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View Diary: The war over fossil fuels subsidies (41 comments)

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  •  Really? Nationalize? (2+ / 0-)
    Recommended by:
    Anne Elk, MGross

    Do you really want the federal government to run a giant oil company? Statoil and Petrobras and doing a pretty good job and operate around the world, but they are only part state-owned. OTOH, you've got the Pemex model where lack of re-investment and technical capability is causing Mexican production to plummet - with highly undesirable results for the Mexican economy and dire implications for her northern neighbor. Same with Iran. Aramco is a different kettle of fish, as they are kept busy producing and redeveloping giant fields discovered 50 years ago.

    Relook at the tax breaks and potentially the royalty rates.

    Domestic deepwater development would take place (if allowed - it isn't right now) regardless of subsidies, it's just that some marginal projects would be uneconomic.

    As the price rises, there will be a windfall for the companies and the US treasury, and deepwater development will only become more economically attractive (at least until the high prices send us back into recession or worse).

    Also, keep in mind that less deepwater development in the US means more in less regulated parts of the world in addition to a big balance of trade deficit and loss of enormous revenues to the US treasury (oil and gas is 2nd largest source of revenue after IRS).

    Do you know who owns the most oil in the Gulf of Mexico? Answer: us. By virtue of royalties, the US actually gets more revenue than any single company operating offshore.

    Oh, BTW: we should send more of the revenue to the states affected  by the industry (mainly Louisiana) to use for coastal restoration.

    •  Norway (4+ / 0-)

      Salon: Why Norway's offshore drilling is safer

      Statoil operates the most environmentally friendly offshore oil rigs in the world -- because it's state-owned

      Slate: Avoiding the Oil Curse: What Norway can teach Iraq

      Norway has pursued a classically Scandinavian solution. It has viewed oil revenues as a temporary, collectively owned windfall that, instead of spurring consumption today, can be used to insulate the country from the storms of the global economy and provide a thick, goose-down cushion for the distant day when the oil wells run dry.

      Less than 20 years after they started producing oil, the Norwegians realized their geological good luck would only be temporary. In 1990, the nation's parliament set up the Petroleum Fund of Norway to function as a fiscal shock absorber. Run under the auspices of the country's central bank, the fund, like the Alaska Fund, converts petrodollars into stocks and bonds. But instead of paying dividends, it uses revenues and appreciation to ensure the equitable distribution of wealth across generations.

      The U.S. would be better off with a Norwegian model than the corporate-profit driven oil exploration and production system we have in place today.

      •  Agreed - Norwegian model has worked well (1+ / 0-)
        Recommended by:
        Magnifico

        I like the fund and that they are also a publicly traded company with only part state-ownership.

        Statoil is not the only company that operates in Norwegian waters however - they still compete with the other companies; they did not take over or expropriate existing production like Mexico or Iran.

        Statoil is also quite active in the US Deepwater GOM.

      •  Statoil is a profit-driven public company (0+ / 0-)
      •  Norway wasn't nationalized, though. (2+ / 0-)
        Recommended by:
        Magnifico, noladerf

        They built Statoil from the ground up, as Norway found oil.  They didn't get the company by appropriating other people's property.

        It would be more than a minor diplomatic incident if we confiscated billions of dollars in property from one of the United Kingdom's largest firms.

    •  Right. (1+ / 0-)
      Recommended by:
      noladerf

      Nationalization is a non-starter. Heck, we can't even nationalize healthcare!

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