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Democratic Talking Points on Gas Prices

Daniel Foster posted this on the Corner on National Review.
Greg Sargent has a set of Democratic talking points reportedly being circulated to Obama allies and "TV surrogates" by the White House, a sign the administration is beginning to feel the heat on the issue.
The talking points boil down to raising taxes on oil companies. The taxes will increase the cost of doing business. How is raising their costs going to lower the prices at the pump? They don't explain. 

Here are a few of the items on their list:
  • Although there is no single, easy answer for addressing increased gas prices in the short term, there are things we can do to guarantee that Americans aren't victims of escalating gas prices in the long term.
  • One thing we can do is eliminate unnecessary tax breaks for the oil and gas industry and instead invest that money into clean energy, so that we can cut our dependence on foreign oil.
  • America's outmoded tax laws offer the oil and gas industry more than $4 billion in annual taxpayer subsidies, even though that industry is expected to report extra-large profits this quarter. Even as those companies are reaping near record profits, Americans are shelling out for near record gas prices. That doesn't make sense and it has to end.

Obama's plan, as outlined in his 2012 budget request, would raise taxes on oil companies by as much as $90 billion. (Please note that that is a study produced by the American Petroleum Institute, not an especially unbiased source, but a good place to start.)

When I studied economics in kindergarten, I learned that when you raise the cost of something the price goes up. It's almost as if he wants the cost of energy to necessarily skyrocket or something.

How does Obama intend to increase taxes on oil companies? Let me count the ways:

  1. Eliminate the ability of oil companies to expense the cost of exploration. Today, they get to write off the costs of exploration as the costs are incurred, instead of depreciating the costs over the life of the asset.
  2. Eliminate the ability of oil companies to deduct the income taxes they pay in foreign countries for operations there.
  3. Strip from oil companies (and only oil companies), the ability to participate in what are called Section 199, which accelerates deductions for employment dedicated to production.
  4. Eliminate the LIFO accounting practice. This is an accounting technique, required of all companies by the SEC, wherein they value inventory at the price of the last barrel purchased. This has the effect of increasing their accounting cost as prices are rising, since they now carry the current cost, rather than the cost when acquired.
I'm no expert on oil or accounting, but when an entire party has one industry in its cross hairs, someone is going to get rolled. This is pure demonization going on, and it won't end well.

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Comments (47)

Actually, it looks as thoug... (Below threshold)
Baggi:

Actually, it looks as though everything they propose will raise the price of gasoline, not lower it.

Either they think we're stupid, or they are stupid.

Oh, I have another way we can "cut our dependence on foreign oil"

Drill Baby, Drill

Actually I think we are all... (Below threshold)
hcddbz:

Actually I think we are all looking at this wrong. I mean why do we subside foreign Oil Companies?

black helicopter

BHO wants to raise the Cost of American Oil Companies doing business in the USA and the cost of gasoline. To such appoint that he can without much fanfare nationalize all the Oil in the USA. Look around the world most Oil Companies are state owen or sponsored. There just a few truly private ones. Once US government get control it will single the end of private Oil & Gas. Then we will embrace clean energy the way Obama likes through the barrel of a Gun.
/BlackHelicopters

"•Although there is no sing... (Below threshold)
retired military:

"•Although there is no single, easy answer for addressing increased gas prices in the short term"

If I were a reporter I would ask why they dont send in John Kerry to "jawbone down the prices".

I mean if it was good enough for them 11 years ago it should be good now.

Meanwhile they have stopped oil from being drilled in Alaska. Again. This time because of the chance of air pollution to a 200 person village 90 miles from the drill site. But the oil there is a very small amount. Just enough to cover all the oil we will import from the middle east for the next 40 years. Thats all.

The taxpayer will continue ... (Below threshold)
914:

The taxpayer will continue to get rolled until we take back the government from the blue blood Aristocrats.

Anybody but Barry. Drill baby, drill baby, drill!

I'm surprised putting on a ... (Below threshold)
Peter F.:

I'm surprised putting on a sweater isn't on the list.

Lost in the discussion of t... (Below threshold)
steve:

Lost in the discussion of the Democrat talking points is the absence of a coordinated GOP assault on how Obama's policies have aggravated the problem (and that many of those policies were carryover from Bush doesn't matter, Obama isn't making things any better).

The public is upset, and rightfully so, but if the GOP doesn't try to affix the blame on Obama, one can't assume the public is smart enough to figure it out on their own (proof that they're not that smart? A good many of them voted for Obama).

