Electric cars are a pipe dream

[Billy T]

This {depletion allowance} is no different than cost recovery for capital investments through depreciation allowed in other industries,....Arthur

No, it is in addition to their allowed tax reduction on their capital invested.- They invested no capital to make there be oil in the ground.*

They (and solid ore miners) are uniquely privileged. For example, the farmer who does not adequately fertilize is not allowed a "soil fertility depletion" tax deduction.

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* IMHO, they should pay into a fund of compensation to benefit future generations they are stealing from. Oil is much more valuable as chemical feed stock. It should not be burned solely for its thermal energy** as there are other sources. Norway does set aside for future generation a significant part of the oil profits of Statoil, etc. At the very least US oil companies should not get this extra tax break.

** not to mention potentially very serious pollution problem that may be making the Earth completely sterile in a 1000 years or so. For more on this see: http://www.sciforums.com/showpost.php?p=1473111&postcount=2

 

[adoucette]

No, it is in addition to their allowed tax reduction on their capital invested.- They invested no capital to make there be oil in the ground.*

They (and solid ore miners) are uniquely privileged. For example, the farmer who does not adequately fertilize is not allowed a "soil fertility depletion" tax deduction.

---------------
* IMHO, they should pay into a fund of compensation to benefit future generations they are stealing from. Oil is much more valuable as chemical feed stock. It should not be burned solely for its thermal energy** as there are other sources. Norway does set aside for future generation a significant part of the oil profits of Statoil, etc. At the very least US oil companies should not get this extra tax break.

** not to mention potentially very serious pollution problem that may be making the Earth completely sterile in a 1000 years or so.

Nope.

From the IRS Pub 535:

The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. You can usually recover them through depreciation or depletion. However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense.

Note the key word OR, they can't double dip.

Nor are they stealing anything from future generations, our use of energy has allowed the development of the technological/scientific advancements which will allow future generations to capture/develop and utilize renewable energy far beyond what we can do today as well as mitigate/stop the impact of our addition of GHGs to the atmosphere.

Arthur

 

[Billy T]

... The costs of developing oil, gas, or geothermal wells are ordinarily capital expenditures. You can usually recover them through depreciation or depletion. However, you can elect to deduct intangible drilling costs (IDCs) as a current business expense.

Note the key word OR, they can't double dip. ...

Certainly drills wear out, dericks rust etc. so on their capital invested they get same treatments as others. But they are also allowed more tax reduction for the depletion of the resource, and as I noted, the farmer is not on his soil fertility depletion. He can only get a depreciation reduction on his capital invested in tractors, etc.

Explain why the farmer's soil is different from oil in the ground, if you can. If you cannot, then the oil company is getting a special tax break.

 

[Billy T]

... Nor are they stealing anything from future generations, our use of energy has allowed the development of the technological/scientific advancements ...

Oil is not the only form of energy available. If there were a steep tax on burning oil for heat instead of a tax reduction for depleting the amount of oil in the ground, then other technologies such as wind, electric cars*, etc would be much further advanced.

* recall initially many cars were electric. They would have developed better batteries, etc. Probably by now the Li-ion battery would be in use by most cars.

 

[Syzygys]

The biggest oiluser organization in the world is the Department of Defense, the US military.

Now imagine tanks and heavy military equipments running on battery power...

 

[Billy T]

... Now imagine tanks and heavy military equipments running on battery power...

If humans had progressed to the point that the US would restrict oil use to chemical feed stocks and lubricants, then probably we would have an effective world government and be done with wars between nations. Now that would be a real gift to future generations, instead of burning up the oil they will need for chemical uses.

 

[adoucette]

Certainly drills wear out, dericks rust etc. so on their capital invested they get same treatments as others. But they are also allowed more tax reduction for the depletion of the resource, and as I noted, the farmer is not on his soil fertility depletion. He can only get a depreciation reduction on his capital invested in tractors, etc.

Explain why the farmer's soil is different from oil in the ground, if you can. If you cannot, then the oil company is getting a special tax break.

Simple, with good farming practices the soil is NOT depleted, which is why our yields per acre of our crops are not falling year to year, but rising.

Arthur

 

[adoucette]

The biggest oiluser organization in the world is the Department of Defense, the US military.

Now imagine tanks and heavy military equipments running on battery power...

Not likely, since Jet fuel constitutes nearly 70 percent of DoD's petroleum product purchases

And it helps to keep it in perspective. Even with our operations in Iraq and Afghanistan, it's less than 2% of our oil use and less than 1/2% of global use.

