Thursday, October 4, 2012

Random Observations....

I have seen a lot of people over the years complaining about the  $4 billion in tax breaks that US oil companies reportedly receive. I saw a lot of people on FB talking about it this morning, after watching the debate between Romney and Obama. Ranting that it needs to stop, rich companies should not get subsidies, blathering on about how much it would reduce the debt.. etc.

My first thought was about what happened to oil and gas drilling in Alberta when the royalties were increased.... My partner works in that field and has done for over 20 years... and we went from living a comfortable life (I'm talking renting a normal house - doesnt even have a finished basement and is one bedroom short on what we need, so dont go picturing a huge expensive house), we were able to pay our regular everyday bills and buy groceries without too much worry - and now we are scraping by month to month because the amount of new wells being drilled and older wells kept running has cut to less than half. My partner used to work 14 hours a day taking methanol to various rig sites over the winter, and now he is lucky to even have a job site to go to, or works 6 hours tops. It's sad. We are barely making it and I have to sit and work every detail out and we are always on the verge of not being able to pay our rent. That's what some extra taxation-style moves on big companies can lead to, so be careful! We have parents at the daycare who are now working overseas in Australia because there was nothing left here and they are gone for 1-3 months at a time. Some have been down in Mexico and Texas as well, leaving the province AND country to continue working in their field, for the first time in their careers. Be careful what you wish for...

My second thought was wondering if charitable donations are ever included in that big tax break total. I don't know how it works in the states, but if the companies receive subsidies and then turn some of their profits into donations because of that, or receive direct tax breaks for charitable donations - what if that stopped if those loopholes are closed, tax breaks are cut, etc? What exactly are people asking for when they want this $4B stopped? I'm curious. I know that around here, strong companies amount for a huge percentage of donations to hospitals, school districts, health societies, etc. What if those stopped?? I'm not judging whether they should receive the subsidies or breaks, I am asking those that outright complain about it to stop and think.

My third thought was wondering what could happen to the cost of fuel - natural gas, gasoline, diesel, etc. Would the cost for consumers immediately increase by an even larger amount than we have already seen? Perhaps a user-based increase is considered 'better' than requiring everyone to pay up for these oil company tax breaks - but really, in the end, pretty much every person uses or relies on that fuel. Even if you don't drive a car and have water baseboard heating, the stores you shop at receive goods trucked in, the place you work may use gas to heat the place, etc - so what if your costs go up that way? And it's not like you would be getting more money back in your own paycheque because that money would be used for something else in the tax system, not to lower your tax rates by anything substantial. So what do the complainers think about that?

I listen to Mike Church and he would like the govt to be as bare-bones as possible in order to keep the country going (that's my wording, not his), and even he has recently pointed out that he realizes that things like airline subsidies help make it more affordable for the direct consumer such as himself. It seems to be the same for oil companies. If a business has to pay more to run, what does it do? It trims staff, cuts their hours, increases it's product price or reduces the amount of product and charges the original price, etc. We get it directly in our pockets. So would that $4B in tax breaks or subsidies be a good thing like so many seem to think? Or would it end up in $4B in increases directly at the consumer level? Just something to think about.

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