House Interior Appropriations Budget Carries Ill Winds for National Park System

With all the drama surrounding the White House negotiations to raise the nation's debt limit without doing further damage to the country's fiscal profile, legislation still working its way through the House of Representatives understandably takes a backseat.

But as crafted, the proposal concerning Fiscal Year 2012 funding for the Interior Department stands to do more than a little harm to the National Park Service's fiscal fitness, and also threatens to degrade the watersheds that drain into the Colorado River as it runs through Grand Canyon National Park.

"In its current form, it's deeply damaging to our national parks, Grand Canyon in particular," John Garder, the National Parks Conservation Association's budget and appropriations legislative representative, said Monday.

As it stands, the bill would, if enacted, reduce overall funding for the Park Service, weaken air and water regulations that are needed to protect park resources, and stall efforts to let the agency acquire a private 1,400-acre inholding in Grand Teton National Park.

The legislation, which was scheduled to be considered by the full House Appropriations Committee on Tuesday, has drawn criticism from a number of groups concerned about its environmental impact.

Trout Unlimited issued a release last week that condemned the bill, saying it "cuts funding for essential conservation programs like the Land and Water Conservation Fund and North American Wetlands Conservation Act, and contains harmful riders that undermine the Clean Water Act and other protective rules for rivers and streams."

“Fishing and hunting generate $76.7 billion annually in economic activity in the U.S.,” said Steve Moyer, vice president for government affairs at Trout Unlimited. “We can’t expect to sustain this powerful economic engine if we’re removing the very conservation programs that make it run.”

At the Natural Resources Defense Fund, Scott Slesinger, the group's legislative director, said the legislation "is a contract on America masquerading as a spending bill. It’s nothing short of a declaration of war on our most basic health protections."

"It would do away with fundamental safeguards that keep our air, water and lands clean. Worse than making deep budget cuts, the bill is chock full of gratuitous policy riders that are unprecedented in number and scope. They have no place in a budget -- or anywhere else.”

Back at NPCA, Mr. Garder said one of the most egregious riders, or amendments, to the bill would block efforts to continue a moratorium on new mining claims on 1 million acres surrounding Grand Canyon National Park for 20 years.

“What really put us over in the edge in opposing this bill were the policy riders, in particular one that would undermine protections for the Grand Canyon," he said during a phone call from his Washington, D.C., office.

The proposed 1 million-acre buffer was identified "through a public process that allowed for public comment, and 300,000 people commented and the determination was that it is appropriate for the protection of Grand Canyon and for the 25 or so million people who rely on the Colordao River for drinking water and their uses," said Mr. Garder.

If the moratorium is not put in place and uranium mining claims are allowed, “It is not unfathomable to imagine that those who are hiking around the Grand Canyon would have to note in which streams there is uranium contamination and carry their own water," he added.

Conservation groups are not the only organizations that support the 20-year moratorium, said Mr. Garder, noting support for it from the Metropolitan Water District of Los Angeles, the Southern Nevada Water Authority, the Central Arizona Project, and Native American tribes in the Southwest.

Other sections of the proposed legislation the NPCA takes issue with include:

* Efforts to weaken or remove Environmental Protection Agency regulation of greenhouse gases;

* Efforts to weaken EPA regulation of coal ash;

* Efforts to weaken oversight of stormwater discharges, something that can lead to degredation of waters such as the Chesapeake Bay;

* Cuts to the Land and Water Conservation Fund that would zero out funding for Park Service lands acquisition;

* A $7 million cut in National Park Service funding.

“That is less than 1 percent," Mr. Garder said of the $7 million, "but it is on top of the cuts that park operations received last year. Something that concerns us is backtracking on funding for an account that is essential to ensuring our parks operate essentially.”

The Park Service already is underfunded by roughly $600 million a year, according to the NPCA, and this proposed cut, while small, would nevertheless have to be absorbed by the parks, he said.

Without the LCWF land acquisition funding, the Park Service also might not be able to move forward with the $107 million purchase from the state of Wyoming of 1,400 acres inside Grand Teton. The administration had been counting on the LCWF funds to start the purchase with a $10 million downpayment in the coming fiscal year, according to Mr. Garder.