Arthur

 

[Billy T]

Simple, with good farming practices the soil is NOT depleted, which is why our yields per acre of our crops are not falling year to year, but rising. Arthur

That is "duck and weave" reply. I did not ask for what is good farm practice but what is the difference between a farmer who does not fertilize or make good erosion control and loses top soil and the oil company. I.e. why is one allowed a special tax reduction for his resource being depleted and the other is not?

 

[adoucette]

That is "duck and weave" reply. I did not ask for what is good farm practice but what is the difference between a farmer who does not fertilize or make good erosion control and loses top soil and the oil company. I.e. why is one allowed a special tax reduction for his resource being depleted and the other is not?

No it's not Billy, we started out as a nation of farmers and land and farms were (and are still) passed from generation to generation and thus farmers are very aware of the value of preserving the quality of their soil, so why would our tax laws ever be written to presume that soil is depleted.

Farmers, like other businesses, can depreciate capital outlays on farm equipment, but the legislature, who creates the tax laws has never presumed that their farms won't be as productive next year as it was this year. Thus no depreciation schedule. Indeed, the value of farm land goes up each year.

Arthur

 

[adoucette]

Oil is not the only form of energy available. If there were a steep tax on burning oil for heat instead of a tax reduction for depleting the amount of oil in the ground, then other technologies such as wind, electric cars*, etc would be much further advanced.

Not really.

There IS a steep tax on gasoline in much of the world, including technology leaders like Germany, France, Japan, Sweden, Denmark etc, but no significant advance has come from them in the electrical car world.

In the US, because our consumption is so great, that anyone coming up with an alternative to gasoline stands to make a huge amount of money. So far next to nothing, even though great sums are spent each year in R&D.

We also subsidize the alternatives by huge amounts to get them going:

According to the Energy Information Administration, electricity production subsidies for solar got 24.34 dollars/MWh and wind got 23.37 dollars/MWh.

Which is HUGE.

So, it's NOT for lack of trying.
Big programs are going on all over the world to find an alternative to oil, and have been for decades.
It's not like the idea that we will hit a peak in production is news to anyone.

Arthur

 

[Carcano]

There IS a steep tax on gasoline in much of the world, including technology leaders like Germany, France, Japan, Sweden, Denmark etc, but no significant advance has come from them in the electrical car world.

http://www.plugincars.com/claiming-...75-miles-55-mph-without-recharging-99966.html

 

[Stoniphi]

...so why would our tax laws ever be written to presume that soil is depleted.

The great dust bowl, perhaps, as in "The Grapes of Wrath"?

 

[Billy T]

“… USDA Secretary Tom Vilsack expects a forthcoming round of federal grants to help start non-corn-based advanced biofuel plants outside the nation's traditional ethanol heartland boosting support for ethanol. … While ethanol detractors often deride the industry's subsidies, Vilsack said they are small "compared to what we do for the petroleum industry." Tariffs on imported Brazilian sugar cane also help protect the domestic ethanol industry, now almost entirely corn-based. …”
From: http://www.siouxcityjournal.com/business/local/article_58f1f434-6051-5ba4-8e37-f9b05c7d7e24.html

PS I did not search for this - it came in list of recent article talking about sugar cane alcohol I routinely get. I don't know specifically what subsidies the Sec. of Agriculture is speaking of, but now am more sure they exist and are large.

 

[F-X]

http://www.plugincars.com/claiming-...75-miles-55-mph-without-recharging-99966.html

I wonder what really drives the almost fanatical hatred that some people have for electric vehicles?

 

[adoucette]

The great dust bowl, perhaps, as in "The Grapes of Wrath"?

Sure, if that was a natural characteristic of the nation's farmland, but it's not.

It was a relatively short period (~6 years), in a relatively small area and it was made far worse than it would have been because of poor farming practices in the high praries coupled with severe drought (1934, the height of the Dust Bowl, is still the hottest year in US history), which is why it has not reoccurred in over 70 years, and the area today is quite productive.

Arthur

 

[adoucette]

http://www.plugincars.com/claiming-...75-miles-55-mph-without-recharging-99966.html

Not trying to be skeptical, but until the advance is available for purchase, it is premature to claim a big advance, still this goes along with my point, that big programs are going on all over the world to find an alternative to oil, and have been going on for decades.

The Volt and the Leaf are still the two most likely first major commercial vechicles that will achieve decent penetration into the automotive market and are likely to far surpass the volume of all previous electrical vehicles ever made.

