is seperated then burned in engines it comes out and converts itsself back into water using the suns energy. on top of that it creates zero greenhouse gasses so it doesnt pollute the enviorment. the only possible problems with this are the exaust parts will probably rust faster because of the water and if you crash your vehicle correctly the converter could explode.

i dont see why almost everyone cant get it through their heads. WATER CAN FUEL VEHICLES. IT HAS BEEN DONE BEFORE! when you convert the water into the gasses and burn it it does require electricity, BUT, alternators provide electricity, THEREFORE, the electricity problem is taken care of. SECONDLY you dont need a 100% effeciant engine to make this work. the engines that run off water arnt being made to run off nothing, they use water , which is hella cheaper than gasolene so people are saving alot of money. the idea isnt to make an engine that runs off of nothing, its to make an engine that can run off very little money. the hydrogen oxygen mixture doesnt need 1.80 liters or whatever of air to make an engine run, you need said amount of fuel along with the air the engines bringing in from the atmosphere. on top of all that hydrogen burns with more power than petrolium so that what the engine needs can be generated. it doesnt require some 2 story generator and it doesnt require nuclear fission or whatever you were thinking. everyone who doesnt think it works needs to actually do some research into this topic before they try and act like they are physics professors.

But some of us are physics professors.

Hey, that gives me an idea. Why not cut out the middleman and run the cars directly off alternators.

Now, I am aware that some people are going to completely misunderstand the comment. For those that do, please just visualize a whole string of cute little emoticons.

I guess the problem is when we do the research no one can show us a working model.