[Cog]

Until we know the total oil production for 2018 it makes little sense to make the bet yet. Maybe after Christmas. I will send you a bong or something. Since the bet is on 2018 oil production versus 2019 oil production.

[kublikhan]

The oil and gas industry has a tax preference through intangible drilling costs and percentage depletion. The CBO estimates that those preferences amount to ~$23 billion over the next 10 years relative to the widget or any other manufacturer.

Renewable energy companies also have a $23 billion tax advantage over widget manufacturers. Not from a depletion allowance like the fossil fuel industry. But from temporary tax credits like renewable tax credits. IE, the extra money fossil fuel companies get from the depletion allowance is the same amount as renewable companies get from the temporary tax credits. Fossil fuel companies produce far greater amounts of energy however so their per MWh subsidies are far lower than renewable energy companies.

Another argument against this option is that it would alter permanent tax preferences for extractive industries but would not make any changes to temporary tax preferences for the renewable-energy sector. This report, however, does not include options to eliminate or curtail temporary tax preferences. Under current law, temporary tax preferences for the renewable-energy sector are scheduled to expire over the next several years; consequently, eliminating those preferences would not have a significant effect on deficits over the decade. Nonetheless, some temporary tax preferences are frequently extended and so resemble permanent tax preferences. For example, the tax credit for renewable-energy production is classified as temporary but has been in effect since 1992. In 2015, JCT estimated that if policymakers extended that credit so that it remained in place from 2015 to 2024, federal revenues would be reduced by $23 billion over that period. Limiting temporary tax preferences for renewable-energy sources would further reduce the distortions in the way resources are allocated between the energy sector and other industries, as well as within the energy sector. However, producing energy from renewable sources may yield wider benefits to society that a producer does not take into account, such as limiting pollution or reducing dependence on foreign governments as domestic reserves are depleted; in that case, preferential tax treatment could improve the allocation of resources.

Repeal Certain Tax Preferences for Energy and Natural Resource–Based Industries

[ROCKMAN]

aspera - Here's another problem you seem to have: believing those net cash flow charts while having no background that allows common sense to tell you that the shale plays could now have been drilled had the economics been that bad. How could any industry been losing money like that and still kept going? But perhaps you'll reply with the same unrealistic explanations so many others have offered.

As far as the EROEI of the "total global system" the same answer applies. Except now you're dealing with investment decisions made inn countless other aspects of global energy supply. And while govt and "society" policies can have some impact on that decision process all those decisions are based upon economics and not EROEI. Can you name one energy investment decision where they stated the INVESTORS rejected a project due to a low EROEI...even just one project? Or can you name one govt policy that was enacted because the GOVT decided the EROEI was to low? Or one project where "society" refused to allow a project due to a low EROEI?

[rockdoc123]

Renewable energy companies also have a $23 billion tax advantage over widget manufacturers. Not from a depletion allowance like the fossil fuel industry. But from temporary tax credits like renewable tax credits. IE, the extra money fossil fuel companies get from the depletion allowance is the same amount as renewable companies get from the temporary tax credits. Fossil fuel companies produce far greater amounts of energy however so their per MWh subsidies are far lower than renewable energy companies.

this is true, which is why it is hard to compare these industries exactly one to one. But for every positive tax treatment the oil industry gets there are similar tax treatments in other industries. The percentage depletion is an example, it was put in place so that all of the stripper wells in the US (which currently make up 20% of US production but back ten years ago were closer to 50%) would not be shut in. That depletion allowance applies to almost all natural resources (albeit at different rates). That sort of incentive isn't much different to my mind from the solar investment tax credit. And the ability to write down non-tangible drilling costs is hardly any different than being able to write down expenses elsewhere other than the speed at which it can take place. But many industries receive substantial R&D tax credits which are also treated as being a large write off in the first year of expenditure. When you start to dig down into all of this the treatment is not egregious. Could tax law for oil and gas be updated? Of course, it could as some of the provisions are 100 years old but caution needs to be applied as there would have been a complete disaster to the oil and gas industry if none of these tax treatments were in place in 2015. And the bigger question to ask is how much actual tax do the oil and gas companies pay in comparison to other industries? IN 2011, as an example EOM, CVX and COP paid combined ~$55 billion in taxes compared to the two largest automakers Ford and GM who paid a combined ~$850 MM even though profits amongst the two groups were not all that much different (CVX $27 billion, COP $17 billion and GM $27 billion).

[kublikhan]

I'll take you up on the bet pstarr. What are the terms?

[aspera]

Rockman wrote: aspera - Here's another problem you seem to have: believing those net cash flow charts while having no background that allows common sense to tell you that the shale plays could now have been drilled had the economics been that bad. How could any industry been losing money like that and still kept going? But perhaps you'll reply with the same unrealistic explanations so many others have offered.

Rockman: I'll presume that you meant to write, "...the shale plays could NOT have been drilled had the economics been that bad." Correct me if I'm wrong, but wouldn't the near-zero lending rates post-2008 recession (leading to massive release of funds into the industry) allow things to appear to balance when in fact they didn't balance? And the graphs show the actual situation?

I had understood that was the very reason why Likvern was doing his work to begin with, and why the dates in those graphs were chosen. His work seems to uncover the common sense since I know that cheap money can cause an industry to pursue behavior that, without such money, would not make sense (common, financial, or otherwise). In fact, isn't this state-of-affairs the very thing we're all waiting on: waiting to see if the post-2008 cheap money warped the playing field? Time will tell, Eh?

