Cog wrote: To single out an industry and not allow capital losses and depreciation, where it is allowed in all other industries, is social authoritarianism. The left is all about "fairness" unless it's a particular ox they want to gore.
Cog and Rock123 and others: It is hard to believe that the oil and gas industry is being treated identically to all other industries. Why, it would be as if the photovoltaic industry had a "solar photon depletion allowance." Or the solar thermal industry had... well you get the idea.
Now you might think solar depreciation is ludicrous. After all, one might say, the oil won't last as long as the sun and thus should be treated differently (although that logic breaks down: how long must it last? how far away does it have to be? Answering such questions, if it can't be done using first principles, is done by a political process). Consider that such an
allowance is apparently allowed for geothermal deposits of hot water or hot rocks. And I imagine the Earth's core will generate heat far longer than there will be recoverable oil in the crust. Rarely have I seen the words "geothermal" and "scarce/depletable" in the same sentence. Quite a muddle.
If economics is supposed to be blind to such preferential treatment, then this uneven state-of-affairs must be the result of a political process.
POLICY/POLITICS: Would there not be reason to make dear a finite resource? Perhaps done through economic policy written at that "higher social system" level. And using the very same economics that O-S says solves such problems? Economics
can treat the notion of scarcity in a way quite differently from the non-scarce;
but it doesn't always do that, it's a choice we make. The choice as to
what resource, what allowance, and how it is claimed are all the result of a political process. And that process occurs at a level quite far removed from the resource industry being regulated.
BIOLOGICAL DEPLETION: It's interesting that two biological (and presumably renewable resources) are allowed a depletion allowance:
Timber and Mollusk shells. This provides further support for the notion that the decision as to what gets
a depreciation allowance is the result of a political process in this country (not in "
...Venezuela, Mexico and Libya.."). Not all biological or renewable resources are currently allowed such a depletion allowance. Thus Cog's claim about,
"is allowed in all other industries..." is not correct.
What we might wish was a purely thermodynamic issue, or a purely economic issue, seems instead to be a process that combines thermo, econ, policy-making, etc. in a dynamic social decision-making process. I'd like that process to be infused with a little more first-principle-based science. But I accept that it will also always be messy; an adaptive muddling through.
Oceans rise, empires fall. - Apocalypse Lullaby, Wailin' Jennys.
Plant a garden. Soon.