Sunday, July 20, 2008

Gerry Calhoun Clarifies "Big Oil Tax Giveaways"

My father-in-law, Gerry Calhoun, soon to become a prolific voice in the energy debate through a blog I'm setting up for him, sometimes serves in a role for me that Will Richardson categorizes as "pushback." I don't always find myself convinced by his sometimes ultra-conservative opinions (he's a Reagan devotee and not at all in the Energy Crisis camp), but I cannot but be impressed by his long career in the oil business, from his days as an early wildcatter to his current status as a retired prospector who cannot seem to get out of the business because his innovative methods of searching for oil keep drumming up business for him.

He published, on July 9, in the Nashville, Tennessean, a brief explanation that is worth a read. I don't faithfully read the (freely delivered--"complimentary-subscribed" to bolster the lagging print newspaper's circulation stats) news stats; but people keep coming up to me and saying things like "Wow, your father-in-law is really knowledgeable." So I want to reprint it now.

Unfortunately I can't, since in an effort to sequester information for sale to protect its profits, the Tennessean has relegated it to it's fee-based "archives."

Citizen-journalist that I am, I can publish excerpts, however; and I'm going to paste in a long bit from the archive copy I purchased right here, with elipses marking parts I edit out, with the caveat that I believe our own best hope lies not in domestic drilling or even exploration, but in rapid adoption of alternative energy sources, per Al Gore's moving challenge at The article is copyrighted, per its citation below, but I share out this excerpt as a news item and in the service of education, as well as a link to the search results page where you may purchase the full article:

July 9, 2008

Government needs to encourage, not punish, domestic oil industry
By GERRY CALHOUN Tennessee Voices Frequent references in print to "tax giveaways" for Big Oil demand factual clarification. With "tax breaks," the oil industry divides into two distinct groups. Group one, the independent companies, drill 90 percent of onshore domestic wells...Group two includes companies mistakenly called "Big Oil" — ExxonMobil, Chevron, Conoco-Phillips, etc. The tax breaks so condemned in the media apply almost entirely to group one, not group two. The geological and geophysical exemption allows independents to deduct the costs of wages, seismic surveys and other techniques essential to the search for petroleum. Such practices are common to all other industries as research-and-development expenses...These costs are tax-deductible within two years of expenditure, as is the case in all other businesses. These deductions are not available for international oil companies...Two conclusions emerge from this analysis: 1) Incentives for independents to find urgently needed energy here at home do not benefit the major oil companies; and 2) the incentives offered to independent companies are shared by virtually every other domestic industry, most of which do not incur the level of risk faced every day by oil explorers. At this crucial time, why penalize the very businesses that give us a measure of energy security? ...The next Congress and president would be wise to encourage, not punish, the domestic oil industry and to realize that our international companies deserve the resources needed to sustain our future needs. As for Big Oil tax giveaways? Think, urban legend.

Copyright (c) The Tennessean. All rights reserved. Reproduced with the permission of Gannett Co., Inc. by NewsBank, inc.

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