“But when there is an effort to prevent any new land acquisition projects in FY12, that’s going to seriously undermine that multi-year effort, and the threat of development there should not be underestimated," said Mr. Garder. "It’s critical that this bill go through if we’re going to prevent the building of trophy mansions or subdivisions in the middle of Grand Teton National Park.”

The House measure also carries an 18 percent cut to the Park Service's construction budget, which the president had already reduced by $50 million in his budget proposal, said the NPCA budget analyst.

“If you look at the suite of those (construction) needs, there are some projects in there that are clearly very important for the protection of visitor safety and the protection of the historic and natural resources,” Mr. Garder said.

For instance, at Grand Canyon National Park there's a $16 million need for a storage system for potable water for park visitors, and at the Statue of Liberty National Monument there's a need for asbestos abatement work, roofing, sidewalk repairs, and seawall repairs that alone are estimated to cost nearly $11 million, he said.

“Many of those jobs are contracted to businesses, and so there is a direct jobs loss component when you are reducing the ability for the Park Serivce to engage in some of those contracts to do some of those basic repairs,” said Mr. Garder.

How the legislation will fare after the House Appropriations Committee deals with it remains to be seen, he said. The full House might take it up next week, or possibly not until September. And the Senate has not even started its work on the Interior Appropriations measure, he said.

Of course, the lawmakers could find themselves having to go back to square one, depending on how negotiations over the nation's debt limit go with the White House.

Comments

Thanks for drawing attention to this awful bill. It looks like it's going to be debated in the House this week, so there's still time for folks to contact their reps.

justin - what are you willing to give up instead?

ecbuck,

Taxpayer-funded subsidies to oil companies, for one.

But the bill is especially egregious, in my opinion, because many of the provisions slipped in do not even address budgetary issues. For example, it undermines 1) the EPA's authority to limit carbon pollution from stationary sources as it is required to do by the Clean Air Act, 2) clean water protections 3) standards on toxic coal ash disposal 4) Clean Air Act permitting processes for drilling off of Alaska's coast; it 5) blocks the listing of endangered species; it would 6) allow uranium mining near the Grand Canyon; etc.

EPA does not effect budgetary issues? The arguments here are so misleading. Unelected EPA officials (forget the extreme rhetoric) making decisions with political verbiage (buzzwords) are HUGE job killers and effect every single individual in the country, ruining businesses and killing jobs. Everyone needs to get real or....live in a gradually more frightening fantasy land. Fact check EVERYTHING you here is what I'd suggest!

Didn't NPS get 700 Million in stimulus dollars over and above their budget last year ? I need to do some more fact checking. The media does so little of it anymore:).

Reality Check, before you start casting aspersions, here are some more facts: At last tally the Park Service's maintenance backlog was about $11 BILLION, and its annual budget shortfall about $600 MILLION.

So while the Park Service did get a seemingly healthy slice of the American Recovery and Reinvestment Act funds, it's still far, far, far in the hole.

As for the EPA's actions being job killers, pollution from antiquated coal-fired power plants and mountaintop coal mines kills vegetation, lakes, and streams and has a decidedly deleterious affect on most all living creatures.

And let's not overlook that tiny mound of uranium tailings piled along the Colorado River near Moab: "When the processing operations ceased in 1984, an estimated 16 million tons of uranium mill tailings and tailings-contaminated soil were present in an unlined impoundment located in the western portion of the property."

It took an act of Congress to get a cleanup under way, one that continues today with two trains a day, Monday through Friday, hauling the tailings away from the river to a better storage area. Perhaps if the EPA were in existence when this operation began we wouldn't have this mess today.

We need industry, but we also need oversight to protect nearby residents and the environment. That's the reality of it.

"Taxpayer-funded subsidies to oil companies, for one."

LOL In 2010 Exxon paid $90 billion in taxes and had net income of $30 million. the top 5 oil companies wrote checks for more than $140 billion to pay taxes - well over 100% of their net income. Tell me - what oil company is being "subsidized"?

Oh and by the way - they actually don't pay the taxes - you do - in the form of higher gas prices.

I don't know, ec, according to CNNMoney, Exxon Mobil had "net income" of $7.56 billion during the second quarter of 2010 alone. And according to a story in the New York Times, BP "used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began..."