The GOP could start by fingering Obama's lousy effort in Libya as driving prices higher. They can follow with his knee-jerk refusal to open up exploration. They can pile on with the high prices caused by the regional formulations. And crown it with complaining about ethanol which drives both gas and food prices higher.

The pitch is coming right down the middle... and the GOP isn't even swinging.

Wow, Obama & Co. really are... (Below threshold)
Caesar Augustus:

Wow, Obama & Co. really are playing here to the lowest possible mental denomintor.

Even liberal idiots on the Internet would be able to figure out that if you raise the operating costs for oil companies that ultimately will result in -- duh -- higher prices for end users of their products.

Obama's target audience here must be those actually dumber than the left. Looks as though he's starting to troll for votes among the clinically brain dead.

Gomer Hussein is ... (Below threshold)
Sarah the Impaler:

Gomer Hussein is going to create an additional slush fund to try and shore up the dead vote in 2012. 90 billion ought to just about do it.

Don't underestimate the stu... (Below threshold)
Jim Addison:

Don't underestimate the stupidity of the electorate - they did put the guy there in the first place.

Don't overestimate the intelligence of the Left, either - they have repeated the whole "alternative, sustainable energy" mantra for so long they actually believe it.

Odd, though, that the media follows blindly along even when Obama, having taken several steps to run up energy prices already, proposes to "solve" the problem by running them up some more. There are reporters in Communist China who show more independence than these jerks . . .

I wonder how much Woop pays... (Below threshold)
914:

I wonder how much Woop pays for gas in his neighborhood? Do you think you pay too much Woop? Do you consider it a tithe for your Obamasiah?

Evidently Barry and Company... (Below threshold)
GarandFan:

Evidently Barry and Company have forgotten who controls the House were tax laws are written.

Fortunately for us, he's got a snowballs chance in hell of implementing a change in the tax laws.

Of course the Republicans could go along with this. AND ALSO REMOVE SUBSIDIES FOR WIND, SOLAR AND ETHANOL.

So, you guys think that com... (Below threshold)

So, you guys think that companies which are making record profits should get subsidies, while programs which benefit actual taxpayers are cut?

And you think it's a bad idea for oil companies to NOT pay taxes on their hugely increased profits, since they also sell and make money at the current price rather than the price at the beginning of the year?

That makes sense to you? Really?

Instead of trying to switch... (Below threshold)
914:

Instead of trying to switch blame to the oil companies, why doesn't Barry suspend federal taxes on gasoline for say, a month? And show us how much he feels our pain?

Sound like a plan?

Either they thi... (Below threshold)
Either they think we're stupid, or they are stupid.
Both. The former is a symptom of the latter.
If Obama were to announce "... (Below threshold)
J-Ho:

If Obama were to announce "because we're getting hosed on foreign oil, we are about to seriously open up American drilling", who believes the price of oil would drop instantly and significantly, with only that announcement.

Isn't Exxon/Mobil the only ... (Below threshold)
DaveD:

Isn't Exxon/Mobil the only oil company based in the United States?

By the way:
"How is raising their costs going to lower the prices at the pump?"

I am now in default mode that from this point forward I blame the American public for electing politicians who are allowed to get away with this twisted logic. In fact, any American that actually accepts this should not be allowed to vote. It suggests a very severe cognitive disorder.

Jim XActually I am... (Below threshold)
retired military:

Jim X

Actually I am all for cutting ALL SUBSIDIES TO EVERYONE. Ethanol subsidies - gone. Oil Subsidies - gone. AMTRAK subsidies - Gone. Farmer subsidies - GONE.

I think Martin Luther King Jr must have been thinking of Obama when he said this.

"Nothing in all the world is more dangerous than sincere ignorance and conscientious stupidity."

Oh and Jim X I forgot to me... (Below threshold)
retired military:

Oh and Jim X I forgot to mention. I am 100% for DRILL BABY DRILL. Open up ANWAR, open up both coasts and the gulf of Mexico.

Also fasttrack about 50 nuclear power plants.

Want to see energy prices plummet (and when they do it helps the poor the most)? do everything above and we will be back to paying about a $1.50 a gallon. Then the oil companies can decide what is econimically feasible to develop rather than socialist nuts in the govt.

jim x #12:"So, you... (Below threshold)
Sky Captain:

jim x #12:

"So, you guys think that companies which are making record profits should get subsidies, while programs which benefit actual taxpayers are cut?"

IIRC, oil companies do NOT make "record profits". Sure, they take in a LOT of money, but they also have a LOT of expenses.
The last I knew, the average profit MARGIN was ~2.5%. I believe that isn't even close to pharmaceutical companies profit margins.

