3 Energy Stocks I Like Right Now

• Report this Comment On August 11, 2008, at 3:08 PM, statsguy wrote:

  Tim,

  you state very matter of factly that increasing tax rates on oil companies would reduce their expenditures on exploration. Perhaps that right, but I tend to think the opposite would be the case. why? $ a company spends on capex, salaries, etc alll reduce profits in the short term. Thus they would actually have more incentive to spend $ rather than save it. You might say that they'll think about the future, not now. Perhaps. But if that's the case, why didn't they invest more in the early 90's when prices were low? certainly they couldn't have thought that prices would stay low forever. Finally, companies like exxon get at least part of their profits from resources that were basically given to them by the US taxpayer. We the people own public lands and waters. Drilling in those is a privelege, not a right. When apple earns a profit it does not reduce the value of what we the people own. When exxon drills on public land it certainly reduces the value of what we collectively own.

• Report this Comment On August 12, 2008, at 10:48 AM, TMFMmbop wrote:

  Thanks for the comment, statsguy. While you're right that a higher corporate tax rate may encourage a company to spend more on SG&A in order to reduce its taxable income, the proposal I discuss above is one that would be a "profit penalty" on oil selling for more than $80 per barrel (according to the candidate's website). Now, it's not clear to me what form that profit penalty would take. I assumed it would be a simplistic tax that would say something like if you sell a barrel of oil for $120, we, the government, are going to take a share of that $40 regardless of where the oil came from. To my mind, that means you pay the same tax regardless of your extraction costs, and that would serve to reduce exploration and expenditures for any project that has higher extraction costs.

  Tim

• Report this Comment On August 12, 2008, at 5:01 PM, garyc27 wrote:

  statsguy,

  I may be mistaken but, I don't think the oil companies get to use those public lands for free. I believe there is a bidding process to obtain a lease and explore those public lands and waterways. The last time I looked the March 2008 winning bid was almost $3.2 Billion. Winning the lease does not give the company the right to drill, (as I understand the United States Code, which is hardly light reading), in order to drill the company must apply for that "privilege" and pay more fees.

  Morgan

• Report this Comment On August 12, 2008, at 10:19 PM, kwl1763 wrote:

  Morgan is correct the companies buy/lease the land and put it to it's best and highest use to use an economic term. This whole concept of only looking at the dollar amount and not the margin is amazing to me. If Exxon and Mobil had never merged and therefore the indivdual companies were making half the profit would this then be off the table? It's simply rediculous that a company be penalized for being big.

• Report this Comment On August 15, 2008, at 11:33 AM, Davosil wrote:

  First off Tim, Apple does not receive the enormous amount of subsidies and tax breaks that Big Oil does. A windfall profits tax is not a burden, it is a modest repayment of the excessive Corporate welfare Big Oil has rceived, particularly over the past 7 years!

  Secondly, although the price of a barrel has skyrocketed and we'd expect to pay more at the pump because of it, why are Big Oil PROFITS breaking records quarter after quarter?!? Clearly they are price gouging, exploiting us and manipulating our government leaders & tax laws!

  History shows clearly that if we tax Big Oil a bit more honestly & reasonably they will be just fine, thank you very much. And as we are now at Peak Oil, supply & demand alone will keep profits high, providing all the incentive Big Oil needs to keep exploring.

  FYI ... Canadian oil sands and deep water drilling are both environmentally disastrous. If we would quit listening to the spate of liars in the public arena (funded by Big Oil) and focus on efficiency and alternative energy we would be (at least close to) energy independent long before the first drop of oil would flow from the OCS or ANWR! Snap out of it folks - we're subsidizing our own destruction while all the solutions we need to stop it are at our fingertips.

• Report this Comment On August 15, 2008, at 1:51 PM, Fergus1108 wrote:

  I have a difficulty with the bland statement that "Canadian oil sands and deep water drilling are environmentally disasterous", at lease as far as the oil sands are concerned.

  I took the time and troiuble to visit both Fort Mc Murray (FMM) and the Bakken Oil region of N Dakota & Montana to see what was going on there. There is no doubt that methods in use at FMM, i.e the excavation in giant machinery and transportation to a hot water processors, puts a heavy toll on the environment due to remediation of the excavation pit, disposal of the sand and purification of the water involved.