Add supposedly the profits kept rolling in 2011:

Climate Progress, an environmental advocacy site that presumably isn't too fond of big oil, reports that ExxonMobil, ConocoPhillips, Chevron, and Shell posted a combined $18.2 billion in first quarter profits — a 40 percent increase over their profits in the first quarter of 2010. BP, hampered by financial responsibilities due to last year's oil spill, settled for a mere $5.5 billion profit, a measly 17 percent increase over 2010's first quarter numbers. The story says big oil receives $4 billion in annual
tax subsidies for domestic drilling and prediction, just to sweeten the pot.
Have you seen any reports to the contrary?

"Perhaps if the EPA were in existence when this operation began we wouldn't have this mess today."

The EPA existed for half the mine's 28 year history - so apparently not.

But if the EPA existed when the mine operations started, would the company have been allowed to place the tailings in "an unlined pond on the floodplain of the river"?

It's often easier to stop a practice before it begins, rather than go back after the damage has been done and force it to clean up its mess. In those cases, as in this one, some companies find it cheaper to declare bankruptcy than clean up their mess.

"70% of the rent"

Only 70% - why not 100%. Rent is a legitimate business expense and "written off" by every business. Why shouldn't BP be able to write off their rent?

"Have you seen any reports to the contrary?"

yes - the companies financial reports filed with the SEC They show the numbers I provided you. The oil company critics call the depreciation (used by every business) a "subsidy". It is a standard business deduction that still has the oil company passing along Billions of your dollars in taxes.

There needs to be an effort on many levels to get past the level of discourse and deal with more facts and not operate in the "tabloid" hysteria. The level of technical knowledge and the intense oversight of operations now is light years ahead of the culture decades ago. Many if not most(all?) of the anti industry/environmental community are the the same as any third generation coming off the benefits of their fathers and grandfathers efforts but do not have the experience of the sweat equity in what has allowed the affluence to spawn the derisive attitudes toward hard work and enterprise. It's just how it goes, I suppose, with the animosity just a natural phenomenon... until real life abruptly enters the picture. We need to move on and get into "realville" learning every step of the way and not stay stuck political dead ends. It's time....Respectfully

Hey Reality Check - Why should EPA regulators be elected? I want decisions about the health of our environment made by SCIENTISTS, not elected glad handers who do what's popular, not what's right.

Maybe with the NPS so far in the hole we should see some oversight into NPS expenditures and what the agency priorities are in such a cash strapped environment. Just one example I can think of are their efforts to eliminate inholdings like the Verkamps Historic Store at South Rim, killing jobs (and 100 year history). How many times does that and other priorities play out in an atmosphere where mere wishes are pursued and not just necessities?

Westerner, that's an awfully broad brush you're painting with today;-)

Mere, not familiar with the Verkamps matter, but good points re better oversight and necessities vs wishes.

Not sure about the "elected" part myself, lol! Scientists like everyone else are tempted by their own "career needs" also. There is a gang mentality out there on several fronts with pop culture actions. The "new enlightenment" is just a lack of spanking (of sorts) at a young age for many (not all:). Which scientists do better, financially? Those that work slow, steady and correctly or those that climb on board the fast career track? Just a reality, I believe.

Freepers like everyone else are tempted by their own needs also. There is a gang mentality out there on several fronts with pop culture actions. The Freeper "reality" is just a lack of spanking of sorts at a young age for many, although not all. Which Freepers do better financially? Those at the very top, not those who are out mucking about online discussions hoping for their slice of the pie. Just a Freeper reality, I believe.

Reality Check wrote,

"EPA does not effect budgetary issues?"

Take another look at what my post actually says.

C'mon, ecbuck, even the SEC has recommended ending taxpayer subsidies to oil companies.

No, ecbuck, the Oil Depletion Allowance is NOT like the depreciation write off that all other companies pay.

At the same time oil companies promote the most rapid possible development and consumption of oil, these same guys are moaning that the government should give them a write off because as they use oil THERE IS LESS OF IT IN THE GROUND ! This is not at all the same as the wear and tear depreciation you get, say, on a fleet of vehicles.