BTW JimBefore we s... (Below threshold)
retired military:

BTW Jim

Before we start cutting subsidies to American companies. Maybe we shouldnt oh say spend $2 billion on foreign companies to develop wind turbines (we do make those here in the US)

http://abcnews.go.com/WN/wind-power-equal-job-power/story?id=9759949

Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind power, funding the creation of enough new wind farms to power 2.4 million homes over the past year. But the study found that nearly 80 percent of that money has gone to foreign manufacturers of wind turbines.

And I am taking a wild stab in the dark here but maybe JUST MAYBE we shouldnt spend $2 billion helping out the state owned BRAZIL oil companies.

(yes I dnt like newsmax either) ( I could get you another source though)

http://www.newsmax.com/InsideCover/GulfOil-JoePetrowski-BarackObama-Brazil/2011/03/22/id/390382

The signal to purchase more foreign oil comes after the U.S. Export-Import Bank invested more than $2 billion with Brazil's state-owned oil company, Petrobras, to finance exploration.


So once again Obama proves the axiom
"A fool and his money are soon parted"


Unfortunately in this case the FOOL IS USING OUR MONEY.

You'll have to pardon jim x... (Below threshold)
GarandFan:

You'll have to pardon jim x, he's merely regurgitating the talking points as directed by his Obamassiah.

jimmy also believes that businesses don't pass on taxes and costs to the consumer. I imagine he also believes in the tooth fairy and Santa Claus.

Jim XIsnt it hard ... (Below threshold)
retired military:

Jim X

Isnt it hard standing up for Obama time after time only to get smacked down time after time with crap that he has done.

GarandFan. Dont f... (Below threshold)
retired military:

GarandFan.

Dont forget to throw in the Spring Bunny. (cant say Easter anyomre. Politically incorrect you know. But hey you can say Quanza and Ramadan. Just not Easter and Christmas ).

Jimx...the gov makes more o... (Below threshold)
CharlieDontSurf:

Jimx...the gov makes more off a gallon of gas in taxes than the oil company makes in profit!!! Whant cheaper gas? Cut taxes.

Obama seems to be aiming at... (Below threshold)

Obama seems to be aiming at $8-10 / gallon gas, then he's going to run against the greedy oil companies for charging so much.

Jim XA. Fo... (Below threshold)
retired military:

Jim X


A. For simplicity sake lets say that oil is now $100 a barrel and we buy 2 barrels of foreign oil a day. Total money spent - $200. TOTal money going overseas - $200.

B. now with Obama's policies oil prices double to $200 a barrel. We only import 50% of our previous amount.

Total money spent $200 - Total money going overseas $200.

Tell me please EXACTLY WHAT WE HAVE SAVED.

From the dems talking points

"•One thing we can do is eliminate unnecessary tax breaks for the oil and gas industry and instead invest that money into clean energy, so that we can cut our dependence on foreign oil.
"

So instead of having a dependence on foreign oil we are now going to have a dependance on foreign wind power companies correct?

Also
http://www.nationalreview.com/planet-gore/265565/epa-ruling-puts-27-billion-barrels-oil-limits-greg-pollowitz


Now lets see how much 27 BILLION barrels are.

Why that is the amount we IMPORT FROM THE MIDDLE EAST - FOR A 40 YEAR PERIOD!!!!!

But Obama wants to cut our dependance on foreign oil by placing 27 BILLION BARRELS OFF LIMITS FOR the air quality of a 200 person FISHING VILLAGE 70 MILES AWAY.

Go ahead Jim. Tell us how that makes sense.


Oh and Jim. The oil compan... (Below threshold)
retired military:

Oh and Jim. The oil company spent $6 BILLION trying to develop that field. Only to have Obama and his cronies say "Sorry you spent that money for nothing". Gee and you dont want oil companies to be able to write off losses on their taxes.

To quote someone much much smarter than Obama

"What an embezzle! What an ultramaroon! What a poltroon! " - Bugs Bunny.

I guess PBS sees that 2012 ... (Below threshold)
retired military:

I guess PBS sees that 2012 is not going to be a good election year for Obama.

http://www.realclearpolitics.com/video/2011/04/26/tavis_smiley_2012_will_be_the_most_racist_election_ever.html

Tavis Smiley: (PBS HOST) 2012 Will Be "The Most Racist" Election Ever

"I said over a year ago that this was going to be, this presidential race, Lawrence, was going to be the ugliest, the nastiest, the most divisive, and the most racist in the history of this Republic," PBS host Tavis Smiley said on MSNBC.'