As far as the EROEI of the "total global system" the same answer applies. Except now you're dealing with investment decisions made inn countless other aspects of global energy supply. And while govt and "society" policies can have some impact on that decision process all those decisions are based upon economics and not EROEI. Can you name one energy investment decision where they stated the INVESTORS rejected a project due to a low EROEI...even just one project? Or can you name one govt policy that was enacted because the GOVT decided the EROEI was to low? Or one project where "society" refused to allow a project due to a low EROEI?

Rockman: This is getting tiresome, no? Briefly: I and others agree with you. EROEI has not been used by energy companies, or investors (or planner, or Wall Street, or name your own player). We concede that point (although, perhaps I'm phrasing that wrong, since we never made that claim to begin with. In fact, it would be a red herring for you to suggest otherwise. And make one wonder why such vitriol is shown toward what seems an otherwise straightforward metric.)

You might say that we're looking forward, not backyard. That we're looking for metrics that might help as biophysical limits are faced in the coming decades. And that we think EROEI is one metric to consider. It's relatively new. It's seems to emerge from a first principles approach. And although, as you have painstakingly taught us, it is not widely used by your industry, that isn't evidence that it couldn't prove useful.

[Cog]

Rock, your endless distraction within/against/from the forum would better be served if it were actually read. Gibberish

Actually Pete, you would be well served to actually read what Rockman and rockdoc123 say about the oil industry. We are lucky they spend the time to give us the benefit of their knowledge. I would listen to you if you told me how to grow a superior variety of marijuana for instance.

[ROCKMAN]

aspera - Yes, thanks for catching my careless mistake.

And now: "...but wouldn't the near-zero lending rates post-2008 recession ..." Now I understand at least one source of your confusion: complete ignorance of how the petroleum industry finances it operations. Not one company has ever financed itself at the Fed rate or anywhere close to it. It would serve you well to search out what the Fed rate actually is. And then search the rates of the bond market many shale players have used to finance their drilling. Public companies have all that data poster as per SEC regulations. Apparently you have never bothered to look up that readily available financial info and just stuck with your childish assumptions.

Sorry but I will have to cut you loose now. Nothing personal but you have proven yourself beyond redemption.

[ROCKMAN]

pstarr - It has been a while so let me remind you what I've told you before: the Rockman doesn't care if no one believes anything he posts here. I usually tag my statements with links supporting my statements. If someone doesn't follow them that's on them...not me.

I just get a kick out of seeing my thoughts on the screen. The rest doesn't really mean that much to me. Why I often don't care to respond to criticism: I don't take it personally so I don't really care.

[aspera]

Rockman wrote: Not one company has ever financed itself at the Fed rate or anywhere close to it.

Perhaps I wrote that too late in my day to be clear. But I do understand the investing process (I've been a part of it). The near-zero rates during this past decade allowed investors (not the Fed, as you seem to incorrectly think I misunderstood) using cheap money to prop up what would have just previously been otherwise financially unsupportable activities. In fact, that's the very PURPOSE of creating cheap money (it's not its ONLY purpose, but it is one purpose of manipulating interest rates).

You and I would have to have been blind and dumb during this period of cheap money to have not noticed the great many publications and posts about this very situation, and its imminent unraveling. (Yes, I know, that sets me up for someone's witty comeback).

Rockman: I can't believe that you'd argue that near-zero interest rates have had no influence on investors in your oil and gas industry, and by logical extension, the decisions made by that industry. That would be an extra-ordinary claim.

(Ghost me if you wish to; I hope doing so doesn't negatively affect your reputation here.)

[asg70]

that is there is no longer a swing state

Wrong.

[Cog]

@pstarr

I believe kublikhan up thread has accepted your bet, subject to terms. I'm still mulling it over. We don't know what total global oil production is yet for 2018.

[asg70]

That's your dumb-#ss signiture.

Get used to it. It's not changing anytime soon.

[kublikhan]

What odds are you offering? What amount are you betting? How will the bet be settled? Which source will be used to authenticate production levels?

Also, why look at monthly fluctuations? If you think this is the year of peak oil, then let's use annual production figures: 2018 vs 2019.

[marmico]

New monthly record in August 2018 of 82.764 million barrels per day.

https://www.eia.gov/totalenergy/data/mo ... ec11_5.pdf

[spike]

Why not a wager on non-OPEC oil?

[Tanada]

New monthly record in August 2018 of 82.764 million barrels per day.

https://www.eia.gov/totalenergy/data/mo ... ec11_5.pdf

The nice thing about that table is it clearly demonstrates the world supply bobbles up and down. So far we do not have world peak so after a down swing we have always hit a higher peak on the subsequent up swing. This table tells you everything you need to know about short cycle predictions. Calling peak now is truly meaningless when past stats show prior dips have extended to nearly a decade in length.

[spike]

What's illustrative, Tanada, is that some seize on every decline as 'proof' of the peak, as if there hadn't been many other bobbles, as you say. We are all biased, but many don't seem to realize that. M. Lynch

[coffeeguyzz]

Nice to see you posting, Mr. Lynch.

With your longstanding reputation as both observing and evaluating innovative trends, the potentiality of the MOF world may bear close scrutiny, particularly regarding the hydrocarbon universe.

With cutting edge samples the size of a pea containing internal surface area the size of two football fields, effective methane storage is on the horizon.

With the Iranians already claiming of success in sub 500 psi storage enabling vehicle transportation comparable to gasoline, all 50 million US households supplied with natgas could someday fuel their CNG cars/trucks right at home.

Interesting times.

[asg70]

OPEC has peaked.

Straight off today's homepage:

Saudi Arabia and Russia increase supply close to a record, at a time when traders are fretting about slowing growth in demand in emerging markets, particularly in Asia.