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Big Oil Tax Breaks - Annotated Bibliography Example

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The issue of big oil tax breaks has captured the news for many years and has been part of the discussions by pundits with arguments for and against alike. The issue of price of oil touches on very core of businesses across industries in manufacturing, agriculture or even service…
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Big Oil Tax Breaks
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The issue of big oil tax breaks has captured the news for many years and has been part of the discussions by pundits with arguments for and against alike. The issue of price of oil touches on very core of businesses across industries in manufacturing, agriculture or even service industries. This is because the cost of gasoline has a direct correlation to the cost of production in manufacturing and the cost of transportation in the agricultural sector. The recent presentation by the Democrats on the floor of Senate to strip billions of dollars in tax breaks for the biggest U.S. oil companies was a move seen by a section as important in helping reduce the rising gasoline prices on a backdrop of high profits by the oil companies From the 1970s there has been federal energy tax policy aimed at the oil industry. This included excise taxes for oil, tax preferences aimed at energy conservation and for the development of alternative energy. Which unfortunately has not been the case .The study seeks to carry out an analysis of the big oil tax breaks. The gasoline prices are a hot issue in the U.S. presidential campaign with a good reason because it affects the state of the economy. The bill had sought to end the breaks, worth about $24 billion over 10 years, noting oil companies were taking in record profits. The proponents of the big tax breaks argue that most oil industries make profits from overseas. The same is true of other companies in other industries like Microsoft and other blue chip silicon valley companies whose there overseas profits are not taxed . They argue that the reduction of the tax break will not reduce the cost of oil. Those against the big tax point out to the huge profits enjoyed by the oil companies over the years. These companies enjoy huge profits while the ordinary American citizens continue to pay high prices for gasoline, Lovins (2005). On the national economy those for the continued tax subsidies say cut in the tax preferences will lead to loss of employment for many Americans. They also point to the high taxes paid by these companies in the oil industry. Due to the tremendous effect oil has on the general economy of the U.S, the paper seeks to analyze the reasons behind the big oil tax breaks, the effects of big oil tax breaks on the U.S economy, the attitude of the big oil tax breaks among the business community in U.S, the attitude of the general public on the big oil tax breaks, , U.S dependence on petroleum energy and the relationship between the big oil tax , huge profits enjoyed by oil companies and the paper will also address how the big tax oil breaks has acted as an impending block to investment in alternative sources of energy. The Energy Policy has its history from way back in 1916 when the first policy was enacted. The intangible drilling cost dry hole subsidies was enacted to encourage the exploration of oil at a time when the U.S was beginning to have huge demand for oil and its products. It was felt that the use of such government fiscal instruments as tax subsidies, the energy sector would be boosted. The policies were enacted with three primary reasons. To correct problems in the energy markets, achieve social economic balance and also take into consideration the environmental factors. This was not achieved fully for the primary reason that the process was hijacked by interest groups and it became political. Annotated bibliography Amory Lovins, (2005). Ending our oil Dependency. The Ripon Forum 32(5):67 Armory Lovins a co-author of the book Winning the Oil End Game wrote the article for with the Ripon Forum and organization dedicated in carrying out studies in the on the energy sector in the U.S . in the March/April publication in article titled Ending our oil Dependency he brings out succinct points which are important for our discussion, he mentions U.S vulnerability to oil which the weakest point in the U.S economy. Armory argues that tax subsidies cannot provide the help but rather investment in smart strategies. The article not only brings out the problem of oil dependency but it provides solution on the same. By suggestion adopting business strategies as the way forward. America must kick its Oil Addiction.Lexington Herald Leader (02 April 2005). An article run on the Lexington Herald Leader 02 April 2005 titled America must kick its oil addiction make analysis of the book by winning the Oil Endgame co-authored by Amory Lavin. Bringing up important points in the book. They mention important carried by business organizations to end oil dependency. They particularly mention strategies carried out by the Richard plant in Texas which has help to cut cost after implementing the strategies in Amory’s book. The article is also important because it give direction for the future and gives the discussion and edge because it goes beyond just criticism. Richard N. Cooper (2005). Security, Foreign Affairs The article by Richard in the Foreign Affairs publication tackled security in march 2005 brings a different perspective in looking at the oil dependency. The argument is of the need to invest in alternative sources of energy since the oil dependency goes beyond jus economic problem but it touches on the future of the state of the American security. He looks at the high oil prices in the previous year 2004 and give projection for the 20 years with an expected 20 million a