Well I guess when you have a clueless race baiter in the Oval Office who thinks that the most important task of the day is getting out of the sand trap on the back 9.

Yep, Barry is going to get ... (Below threshold)
GarandFan:

Yep, Barry is going to get us off "foreign" oil. That's why we're "going to be Brazil's best customer".

Brazil must be one of the 57 states.

Jim Xwhat would th... (Below threshold)
Jeff:

Jim X

what would the "clean energy" be that is a substitute for transportation fuel (i.e. gasoline) ?

Please tell us what this magical "clean energy" is ?

There is no green energy substitute for oil ... possibly yes for coal (wind and solar) but absolutely nothing for oil ...

you could cover every house in America with solar panels and put up a windmill in every backyard and you won't reduce our use of oil one drop ...


We have spent how many bill... (Below threshold)
retired military:

We have spent how many billions on wind and solar over the past 30 years and what do we have to show for it?

Subsidies and tax credit... (Below threshold)
Will:

Subsidies and tax credits do not really appear that effective. OTOH you could put incentives into offshore and other government leases that encourage faster exploration and development. You could also put in clauses that would penalize for hoarding leases rather than exploring and developing them.

Incentives such as royalties cut in half for production before a set date or increased for every month they go beyond a set date without producing.

WillThe thing is O... (Below threshold)
retired military:

Will

The thing is Obama doesnt want exploration and development. Every action he has taken has proven that.

Also the oil companies will develop the more profitable leases first because it is the RIGHT BUSINESS decision. They know their business much better than Obama and his cronies.

This country isn't about Ob... (Below threshold)
914:

This country isn't about Obama. Who gives a damn what that dumb ass wants. The People need to mass and act for our own good. And that means Oil, Natural gas , Nukuler and every other form of energy that makes life easier.

Since the leftists don't like it, they can not use it and leave.

914True but Obama ... (Below threshold)
retired military:

914

True but Obama is currently our "leader"

Where he leads, I will not ... (Below threshold)
914:

Where he leads, I will not follow. Thank God his time is short.


"We have spent how many billions on wind and solar over the past 30 years and what do we have to show for it?"

A bunch of hot air from pandering windbags like Algore, Splash, Lurch and the now an empty suit .


All companies get to right ... (Below threshold)
hcddbz:

All companies get to right off capital expense. Oil companies have to pay leese on Goverment lands state and federal. The question to look at is net profit and how much they pay in Taxes to have a real debate.


Again we are seeing willful destruction of American jobs. You want to punish companies that create jobs in the USA from low level unskilled workers to highly skilled scientist and engineers. Jobs for people in the computer and software business. Oil companies drive innovation in large scale processing of data, they drive private aviation and shipping. When they can explore they also oil and gas are normally fund together.

This will drive up prices for hone heating and hardest hit will be those on fixed incomes and working poor.

Solar energy is a fraud as every plant so far closes because it cannot really provide energy at any cost. Wind power would need to take up the entire state of Montana and the effect would cause climate change as it would stop natural wind flow.

Also wind power cause all kind of issues to humans from the high pitched wind to the light distortion. Then there is the danger of high winds cause the thing to come down.


You want to lower oil let American companies drill for oil in the USA. Increase nuclear, fund research into real energy alternatives not just BS ones like Soglar and wind which are not economically viable or energy effiacnt.

Retired Military, ... (Below threshold)
Will:

Retired Military,
It certainly looks like Obama doesn't want development and production; and oil companies are very capable at business decisions. Getting a lot of leases and just holding most of them can be a good business decision: the way the leases are structured now. The trick for our presidents eventual replacement will be to encourage quick yet safe competition to actually drill.

Tax deductions are one thing; tax credits and subsidies are another. Incentives need to reward results; not methods, behavior, or intentions.

Will"Incentives ne... (Below threshold)
retired military:

Will

"Incentives need to reward results; not methods, behavior, or intentions"

Please explain that to Obama ref Wind Solar and ethanol subsidies. Because we are rewarding methods, behavior and intentions there and definitely not results.

Will.Let look at 2... (Below threshold)
hcddbz:

Will.

Let look at 2009 quater . Exxon revenue of 137 billion.
it paid 47% of that in taxes add in other investments and
Net profit was 14 billion.

I not sure why you want to collect from them. Why not go after the 47% of Americans who pay no income tax.
When Oil prices fall will you change policy? will they get subsides then?