According to the late Speaker of the House Sam Rayburn of Texas (of all places) the way the oil companies got this tax break was to blackmail President FD Roosevelt. With America going into war and needing maximum production, the oil companies said tough -- we won't produce the oil you need. We won't support the war effort until you give us a break for all the oil we develop. Rayburn said Roosevelt was totally blackmailed, and had to agree to give them the break so American troops could have the oil they needed to fight effectively. Rayburn said he would never trust the loyality of the oil companies to the United States again.

I would like to get a tax break: for every lungfull of air I breathe, the government should give me money because now there is not as much air as there was before. Or, the fisherman consuming the last of a remaining species should get your tax break because as they overfish, fewer and fewer fish are there. Do you think gold miners can write off taxes because with every ounce of gold, there is one ounce less left in the world?

This is not depreciation, and it is not a normal tax break.

And this break does not even cover another hidden benefit. Pro-oil Administration;s, like Bush and Reagan, would flood the market with oil lease opportunities by opening up simultaneously as many oil fields as they can. This means fewer companies bid on individual leases, and the leases then go for the bottom dollar. I am not accusing the oil companies of colluding in structuring bids, but this has sometimes also been suggested. So rather than a market-rate lease share coming to the federal government's coffers, the oil companies get bargain rates. Then, the oil companies in fact only develop the easiest to get at oil in these leases, meaning they are wasting oil and the federal lease share of those undeveloped leases, only to get the most profit. It used to be that the US Government would only let parcels be leased gradually to make sure they are fully developed and to get the best competition of bidding and prices available. Reagan, Watt, Cheney and 'drill, baby drill' killed that. So billions of totally unseen dollars alone go to oil that way. It was estimated that Reagan and Watt in just one program of lease sales basically gave away over $30 Billion in value to oil companies, in 1983 dollars.

On top of that of course, the money lost from the federal outer continental shelf leases is money lost to land conservation, because that is the source of funds for buying land for parks, for wildlife refuges, for conservation.

ecbuck, don't worry too much about oil companies ensnared by tax and spend liberals. With the vast amount of resources oil companies pay in their escalating lobbying effort on both naive or complicit federal, state and local politicians, they clearly have the money to blow to make the rules. It is a new meaning of the word 'payback.'

"even the SEC has recommended ending taxpayer subsidies to oil companies."

They have? Since when has the SEC been formulating tax policy? Please site where the SEC has done that and then explain how a company that pays more in taxes than it has in net earnings is "subsidized".

Well d-2 - maybe you can explain how companies that pay more in taxes then they have in net income are subsidized. You may not believe that oil depletion is the equivalent to depreciation - on that we will disagree. However, bottom line, they pay far more in taxes than they take home in net income - a situation that hardly constitutes a subsidy.

Of course the best answer would be to totally eliminate ALL corporate taxes. After all - they don't pay them, they merely pass them along out of your pocket. Eliminating corporate taxes would get rid of a massive IRS bureaucracy, remove internal expenses that show up as higher prices and remove incentives to ship operations and investments (i.e jobs) overseas.

ecbuck,

"Recommending" and "formulating" aren't the same. This shouldn't be too hard to google. (You'll also find that there's plenty of public bipartisan support to end the subsidies.)

But this is all off-point anyway; your original question asked, "what are you willing to give up instead?" My answer (still) is that I'd rather have my taxes go to protect and preserve the national parks than to oil companies that annually enjoy record-breaking profits.

" This shouldn't be too hard to google"

Which means you can't provide it.

" I'd rather have my taxes go to protect and preserve the national parks
than to oil companies that annually enjoy record-breaking profits."

I see 50-60%+ of their income isn't enough? Well then lets just confiscate all their profits. Then you can walk to your favorite park.

Oh and for d-2 gold miners do get depletion allowance - in fact anyone that has a mineral or timber activity is eligible - though large integrated oil companies are limited.

ec, re googling, you never provided a link to the oil companies' SEC reports. Should I assume you can't provide them?;-)

As for gold miners, let's not forget that hardrock miners pay no royalties from federal land operations. And grazing fees for public lands are ridiculously low.

Bottomline: There are a slew of rules, regs, and requirements on both sides of this discussion that need some overhauling.