barrel per GDP being consumed by U. S alone. He advocates for alternative sources of energy to lift this burden, the article gives the discussion an important reason for alternative energy and what type. Energy non Policy (2005).Los Angeles Times .16 (3): 9. The article Energy non Policy by the Los Angeles Times on 16 March 2005 looks at the history of policies implemented in the oil industry. The paper mention the three back backbones of the policies implemented which are dig, drill and explore. This gives a great contribution to the discussion on the big oil breaks to get to understand the trend of the policies. The paper also mentions the issue of foreign dependency on foreign oil and also mentions the need for alternative energy. The articles so mentions the alternative energy such as ethanol. Robert McFarlane, (2004). A Declaration of Energy Independence: The Wall Street Journal; 20 (12): A15 The article by Robert A Declaration of Energy Independence in the Wall Street Journal gives the history of the oil industry from the 1970s. It ask the question on the country to have affordable energy. It mentions the Rocky Mountain Institute analysis tasked on to a analysis of the oil in the U.S by the pentagon. John Whitmore, (2004) Motoring. The Daily Telegraph. 9(2): 07. The article by John in the Daily Telegraph titled motoring give a review of the big tax in the oil industry. And talks of the need of weaning the U.S of oil which is important for the discussion.. Terence Chea, (2004 The Future of Energy Associated Press The article by Terence points to the fact that oil the tax breaks will not help reduce oil dependency. But rather it will still continue to make the economy volatile. The article mentions the recent debates in global warming and geopolitical instability due to oil This brings to the discussion the greater effects of oil dependency whether tax break swill jot assist to alleviate. Jim Jubak (2004) . Five Ways the next President can make his Lack. MSN Money 29 (10)67 The article by Jim in the MSN money, he gives a presentation of how other countries use oil in comparison to the U.S. He notes that the U.S uses twice as many barrel of oil per GDP in comparison countries like Japan Germany which use 1/3 of barrel per GDP and Germany which has twice efficiency in oil use than U.S On e of the things Jim talks about is the need for the next President is to alleviate the U,S dependency on oil. His contribution to the discussion s the view that the us president should ensure the policies are enacted to remove the tax breaks. Matthew L. Wald (2004).. Candidates Preach Oil Independence to Unconverted Public October The New York Times. 25 (10)32 Mathew gives an important contribution in the discussion by giving the history of efforts to amend the big oil tax breaks enjoyed by the oil companies. Mathew is columnist with the New York Times and the article on Candidates Preach OiL independence to unconverted public looks at the political game around the oil tax breaks. He brings out the fact that while issues of ratifying the tax breaks ha s been discussed for along since 197os but no real steps have been them. Robert Collier, (2004). Campaigns Fail to Focus on Energy. The San Francisco Chronicle. 26(10)3 Robert is a columnist with the San Francisco Chronicle. His article on 24 October 2004 gives an overview of the energy discussion surrounding the presidential campaigns. It brings forth the big oil tax break that had dominated the debates in the U.S. But also mentions the fact that the presidential campaigns failed to put energy in the center stage yet it was on he primary concern so the American people. His article is important for the discussion it gives an understanding why policy shifts have not then able to happen. Says that the presidential candidates did not provide tangible plans to solve the energy problem facing the American economy. Mark Clayton, the Christian Science Monitor (2004) Breaking Free—New Plans Would Use New Technology to Make the United States Energy Independent.10 (21): 13. Mark is an energy columnist with the Christian Science Monitor . In this article he makes a presentation on what he believes is the way forward in regard with the energy fiasco in the U.S with focus on reducing the oil dependency by the merits economy. He mentions the recent suggestions tom use carbon fiber material as way to cub on the U.S of energy. The carbon fiber he believes is the way forward and settle the oil debate. Crude Arguments—The Problem With Oil is Not Its Shortage, But Rather Its Concentration (2004)The Economist ,07 (10):78 Given that America consumes a quarter of the worlds oil but has barely 3% of its proven reserves, it will never be energy-independent until the day it stops using oil altogether. How to get there? Amory Lovins has some sharp and sensible ideas. In Winning the Oil Endgame, a new book funded partly by Americas Defence Department, this sparky guru sketches out the mix of market-based policies that he thinks will lead to a good life after oil.. David L. Chandler (2007). In 50 years, We Could Cure Our Oil Addiction New Scientist 29 (1): 28 David talks about the alternative sources of energy. By saying that the U.S will remove the dependency on oil in the next 50 years. This article is very important because the discussion a positive view of the future, and it shows I all a lost cause. The article actually points that the U.S can eliminate oil us by the year 2050. David takes a critical view of the fact that there is need to remove the tax subsidies enjoyed by the oil companies to use the money to invest in alternative. The article is important because it the gives the discussion opinion on the need to remove subsidies to invest in alternative energy. Alex Skinner, (2004). Weight Limits Needed for Better Gas Mileage The John Hopkins News-Letter 01 (10): 32 In the article Alex brings a discussion on the hybrid engines which he says is