Nissan has an annual Leaf production capacity of 50,000 units at the Oppama plant in Japan and they will start production at the company’s U.S. Smyrna plant in late 2012 and at its U.K.-based Sunderland facility in early 2013. At full ramp up, Smyrna will have an annual production capacity of 150,000 units, and Sunderland will have a capacity of 50,000 units. Or approx. 250,000 cars per year by end of 2013.

GM vehicle line director Doug Parks has said GM would be building between 10,000 and 15,000 Volts in 2011, and likely will build to the maximum capacity of 60,000 in 2012.

There are ~600 Toyota Prius Plug-in Hybrids currently in commercial trials in the U.S., Europe, and Japan and Toyota is targeting selling ~50,000 of them in 2012 (it has ~14mile electric range) to commercial users.

Arthur

 

[adoucette]

… While ethanol detractors often deride the industry's subsidies, Vilsack said they are small "compared to what we do for the petroleum industry." Tariffs on imported Brazilian sugar cane also help protect the domestic ethanol industry, now almost entirely corn-based. …”
From: http://www.siouxcityjournal.com/business/local/article_58f1f434-6051-5ba4-8e37-f9b05c7d7e24.html

PS I did not search for this - it came in list of recent article talking about sugar cane alcohol I routinely get. I don't know specifically what subsidies the Sec. of Agriculture is speaking of, but now am more sure they exist and are large.

Well they do exist, but in the scale of our petroleum energy use, they are tiny.

Federal Subsidies for Energy 2007 in Millions.

Coal 932
Refined Coal 2,370
Natural Gas and Petroleum Liquids - 2,149
Nuclear 1,267
Renewables 4,875
Electricity (Not fuel specific) 1,235

Or

Now consider that we spent $1,269 Billion on Energy that year, the total direct subsidy for all sources is ~1% ($12.8 Billion dollars)

http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/execsum.pdf

On the other hand, besides agricultural subsidies for corn of several billion there is a direct 45c per gallon subsidy for ethanol, that costs us about 6 Billion per year, far higher than we subsidize oil.

http://green.blogs.nytimes.com/2010/11/30/end-ethanol-subsidies-senators-say/

Arthur

 

[Billy T]

First footnote from post 362 of the BRIC+ news thread at http://www.sciforums.com/showpost.php?p=2671237&postcount=362 :

* A major reason why a Danish wind machine maker {world's largest} has its main production plant in China is of course to be closer to the world's main market, but also of importance is the fact each machine needs many pounds of rare metal (presidium, I think) in its permanent magnets. Because of pollution problems, China has closed all small rare Earth mines and is reducing production at some larger ones. With the growing internal demand and reduced supply, I expect in 2012, China will not export any of the badly needed Rare Earth metals. (END OF FOOTNOTE)

Probable effect of this, IMHO, is the Volt will cost about $50,000 in mid 2012. (Lithium is not a "Rare Earth" but also in tight supply. The Volt uses several pounds of Rare Earths in magnets of its various electric motors.)

 

[Billy T]

... Now consider that we spent $1,269 Billion on Energy that year, the total direct subsidy for all sources is ~1% ($12.8 Billion dollars)
http://www.eia.doe.gov/oiaf/servicerpt/subsidy2/pdf/execsum.pdf

On the other hand, besides agricultural subsidies for corn of several billion there is a direct 45c per gallon subsidy for ethanol, that costs us about 6 Billion per year, far higher than we subsidize oil.
http://green.blogs.nytimes.com/2010/11/30/end-ethanol-subsidies-senators-say/ Arthur

I assume your figures are correct, but note this is tax-payer money the US can ill afford. Especially as the aid to big oil, plus the much more important low relative to rest of the world taxes on gasoline, has given the US big cars, suburban sprawl, etc.* and slowed the development of (or really the "adoption of" well demonstrated as practical) alternatives (natural gas and sugar cane based alcohol, from tropical countries, not now producing it. Brazil no loner has any for the US as it is making plastic in 200,000 TONS / year plants.)

SUMMARY: US's stupid subsidies to big oil and corn based alcohol with tariffs blocking import of alcohol add to Joe American's taxes and increased his cost/ per mile of driving. Read more in old thread: "How DUMB can US Voters be?"

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*The main "etc." is the destruction of the local farms / food supplies. - Now the average food item on US tables travels about 1200 miles to get there. This suburban infrastructure will be unsustainable soon with much higher oil prices.