Alaska Disasta! Conoco Net Income Looks Grim…
Forgive me a second while I try to calm down. I… it’s…. I’m sorry. Just… just give me a second.
(You kindly wait while I compose myself)
You know how Governor Parnell tells us that we have to give $2 billion back to the oil companies every year? It’s not that he really wants to, but you know, they have to make a living. They invest a lot in our state, and we need to show a little gratitude. We can’t be all greedy and hog it all to ourselves, or they will just be lose their incentive, and will be forced to take the show elsewhere in the world, and then we’ll be left here with a dead economy. We have to “keep Alaska competitive” as the Parnell saying goes.
And this is why we’re all in such a panic. Now, with this latest news, I… I just don’t know how the oil companies are going to survive here. The “Big Three” (Conoco, BP and Exxon) are barely making it. The new reporting numbers are out for ConocoPhillips, and their net income from Alaska for the first three quarters of the year is only… only… $1.5 billion.
~Sad violin
Times are bad, ladies and gentlemen. And Sean Parnell knows this. This is why it’s so terribly important that his bill giving $2billion a year back to the oil companies is passed. Otherwise, how can they possibly stay? I mean who needs schools, and roads, and bridges and all that stuff. We need to do a little triage here, and put that money where it’s really needed for Alaskans. In the meantime, all we can do is hope and pray that Conoco manages to pull it out in the fourth quarter so they can justify staying in this God-forsaken, anti-business hell hole.
If Alaska can afford to give $2 billion a year to oil companies, why are any federal tax dollars going to Alaska? There are plenty of people in Michigan who could use some help.
The Libyan conflict only cost 1 billion……..
Mo,
Thanks for the link to Bob Cesca’s blog. He makes a great case for the OWS crowd and
against the common, RWNJ’s that blather daily on talk radio.
DD
Maybe we could all get together and hold a bake sale for the poor starving oil companies.
Only if we can bake some of those wacky weed brownies, slip! SP lite has got to be munching them up there in Juneau.
Very relevant essay today in Bob Cesca’s blog:
http://bobcesca.com/blog-archives/2011/10/occupy-wall-street-isnt-anti-corporation.html
“The OWS movement, like the American people, isn’t anti-corporate, it’s anti-corporate crime. … accountability against the corporations that poison our water or exacerbate unemployment or trigger a deep recession.”
What part of “insufficiently obscene profit” don’t you understand?
/WC
Visited your blog today, WC. Will return to read your novella when I have a little more time. Enjoyed my stay, and always enjoy a good bird photo. Btw, thanks for your post on lawyers. Recently, I hired an attorney to assist me in an unresolved family matter, and it’s a huge weight off my narrow shoulders.
I like WC’s blog very much as well. I read it every day but I am unable to comment there for some reason. In any event, it is pleasing to see him here and I will say that his bird photography is a source of much enjoyment and interest. His perspective is always interesting and informative. To his question here I would reply – avarice knows no bounds.
Let’s not overlook today’s news on Exxon Mobil’s QUARTERLY profit:
http://www.huffingtonpost.com/2011/10/27/exxon-mobil-income-leaps-41-percent-higher-prices_n_1034691.html?1319719799
“Exxon Mobil Earns $10.33 Billion As Income Leaps 41 Percent”
Heck, we might as well throw in Shell, also, too, and as well:
http://www.huffingtonpost.com/2011/10/27/shell-posts-nearly-7-bill_n_1034643.html
“Shell Posts Nearly $7 Billion Profit In Third Quarter 2011”
Yes, their risks and their profits are huge and their executives make obscene amounts of money.
Now for the reality check: If they can make more money somewhere else, they have a fiduciary responsibility to their shareholders to do so. And they will. So, it isn’t a question of “Are they making a huge profit here?” but “Could they make as much or more somewhere else with the same or less risk?”
Where is the good, solid analysis that compares what they can make here to what they can make elsewhere, and explores what incentives actually work as intended? I’ve heard lots of outrage and posturing, and seen lots of illogical arguments, but have not yet seen an analysis that is well documented, well thought out, and that leaves the hype and politics out.
valley_independent –
What you are asking for is probably not possible unless oil companies have radically changed their policies respecting the reporting of cost related specifics. And even if that were so, the whole analysis you call for is largely rendered moot by the fact that crude oil and products made from it are traded in unregulated commodities markets so there is a “profit factor” involved that has nothing to do with costs or markets and is purely a result of massive speculation. You may or may not be aware but during the price spike in crude in 2008 Goldman Sachs traded futures for more than 800 million barrells of oil. Can you think of any plausible reason why Goldman Sachs would have a ‘need’ for that quantity of oil over a period of a few months other than manipulating the futures market to make large profits from pushing paper?