  However I found that the authorities in Alberta were aware of that and have imposed stringent environmental requirements on the companies involved and their new licencing regulations should encourage cleaner technologies. The newer in-situ technologies that were being developed, Steam Assisted Gravity Drainage (SAGD) and THAI will obviate the need for massive excavations and disturbance of the ground and dramatically reduce the amount of water being used. I have no doubt that when they get around to licencing more oil sands development projects in Alberta and Saskatchewn and elsewhere that these and other advanced technologies will be mandated, hence it might be a good idea to hold shares in the companies developing these technologies.

  If there is a problem with the environmental performance of deepwater offshore drilling and the drilling takes place in "national waters" then it is up to the country that licences the drilling to deal with it by penalties on the drillers. If the drilling takes place in international waters then the country where the oil is landed must deal with it.

  As for the Bakken shale region, what I found there are a series of small drilling installations around a single drill hole with horozontal shafts and fractured rock which cause the oil to trickle from the shale for collection at the central point. Here again there are in-situ methods being developed, of which I like the THAI system and the proposed use of microwave to reduce the viscosity of the oil to encourage it to flow.

  With the price of oil above €100 and the extraction cost per barrel at around €40 there is plenty of room for these newer processes to be employed.

  I believe that they will be mandatory and that is why a large portion of my portfolio is concentrated in this region.

  Disclosure :

  I have shares in the following companies that work in this region

  PBG, SU, COS.UN, IMO, EPL, ERF.UN, HTE.UN, GBRC, PEP, BQI, DLLFF, ESSE as well as deepsea oil drillers RIG, DO, NE

• Report this Comment On August 15, 2008, at 2:34 PM, TMFMmbop wrote:

  Secondly, although the price of a barrel has skyrocketed and we'd expect to pay more at the pump because of it, why are Big Oil PROFITS breaking records quarter after quarter?!? Clearly they are price gouging, exploiting us and manipulating our government leaders & tax laws!

  -------

  This is a joke, right? First, due to inflation, if a company were to do the same every quarter, it would regularly post record breaking profits in absolute dollar terms. I just have no idea how you get from point A to point B here. Oil prices incresed faster than SG&A or capital spending. Hence, record profits. That doesn't mean it can't turn around just as fast if companies start spending enormously on capital projects only to see oil prices plummet.

• Report this Comment On August 15, 2008, at 2:54 PM, jempsall wrote:

  Oil companies don't use government land for free - leases are granted thru competive bidding and royalties are paid once production commences. One of the big tax breaks that oil and mining companies get is the depletion allowance - recognizing that their assests are deminished by production. Makes sense but maybe it's to generous - I don't know. Likewise terms like windfall profits are meaningless unless you use some metric such as ROI. Otherwise, windfall profits is nothing but political pandering.

• Report this Comment On August 15, 2008, at 3:29 PM, Gigarob wrote:

  Davosil, so what you are saying is that high fuel prices are strictly the fault of Big Oil companies in the U.S. They have hoodwinked The People, disrespected the Government and practice illegal "tax avoidance". Correct? I guess OPEC does not really exist in your mind. If Obama gets his way (which by the way is likely just retoric with no substance), you will witness a rebirth of the luxury tax in the form of a Big Oil tax penalty. Remember Bill Clinton's luxury tax? Guys like you thought "what a great way to penalize the rich". They should not be allowed to buy high priced items. So they didn't! It literally put industries such as boat builders out of business. Thousands of jobs were lost. Even after the luxury tax was wisely repealed these companies never fully recovered. Is that what you want? Do you really understand the long term effects and who will truly paying for the tax penalty? Could it forever criple this industry like the luxury tax did? So before jumping on Obama's band wagon, think about the riple effect and the long term penalty the We The People will end up paying in the name of "fairness".

• Report this Comment On August 16, 2008, at 10:56 AM, whirlybrd wrote:

  I remember Dennis Healy of British Labour party fame raising loud cheers when he advocated "squeezing the rich until the pips squeaked". That was decades ago. It didn't work then and it won't work in America in 2008. It might capture Barry Obama some non-informed votes, but a lot of Americans are savvy enough to be very suspicious of policies that aim to "tax the rich". Barry's big and bloated government would likely revise the definition of "rich" downwards (Like Labour did in the 70's) and tax ordinary middle class families as well. Directly or indirectly. Not to mention hobbling the economy.

  Look only to the British Labour party's mess of many decades ago. It led to economic stagnation, and Maggie Thatcher. Seems Barry and his rabid groupies never studied history.....

• Report this Comment On August 18, 2008, at 12:40 AM, msconce wrote:

  The only history we Obama groupies need to study, oh whirlybrd on you beanie cap, is the history of the last eight years. Talk about "hobbling the economy!"

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