And I'd be willing to give up bombing a stone-age country further back into the stone age, in order to be able to protect and preserve our own country's wilderness and heritege.
The effect of the ongoing eternal war on the budget and deficit is the elephant in the room [pardon the image] that too few in power are willing to talk about. Much easier to eliminate park ranger jobs than to bring the 75th Ranger Regiment safely home.

ecbuck wrote,

"I see 50-60%+ of their income isn't enough? Well then lets just confiscate all their profits. Then you can walk to your favorite park."

1) Taxpayer subsidies obviously do not consitute (or make possible) 50--60 % of oil industry profits--if it did, this would be a pretty strange situation. 2) And I'm not sure why you're equating the elimination of taxpayers subsidies with confiscating their profits. 3) There's plenty of evidence that says eliminating taxpayer subsidies would not raise gas prices because of the record profits oil companies routinely make, or that the elimination of these subsidies would unfairly lower their profits. For example, see two articles that cite the recent CRS report (I'll Google this one for you): http://thecaucus.blogs.nytimes.com/2011/05/11/report-strengthens-democrats-argument-to-eliminate-oil-tax-breaks/, http://thehill.com/blogs/e2-wire/677-e2-wire/166809-house-dems-press-biden-to-nix-oil-tax-breaks-in-deficit-deal.

"Taxpayer subsidies obviously do not consitute (or make possible) 50--60 % of oil industry profits-"

No but taxes do - which is what I was citing. Is that not enough for you?

" I'm not sure why you're equating the elimination of taxpayers subsidies with confiscating their profits."

Because taxes are a "confiscation".

"There's plenty of evidence that says eliminating taxpayer subsidies
would not raise gas prices because of the record profits oil companies
routinely make,"

Not to anyone that understands capitalism and the US economic system. You add to their taxes, they will increase the price - it is as simple as that.

Oh and where are their routine record profits? 2009 profits for Exxon/Mobil (the largest US oil company) were down 58% in 2009 and though they recovered somewhat in 2010 they were still below the levels of 2006, 2007 and 2008.

Re: ecbuck "Not to anyone that understands capitalism and the US economic system. You add to their taxes, they will increase the price - it is as simple as that."

This covers a lot, a whole lot, including you can't talk facts with Liberals (no disrespect intended). Well, I have and do only because I have so much fun doing it and seem to make some friends along the way. Must be the beer:)!

ecbuck,

Try googling "oil industry record profits."

Again, see the Congressional Research Service (CRS) report's finding that ending taxpayer subsidies will 1) not raise gas prices at the pump and 2) will not cut into oil company profits. If you can ignore this report, I'm not sure what would count as evidence for you.

Reality Check,

Famous liberals such as George W. Bush, John Boehner, Paul Ryan, and even John Hofmeister (ex-CEO of Shell Oil) have all said publicly that oil subsidies are not necessary and should be discontinued. We just can't talk facts with these folks!

"Try googling "oil industry record profits.""

Try reading the actual financial reports. Why is it you keep saying to google but don't actually provide any "facts".

"Again, see the Congressional Research Service (CRS) report's finding
that ending taxpayer subsidies will 1) not raise gas prices at the pump
and 2) will not cut into oil company profits."

And exactly how would that "magic" happen. Its got to be either one or the other - and economic history tells us it is more likely 1 than 2. Taxes are like any other cost of business. If that cost goes up - it will be passed along to the consumer.

"have all said publicly that oil subsidies are not necessary and should be discontinued."

Not as a stand alone action but as part of an total overhall of the tax system as well as reigning in of the budget. You seem to have left that "fact" out. You give me what Boehner and Ryan want for taxes and the budget and I'll give you the "oil subsidies".