As to the red herring of fiduciary responsibility to maximize profits, I recall how there was a hew and cry raised when the too big to fail banks that had just been bailed out by massive amounts of taxpayer money were “contractually obligated” to pay gigantic bonuses to people whose reckless gambling had crashed the world economy. Yet now we have an amazingly homogeneous movement on the part of state governments to void contracts with unionized state employees, to take away their rights to bargain collectively, and to loot the pension funds to which they have contributed and for which they sacrificed past wage increases, benefits etc. Their contracts do not appear to be as sacrosanct as the ones written to the gamblers on wall street. The other reason that I call the profit claim a red herring is that there is no silent subclause that states “by any means available”.
Finally, the fact that volume of production is falling on the north slope is a natural consequence of the inherent properties of oil reservoirs. Under the best circumstances, and with considerable effort it is generally accepted that the maximum that can be produced from any given reservoir is in the neighborhood of 70% of its reserves, and it is often lower. It becomes progressively more expensive to produce residual oil so it is in the interest of the oil companies to delay enhanced oil recovery methods for as long as possible on the assumption that the price will increase over time. For companies where a good prospect sees a lead time of 10 to 12 years to come into production such strategies are unsurprising. It is safe to assume that primary recovery is coming to an end in many of the N. slope fields and that secondary recovery (usually water flooding) is in progress. New production is going to be more difficult to find and slower to come on line so revenues for both the oil companies and the state will continue to decline. At some time in the future, to keep the pipeline viable the companies will begin EOR and ship more oil for a time but ultimately the resources will fall below the levels needed to sustain the pipeline and that will be the end of the AK oil industry. That time is probably 50 years in the future but it is foreseeable and AK should take steps now to make the adjustment.
Short version, I don’t think your reality check is realistic at all.
Well put…….
Hard core Alaskans are being had by a demagogic giant, “Big Oil”. Rarely has more fraudulent lies been foisted on a people, yet these are persistently repeated and widely believed, mainly because so many want to believe them.
But you ask: How do Alaska’s oil tax policies compare to those of other oil producing countries? Doubt if even this will convince you but please note: Sources for this were: Wall Street Journal, Chevron, Business Week, International oil tax consultant- Daniel Johnston, oil economist-Roger Marks and Bloomberg Business and Financial News.
http://citizens4ethics.com/site/wp-content/uploads/2011/08/Iraqi-Clips-Petroleum-News-ADN.pdf
Do you have anything comparing costs of production, including, but not limited to, wages and regulatory compliance, for those countries and a good comparison of same plus taxes within the US? It’s not just the tax issue that we need to look at, so if you have some other helpful resources, please share those, too. Thank you for your assistance.
Well, it appears to me anyway, that the “tax/royalty issue” reveals quite a bit. There are many variables and nuances connected with cost of oil production, depending upon locale and the players involved. Fortunate for the lay person observer is that expenses of production and transportation eventually manifest in the percentage of net revenue kept by governments.
Why would you expect politics to be left out? Or posturing? Why would you expect any aspect of power to be set aside? The decision could just as easily be, does a particular choice elevate the power of the proposer and his coalition inside the company.
Yep, might be totally willing to pay for position ……… they certainly have the money.
Exxon’s profits are up 41%. They especially need Sean ‘take paradise and put up a parking lot’ Parnell’s largess.
Isn’t that like, I don’t know, Socialism for Conoco?
Isn’t socialism a bad bad thing?
Or is itonly bad when republicans say it is?
Bingo.
*snickers*
Don’t we know it!
Well, if everything old is new again, the robber barons are back.
Oh horrors! Parnell is right: give them loads of money so they can… hmmm…sit on their profits like all of the rest of the corporations. (gag)
Shall we light a candle for the Conoco Philips executives?
This is an emergency. We can’t wait for the Legislature to take action. We should each go downtown today and leave $100 at the front door of the Conoco Phillips building.
HMmmm..well then..my portion might be..a small one dollar bill..and a Large Pile.
Just don’t forget to set the bill on fire …ring the bell and RUN!