the future of the energy industry. Which he believes is important for economic, political and environment property of the U.S . His article puts a further emphasis on the need of the U.S to overcome dependency. The article is important for the discussion because it adds very important contribution on the future without need of oil, this article is very important on support to remove tax subsidies for the oil industry. Diane Carman, (2004). Some Burning Questions on Moving Beyond Fossil Fuels, The Denver Post 30(8) :15 Diane is a columnist with the Denver Post. She brings to the attention of high prices of oil at 50$ per barrel .Diane says that the future of the country being dependent on government official for the last 30 years since the debate began have been ineffective.. The article makes a critical presentation in the fact that for along time those in Washington have been unwilling to resolve e the oil fiasco. Hence no cuts on tax subsidies have been carried out. The United States Must Veer Away from Reliance on Crude (2004). The Atlanta Journal-Constitution 26 (7): 65 The journal takes a review of the book Winning the Oil Endgame, The review gives a fresh view of the matters raised in the book. Such as the need to protect the natural reserves for oil in other parts of world even those areas are undemocratic. The journal brings a very important aspect in the debate of the big tax breaks of being non partisan. This is very important in taking the agenda forward. Michael Elliott (2004).Winning the Oil Endgame 27(7)39 Michael asks a very critical question. Why is that the experts are calling are calling for energy reforms but the politicians are not. This gives the clear picture of the debate from the 1970s. The politicians have too much interesting in the debated to have a clear had on the same. Hence the refusal to cut tax subsidies to reinvest the resources on the alternative sources of energy. Making an important contribution to the debate. Jefferey Ball, (2006)The United States Must Veer Away . the Wall Streel Journal. 21 (7)76 Jefferey is a columnist with the Wall Street Journal. He makes a succinct point that the use must start spending more money on alternative energy. This is only possible if the there are cut on the oil tax subsidies, the article makes strong arguments for alternative energy. Which gives important contribution to the debate? The verdict by Jeffery simple the tax subsidies should have been cut a long time ago and the money reinvested where it is most needed in alternative energy. The issue of big oil tax breaks has captured the news for many years and has been part of the discussions by pundits with arguments for and against alike. The issue of price of oil touches on very core of businesses across industries in manufacturing, agriculture or even service industries. This is because the cost of gasoline has a direct correlation to the cost of production in manufacturing and the cost of transportation in the agricultural sector. The recent presentation by the Democrats on the floor of Senate to strip billions of dollars in tax breaks for the biggest U.S. oil companies was a move seen by a section as important in helping reduce the rising gasoline prices on a backdrop of high profits by the oil companies From 1916 there has been federal energy tax policy subsidies aimed at the oil industry. This included excise taxes for oil aimed at energy conservation and for the development of alternative energy. The aim was simple, to encourage exploration of oil and later on investment in alternative sources of energy, unfortunately this has not been the case. The tax subsidies have ensured continued profits for the oil companies and ravishing citizens with high gasoline prices on the other hand. One would wonder why the tax subsidies have not been cut since the debate began in the 1970s with a majority of Americans against maintenance of the subsidies. The proponents of the big tax breaks argue that most oil industries make profits from overseas. The same is true of other companies in other industries like Microsoft and other blue chip Silicon Valley companies who their overseas profits are not taxed. They argue that the reduction of the tax break will not lead to the reduction in the cost of oil. There are obvious reasons why the maintenance of these tax subsidies does not make sense. One of these is the huge profits enjoyed by the oil companies over the years. These companies enjoy huge profits while the ordinary American citizens continue to pay high prices for gasoline, Lovins (2005). Another important reason is that the tax breaks have acted as impediments to investment in alternative sources of energy Cooper (2005). The billion of shillings enjoyed as tax subsidies could be used to lift the nation from oil dependency by redirecting the funds in research for alternative energy. This has been the focal point by majority of Americans. The presentation of the bill on the cut of the tax subsidies on the floor of Senate is a clear sign of the view that a good number of Americans are not amused by the huge profits enjoyed by oil industries yet gasoline prices are still very high.. The bill had sought to end the breaks, worth about $24 billion over 10 years, noting oil companies were taking in record profits Whitmore (2004). The oil companies want the subsidies retained saying that they make profits from overseas. Pointing to the fact that companies in other industries which also make huge profits abroad like Microsoft the profits made abroad are not subject to taxation. On the national economy they argue that cut on the tax subsidies will lead to loss of employment for many Americans because these companies will opt to relocate their headquarters abroad. They also point to the high taxes paid by these companies that help sustain the American economy. The Energy Information Agency (EIA) a lobby group based in Washington showed that the oil companies