Well, I learned a lot on this one. I learned that I don't have a clue as to who is right and who is wrong. Sorta reminds me of the " Best available Science " we have been battling at Cape Hatteras.
Now, I know you are saying 'what has that got to do with anything'. Well, maybe nothing but, I was just thinking, with all the problems the NPS and our Country are having, particularly financially, pray tell me why we are going through the mess we are at Cape Hatteras concerning beach access.
The people there just want to continue to fish, swim and recreate on the beaches (and, yes, walk and drive on them to do so) in the manner they have for better part of a century. They want to work, make a living and spend money and so doing, pay taxes. They readily purchase fishing licenses (taxes) which support conservation efforts. They have done this for ever while protecting and preserving the resources and coexisting with the birds, turtles and other wildlife. They have left no significant footprint on these beaches during this time.
My question is, why are there people that are insisting that these people give up this culture. Why are they proposing that millions of dollars be spent by NPS for improvements that are not needed and will be useless, when it works just fine the way it is, at the same time, excessively limiting access to every user. Doesn't make sense. I repeat, doesn't make sense. It's a recreation area for God's sake. The birds and turtles will be fine.
Worry about funding of the NPS ? Want to meet a lot of folks who don't care ? Come to Cape Hatteras and talk to the people.
You can quote all the statistics and science you want but, the people don't care anymore. It has all been corrupted to a point that none of it is believed anymore. What used to be the fabric of which this country was built, is now worthless, and will be until someone figures out how to bring back the credibility. That goes for all the politicians, judges, lawyers, scientists, environmentalists and special interest groups. I wonder if that is even possible.

Ron (obxguys)

EC, I gotta admit reading the CRS report very possibly would clear some of the confusion up. Here are a coupla snippets:

Repeal of the immediate expensing of intangible drilling costs provision and replacement with a form of cost amortization more consistent with depreciation methods common in other industries likely will have no effect on current U.S. oil production, and hence no effect on current gasoline prices. The purpose of the expensing provision is to enhance the investment returns for investors in what has historically been a risky activity: exploring for, and developing hydrocarbon resources. Since the provision has little effect on wells already in production, available output and prices should be unaffected if the provision is repealed and replaced with less favorable amortization procedures.

Wood MacKenzie, a consultancy, determined that the sum effect of eliminating the Section 199 deduction and the repeal of the expensing of intangible drilling expenses would have an effect on the rate of return to exploration, lowering the return of marginal projects, and reducing over-all domestic exploration and development activity by U.S. firms. However, the conclusion is sensitive to the level of oil and natural gas prices. High prices can raise rates of return substantially. Natural gas projects are more likely than oil projects to be affected by the tax changes because they are experiencing low market prices due to the
volume of non-conventional gas production that has entered the market in the past several years. The Wood MacKenzie study did not conclude that U.S. gasoline prices would be affected by the tax changes.

The oil industry has benefited from the ability to deduct very broadly defined foreign income tax payments from their U.S. tax liability since the 1950s. If the definition of what constituted an actual income tax payment were tightened and foreign governments did not reduce their charges correspondingly, the industries’ domestic, as well as total income tax burden would likely increase. However, this provision again is a tax on profit, and in line with the economic theory of taxation, should have no effect on the firms output or pricing decisions, and therefore no effect on the price of gasoline. The incidence of the tax would appear to be on shareholders. The change in the dual capacity tax payer rules might make overseas investment that leads to foreign profits less attractive to the companies than investment in the United States. This could lead the firms to enhance domestic capital spending leading to increased domestic production and reduced oil dependency.

Costs associated with the use of tertiary injectants are currently treated as deductible expenses. Expensing of these costs encourages their use and enhances oil production levels. For smaller, independent exploration and development firms the cost incentive could be important. However, the five major oil companies, to which repeal would apply, earned over $32 billion in net income in the first quarter of 2011. Repeal of the deduction for the industry is estimated by the Obama administration to yield only $6 million in revenue in 2012. Only a part of the $6 million revenue estimate would be paid by the five major oil companies. As a result, it is likely that repeal of the deduction, with a change to capitalization, or amortization, of these costs, would have only a small effect on oil production or pricing, especially in a market where oil returns over $100 per barrel. In periods of low oil prices the repeal of the deduction could have a larger effect. The effect on domestic gasoline prices is likely to be small.

As for your figures on how much Exxon Mobil made and how much the oil companies paid in taxes, the CRS would seem to disagree:

For the calendar year 2010, the revenues of the five largest oil companies were approximately $1.5 trillion with additional revenues accruing to the non-majors. The net incomes, after tax, of these five companies totaled over $76 billion with additional earnings accruing to the non-majors.