This is probably a waste of... (Below threshold)

This is probably a waste of time, but here goes:

A. For simplicity sake lets say that oil is now $100 a barrel and we buy 2 barrels of foreign oil a day. Total money spent - $200. TOTal money going overseas - $200.

And? How exactly does that mean US companies shouldn't have to pay taxes according to the real cost of what they sell?

B. now with Obama's policies oil prices double to $200 a barrel.

I'll stop you right there. Sorry, you can't blame the rise in oil on Obama. As I've posted in other places, if you care about facts, experts in the oil industry place the cause of the cost rise on SPECULATION due solely to unrest in the Middle East.

So instead of having a dependence on foreign oil we are now going to have a dependance on foreign wind power companies correct?

No, not correct. The wind turbines will be here, and thus obviously controlled by us. If you really want to be sure about it then limit the construction solely to American companies also.

Why that is the amount we IMPORT FROM THE MIDDLE EAST - FOR A 40 YEAR PERIOD!!!!!

And?

This makes it a bad idea to reduce our consumption how, exactly?

Go ahead Jim. Tell us how that makes sense.

Sure. It's like this:

1. oil is a finite resource that costs more as we have less
2. we are running out of oil
3. even if we had enough oil to last our current population hundreds of years - which we do NOT - our population and needs are increasing also
4. therefore, if we want our grandkids to live better than us and not worse, for reasons of pure pragmatic energy consumption alone we need to get off of oil before we run out of it.

But don't take my word for it. Taking those flaming pinko liberals at the Pentagon's word, on what will happen to the world if we run out of oil before we switch to other sources:

http://www.jfcom.mil/newslink/storyarchive/2008/JOE2008.pdf

Now, you asked for my proof. There it is. Please read the whole thing as if the lives of your grandchildren depend on it - because if you have grandchildren, its probably actually the case.

the problem is bigger than... (Below threshold)
MF:

the problem is bigger than just the price of oil which will get worse
something to think about and address - we need to address the devaluation of the dollar and that impact to the US for our future

The problem with wind power... (Below threshold)
hcddbz:

The problem with wind power is that it is not ready for prime time. All the forced forced government subsidies around the world help to create mediocre product that went into production and has cause lots of problems but we ignore them because "They are Good Green Power"

Same thing with Solaris which is only 10-15% There are some products which are in the 40% range but their is not a lot of incentive to build a better product when crap is encouraged to be purchased by by governments.

A stable, secure , efficient source of power.
We also need highly efficient portable source of power for heavy equipment and ships.

German report Wind power inefficient

German wind power unreliable

health Risk for wind


hcddbz, Collect? I ... (Below threshold)
Will:

hcddbz,
Collect? I would like to see ALL tax CREDITS and subsidies abolished, and no refunds to any entities; human or corporate, that result in a negative tax rate. (not holding my breath.) Government seems to like paying for failure as long as there are very visible "good" intentions or even well presented pretensions.

Will,I would like to... (Below threshold)
hcddbz:

Will,
I would like to see 15% corporate, capital gains and individual income tax rate. Then you can eliminate all tax credits. I agree we should not have any subsides.
If we repeal the 16 amendment. Then we can have a VAT tax.
Even with 0% income tax, FICA would still be deducted.

Both of these would allow companies the freedom to invest their profits.
The same way it would allow individuals to invest in their own security.

MF,
Strong dollar is key.
I saw a report that showed the same amount of Gold in 1979 would purchase same amount of OIL today. This shows that dollar valuation is an issue.

hcddbz We can d... (Below threshold)
Will:

hcddbz

We can dream. VAT tax seems too easily hidden but I would be game to try it. Like I said though, 'I'm not holding my breath.' In fact, I really think it is too late to stop this country's fall. I just hope for my grand-children's sake it can be reborn.

Will,I fear your c... (Below threshold)
hcddbz:

Will,

I fear your correct, a VAT without income tax will not happen. The income tax is no longer about raising revenue it a method of controlling behavior and wealth redistribution.

Look how much revenue the Oils companies generate for USA. However they want to take that money and pump it into companies that operate at a loss because that the "good energy"

We do ethanol that raise food and fuel prices because it "clean" mean while who suffers for it? The poor who they claim to care so much for.
We are in the process of doing what we did to American OIl and Gas companies in the 80's when we put the wind fall profits tax and drove out small producers and increased or dependency on foreign oil.
We need new refiners. Do you know we import Gasoline from Canada ? because we do not have enough refiners to produce it in the USA.




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