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Taxes - Oil & Shale

 
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PostPosted: Sat Oct 04, 2014 12:13 am    Post subject: Taxes - Oil & Shale Reply with quote

PeakTrader:

The purpose of cutting taxes is not to raise tax revenue.

It’s to raise GDP.

As GDP rises, tax rates are low.

When the economy fully recovers, then tax rates can be raised, to maintain sustainable growth.

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Let’s be honest, the Obama-Reid-Pelosi leadership (with a 60-vote Senate) in the first two years didn’t achieve a recovery after the severe recession.

Perhaps, the best they did was put a floor on the economy.

The U.S. government added over $5 trillion in debt in five years and all we got was a deep depression.

We should’ve closed the output gap years ago, with the Fed completing a tightening cycle.

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Optimism is good.

However, there’s been a lot of dishonesty or denial, while rigid ideologues put more lipstick on this pig.

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Baffling, where did I say interest rates should be raised in a recession?

We didn’t have a recovery and didn’t tighten the money supply.

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Oil is less of a constraint on growth than some people believe.

When oil prices rise, supply, technology, efficiency, and conservation increase, to lower oil prices.

Also, U.S. production has become lighter, e.g. through more services and high tech.

The energy savings on the production side was shifted to the consumption side, e.g. bigger houses and autos.

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Steven Kopits, reality contradicts your conclusion about oil.

The global economy has been expanding and oil prices haven’t been rising.

If we had a V-shaped recovery, oil prices would rise and then fall.

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Every recession is different.

That’s why a substantial tax cut was even more important in the last recession.

I’ve explained it before (e.g. household debt and trade deficits).

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Soencer:

Interestingly, if you look at the industrial production data it shows that US energy production has outpaced non-energy production.

That was largely because energy production barely fell during the recession.

If you compare industrial production of energy — that includes oil — since the 2009 recession bottom however, energy production has grown less than non-energy production. This suggest that the shale oil boom has made a much smaller contribution to growth in this recovery than is generally believed.

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PeakTrader:

Spencer, “Peak Oil,” facilitated adjustments, e.g. energy efficiency.

Energy is still needed to produce output and maintain living standards.

The U.S. imported less oil, which narrowed trade deficits, raising GDP.

The production of shale oil, with multiplier effects, also raised GDP.

Moreover, consumers spent less on gasoline (than otherwise) and more on other products.

Oil prices rose, from $10 a barrel in the late ’90s to $150 a barrel in the mid ’00s, fell in the recession, rose in the initial stages of the recovery, and then basically stabilized.

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[How to deal with falling oil prices with end of fracking boom]:

Perhaps, the U.S. should expand capacity for the Strategic Petroleum Reserve and buy oil when it’s well below $100 a barrel.

“The Strategic Petroleum Reserve (SPR) has the capacity to hold up to 727 million barrels. As of October 2014, the inventory was 691.0 million barrels. This equates to about 37 days of oil at 2013 daily U.S. consumption levels of 18.5 million barrels per day or 70 days at 2013 daily U.S. import levels of 9.9 million barrels per day.

At $102 a barrel as of February 2012, the SPR holds over $26.7 billion in sweet crude and approximately $37.7 billion in sour crude (assuming a $15/barrel discount for sulfur content).

The total value of the crude in the SPR is approximately $64.5 billion. The price paid for the oil is $20.1 billion (an average of $28.42 per barrel).”

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Bush 43 asked Congress to double the capacity of the Strategic Petroleum Reserve (of course, that didn’t happen).

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“Vehicle Miles Traveled: A Structural Change in Our Behavior:”

http://www.advisorperspectives.com/dshort/updates/DOT-Miles-Driven.php

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Arctic oil (Kara Sea) – From articles:

“Rosneft said it is currently exploring three areas in the Kara Sea that are believed to contain 87 billion barrels of oil. It said the Kara area’s total reserves could rival those of Saudi Arabia.”

“…a vast pool of crude was discovered in the Kara Sea region of the Arctic Ocean, showing the region has the potential to become one of the world’s most important crude-producing areas, arguably bigger than the Gulf Of Mexico.”

“It exceeded our expectations,” Sechin said in an interview. This discovery is of “exceptional significance in showing the presence of hydrocarbons in the Arctic.”

The development of Arctic oil reserves, an undertaking that will cost hundreds of billions of dollars and take decades, is one of Putin’s grandest ambitions. As Russia’s existing fields in Siberia run dry, the country needs to develop new reserves as it vies with the U.S. to be the world’s largest oil and gas producer.

Output from the Kara Sea field could begin within five to seven years, Sechin said, adding the field discovered today would be named “Victory.””

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