You can read the full CRS report here.

ecbuck,

The two articles I linked above explain pretty clearly how that "magic" would happen, according to the findings by the CRS report. As for "facts," I'm not sure what you mean here. Googling "oil industry record profits" brings up a whole slew of articles that document this. Would googling, copying, and pasting the links for you consitute "facts"? Or are the articles incorrect in their reporting, and therefore not "facts"?
You wrote, "Not as a stand alone action but as part of an total overhall of the tax system." Again, unless you ignore the CRS report (and others, such as that of the Joint Economic Committee), one can discontinue oil subsidies without overhauling the entire tax system, and the impact of gas prices and oil company profits would be the same.

Last sentence: I meant, of course, impact "on" gas prices.

Ron,

I should know better than to wade in to the Cape Hatteras situation, but I don't think anyone is being asked to "give up a culture."

I was down your way a couple weeks ago and there seemed to be folks on the beach, with their rigs, enjoying themselves and fishing and carrying on. True some ramps were closed, but others weren't. I saw ORVs on the beaches at Cape Lookout, which are harder to reach than those at Cape Hatteras, and I saw vehicles on the beaches at Cape Hatteras. And I saw surfers and surfcasters.

Now, before I totally ignite this issue, I'm still talking to folks and reading reports and listening to concerns about what's going on down your way. I'm not saying that everything's hunky-dory. But I also didn't see the death of a culture.

Kurt,

The CRS report only considers the impact on the amount of oil produced. It assumes if that amount doesn't change than the price won't change. I don't know what "economic theory of taxation" they are referencing. The reality is that taxes are like any other cost for the oil companies. If their taxes go up, either their net profit goes down or their prices will go up. The oil companies may produce the same amount BUT they will charge more to make up for their higher costs. The CRS report totally ignores that basic economic factor. Now if the subsidy is really on $6 million as you quote - then no it won't have any real impact - but then - it wouldn't make up for the shortfall in the Park budget either.

As to my figures on Exxon Mobil - I see nothing you provided that disputes what I said. I gave Exxon Mobils numbers and you gave a total for the five largest oil companies. Exxon paid more in taxes in 2010 than they netted and their profits were lower than they have been since 2005. By the way - their profits represented a 10% return on assets? Do you think that is unreasonable?

"The two articles I linked above explain pretty clearly how that "magic" would happen"

No they don't. If pretax profit is x and taxes are y then net income is z. x-y=z If Y goes up (higher taxes) than either z (net profit) goes down or the company will have to raise prices (or other lower costs) to make pretax profit go up. Simple accounting.

" brings up a whole slew of articles that document this."

And I show you the ExxonMobile annual report that show those undocumented articles are wrong. Or is ExxonMobile lying to the SEC?

"one can discontinue oil subsidies without overhauling the entire tax system"

One can but that is not what Ryan Boehner et al are proposing. They know better.

EC, I think your Exxon figures are off. Here's what the company's chairman, Rex Tillerson, had to say in discussing year-end 2010 revenue figures:

The full year 2010 earnings, excluding special items, were $30.5 billion, up 57% from 2009, driven by higher crude oil and natural gas realizations, stronger refining margins and record Chemical performance. Fourth quarter earnings were $9.3 billion, an increase of 53%.

Oil-equivalent production was 19% higher than the fourth quarter of 2009, driven by our
world-class assets in Qatar and our growing unconventional gas production. Capital and exploration expenditures were $32.2 billion in 2010, reflecting a record level
of investment.

The Corporation returned over $19 billion to shareholders in 2010 through dividends and
share purchases to reduce shares outstanding.”

By the way, that $30.5 billion in earnings was net, after taxes, according to the company's press release.

Doesn't sound too shabby to me.

"In a review of the five specific tax changes being advocated by Democrats, the research service also said that tightening the tax code would make A VERY SMALL DENT IN THE HUGE REVENUES of the industry and that THE PRICE OF OIL HINGED ON MANY OTHER, LARGER CONSIDERATIONS. Political unrest, market gyrations, 'macroeconomic growth trends, the value of the dollar and a host of other factors have contributed to fluctuations in the price of oil and gasoline,' the report said. 'Any effect due to changes in the tax treatment of the oil industry would be hard to separate from the changes due to other factors.'" (emphasis mine)

Seems pretty clear to me, ecbuck. This is from the Times article, but you might take a second look at both of them--or the CRS report itself (if you want to check their documentation).