in the period 1981-2008 paid 1.9 trillion dollars in taxes an amount it said was more than 40% of all the industry’s combined profits Wall street Journal (2004). So in case they decide to relocate their headquarters abroad, the U.S will lose a lot of money it terms of revenue received from these companies. Robert Collier, (2004) say that the main reason why the oil companies still continue to enjoy big tax cuts is because they fund politicians in Washington. It is the feeling that these companies can stand on their own without the help of the tax subsidies, the rising gas prices from $0.30 to $ 3.92 per gallon in recent times is clear indication of the hard times facing the American People, David (2007). The feeling of the American citizens on the high prices of oil is that they blame the oil companies that enjoy huge profits. According to a poll by the Wall Street Journal most Americans say that the volatility in gasoline prices is because oil companies make too much profit. The American people feel that they are struggling but the oil companies are not. But what should worry more according to the Wall street Journal (2004) is that fact the high gasoline prices will slow down the economy. This high prices touches across all the industries. This is also worrying with the recent down turn and the economy is still struggling to find its feet. The oil companies have received tax breaks amounting to 23 billion dollars. The debate on the oil tax breaks has always received twists because of the influence by many interest groups. The Democrats move to cut down the tax benefits of the big five oil companies to raise $40 billion revenues was seen by many as not only genuine interest to save the masses but selfish interest Carman, (2004). This is because the Republicans have often accused President Obama of handling the oil pries problem poorly. So the bill was in a move to show masses that the oil companies getting big profits are to blame and the Republicans who defend them due to the campaign they benefit from them On the other hand oil companies like Exxon Mobil argue that the tax cuts come in aid in research of new oil fields which require large sums of money. So this is equivalent to research and development costs incurred by engineering companies to come up with the next big gadget. Yet critics argue the tax breaks are still unjustified David (2007). This is because expenses incurred by companies in the process of developing the next big should not be written immediately but instead it should be gradual. But oil companies argue that pay taxes in more than one country since they operate globally. Oil tax subsidies first placed to allow for exploration of oil before the 1970s, David (2007).When oil companies started to enjoy huge profits while the citizens suffered from huge oil prices questions began to be asked. Few individuals and companies gained a lot of profits yet the citizens continue to suffer, this raised the debate as to the essence of the tax breaks. The recent debate on the floor of the senate was a clear sign that the tax has more to it than the eye can see. Lots of money has been spent by oil companies in campaigns of the same people who defend it against the removal of the subsidies raises more questions than answers. It was until 1970s when questions began to be raised about the oil companies’ huge profits in relation with 1916 tax subsidies for intangible drilling cost on dry holes and 1932 depletion cost allowance while Americans were not enjoying any benefits from the enacted policies. This saw policies enacted in the 1970s for tax preference for energy convertion, exploration of alternative sources of energy and the commercialization of the technologies production such alternative energy. This included solar, wind, biomass and non conventional fossils Carman, (2004). It is clear that the huge tax break on oil is a big impediment for significant strides on development of alternative sources of energy. The debate on the huge tax breaks enjoyed by the oil companies that began in the 1970s does not seem to end soon. The same arguments are always recycled to keep the oil breaks. That the huge profits enjoyed by these companies are foreign profits, cut on oil breaks will lead to this companies moving their headquarters oversees where they are not harassed and vilified. This in return will lead to loss of jobs and revenue to the government due to loss of taxes that these companies remit to government. What is evident from observations made in the earlier part of this paper is that the gains to be achieved after cuts on the oil tax subsidies far outweighs maintenance of these subsidies. With these subsidies maintained the future of America will remain uncertain in terms of economy as well as its security because of oil dependency. It is only a shame that Washington which should provide direction has failed to do that in the last 30 years and the failure by the bill in the Senate means that it might still be there for another three decades. REFERENCES Amory Lovins, (2005). Ending our oil Dependency. The Ripon Forum 32(5):67 America must kick its Oil Addiction.Lexington Herald Leader (02 April 2005). Energy non Policy (2005).Los Angeles Times .16 (3): 9. Robert McFarlane, (2004). A Declaration of Energy Independence: The Wall Street Journal; 20 (12): A15 John Whitmore, (2004) Motoring. The Daily Telegraph. 9(2): 07. Terence Chea, (2004 The Future of Energy Associated Press Jim Jubak (2004) . Five Ways the next President can make his Lack. MSN Money 29 (10)67 Matthew L. Wald (2004).. Candidates Preach Oil Independence to Unconverted Public October The New York Times. 25 (10)32 Robert Collier, (2004). Campaigns Fail to Focus on Energy. The San Francisco Chronicle. 26(10)3 Crude Arguments—The Problem With Oil is Not Its Shortage, But Rather Its Concentration (2004)The Economist ,07 (10):78 Read More
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