Once again Kurt, nothing in those statements are contrary to what I said. Exxon earned $30.5 billion up 57% from 2009. But 2009 was down 58% from 2008. And if you do the math you will realise that 57% up doesn't recover from 58% down - not even close.

Profit
2010 30.5 billon
2009 19.3
2008 45.2
2007 40.6
2006 39.5
2005 36.1
2004 25.3

2010 wasn't a record year. In fact, you have to go back to 2004 to find a year that profits were lower.

"Doesn't sound too shabby to me."

But then, you didn't invest $300 billion in assets. That $30 billion is a 10% return on assets. Hardly a windfall.

'Any effect due to changes in the tax treatment of the oil industry
would be hard to separate from the changes due to other factors.'"
(emphasis mine)"

Hard to seperate and non-existent are two very different things. By your logic, political unrest, market gyrations, marcroenconomic trends the value of the dollar and a host of other factors wouldn't matter because they would be "hard to seperate".

Anyone that believes that tax rates don't effect pricing, employment, plant locations et al is totally naive.

Fine Ec, you win.

But let's recap: First you said Exxon made $30 million in '10, when in fact they made $30 BILLION. When that was pointed out you moved the yardsticks and said "$30 billion .... is hardly a windfall."

I bet the stockholders were pleased.

And let's not overlook that none of those years you cite showed a loss for the company. So whether it's up 57 percent one year or down 58 percent from the previous year, it's not like Exxon lost money in any of those years. Was 2009 an off year when compared to 2008? Absolutely. But what company wouldn't love to be able to report a $19.3 billion profit (which, by the way, was lower than 2010's profit, so you don't have to go all the way back to 2004 to "find a year that profits were lower.")

But that's beside the point. No one's talking about record profits or windfalls. The point you brought to this discussion much higher up is profitability. And the oil companies have demonstrated a nice track record of returning profits. If they couldn't, they wouldn't be in business.

Frankly, a 10 percent return sounds pretty darn good to me; I wish my portfolio returned that. And I'm guessing that $300 billion in assets wasn't purchased in 2010, but over the long run.

"First you said Exxon made $30 million in '10, when in fact they made $30 BILLION."

If I said "million" it was obviously a misstatement. It has always been "Billion" and I always meant "billion".

"I bet the stockholders were pleased."

And that is bad?

"And let's not overlook that none of those years you cite showed a loss for the company."

So the company should operate to generate a loss?

" But what company wouldn't love to be able to report a $19.3 billion profit"

A company that invested $300 billion. You seem so fixated on the absolute number. $19.3 billion (or $30 billion) means nothing without the context of the investment made.

"And the oil companies have demonstrated a nice track record of returning
profits. If they couldn't, they wouldn't be in business."

Welcome to America. That is the purpose of a corporation - to return a profit. If they couldn't, they wouldn't be in business and your life would be materially different - for the worse.

"I wish my portfolio returned that."

Maybe you should invest in ExxonMoble

" And I'm guessing that $300 billion in assets wasn't purchased in 2010, but over the long run."

Of course - who whould invest $300 billion annually for a $30 billion annual return? I'm sure you don't put the full value of your portfolio in anew every year but rather earn on the cummulative account.

BTW Apple has a 25.7% ROA, Texas Instruments 25%, Mastercard 24.2%, Microsoft 23.6%. Should we jump up their tax rates because they are profitable?

Fact is the average for the S&P 500 is just short of 9%. Not substantially different from the 10% ExxonMobil earned in 2010.

ecbuck,

You'd have a point if the previous sentence did not exist: ".... THAT THE PRICE OF OIL HINGED ON MANY OTHER, LARGER CONSIDERATIONS." The other, larger considerations are what the price of oil hinges on.

I just can't believe that folks are actually arguing on behalf of the oil companies profits.
Obscene.

Once again you miss the basic economic point. Whether there are larger influences is immaterial. Taxes are an influence and will impact the price of oil. It may not be the largest influence but it has an influence just like every other cost the oil companies incure.