Fracking likely caused series of Ohio quakes, officials say

[Bad_Daddy 2,209]

http://www.timesrecordnews.com/news/2012/mar/18/oil-companies-pay-more-taxes-than-other/

Mills: Oil companies pay more taxes than other industries

Alex Mills

Posted March 18, 2012 at midnight

President Obama has made increasing taxes on the oil industry a central part of budget for the last three years.

An interesting editorial appeared in the March 14 issue of The Wall Street Journal titled "Big Oil, Bigger Taxes."

The WSJ stated the oil "industry is subsidizing the government."

The Energy Information Administration reports that the oil industry paid some $35.7 billion in corporate income taxes in 2009, the latest year figures are available.

"That alone is about 10 percent of nondefense discretionary spending — and it would cover a lot of Solyndras," the editorial stated. "All told, the government rakes in $86 million from oil and gas every day — far more than from any other business."

Obama has scolded the oil industry for making a profit and not paying its "fair share."

"Here's a staggering fact: The Tax Foundation estimates that, between 1981 and 2008, oil and gas companies sent more dollars to Washington and the state capitols than they earned in profits for shareholders," it stated.

The editorial pointed out that Exxon Mobil paid about $59 billion in total U.S. taxes for the five years before 2010 and earned $40.5 billion, a difference of about $20 billion.

The effective tax rate of oil and gas companies is 41.1 percent for 2010 (taxes as a share of net income) compared to 26.5 percent for other manufacturers on the S&P Industrial index.

"For comparison, nuclear power comes in at minus -99.5 percent, wind at minus -163.8 percent and solar thermal at minus -244.7 percent — and that's before the Obama-Pelosi stimulus. In other words, the taxpayer loses more than each of these power sources produces."

It's important to note that Obama throws around the word "subsidies" loosely when the topic comes to energy taxation. The "subsidies" in the tax code for oil and gas companies are not handouts. No one receives a check from the federal government as does wind and solar. The oil and gas "subsidies" are actually the ability to speed up deductions for drilling expenses in the case of a dry hole rather than having to capitalize the expense over a period of years.

On a final note, in Texas the oil and gas industry paid $8.5 billion in taxes to state and local governments and in royalties for fiscal 2009.

Additionally, oil and gas companies paid an average of $27,000 per employee in state and local taxes and royalties. By comparison, other private sector companies averaged only $4,800 per job.

http://en.wikipedia.org/wiki/Fuel_tax

Fuel tax

A fuel tax (also known as a petrol, gasoline or gas tax, or as a fuel duty) is an excise tax imposed on the sale of fuel. In most countries the fuel tax is imposed on fuels which are intended for transportation. Fuels used to power agricultural vehicles, and/or home heating oil which is similar to diesel are taxed at a different, usually lower, rate.

In the United States, the fuel tax receipts are often dedicated or hypothecated to transportation projects so that the fuel tax is considered by many a user fee. In other countries, the fuel tax is a source of general revenue.

United States

State Diesel Taxes, April 2009

Fuel taxes in the United States vary by state. The United States federal excise tax on gasoline, as of February 2011, is 18.4 cents per gallon (4.86 ¢/L) and 24.4 cents per gallon (6.45 ¢/L) for diesel fuel. In January 2011, motor gasoline taxes averaged 48.1 cents per gallon (12.71 ¢/L) and diesel fuel taxes averaged 53.1 cents per gallon (14.03 ¢/L).[9] For the first quarter of 2009, the mean state gasoline tax is 27.2 cents per US gallon, plus 18.4 cents per US gallon federal tax making the total 45.6 cents per US gallon (12.0 ¢/L). For diesel, the mean state tax is 26.6 cents per US gallon plus an additional 24.4 cents per US gallon federal tax making the total 50.8 cents US per gallon (13.4 ¢/L).[10] There are also a few states and municipalities that charge sales tax on top of the excise taxes and the retail price.

The states that have a tax on their fuel, impose a tax on commercial drivers that travel through their state, even if the fuel is not purchased in that state. The paper work for this taxed on a quarterly basis and filed somewhat like a federal tax return that is done yearly. Most commercial truck drivers have an agent fill out the paper work. The driver calls in their information, the agent figures out how much tax should be paid to each state, then the agent faxes the forms to the driver and they are required to carry the papers with them along with their travel log books.

[Bad_Daddy 2,209]

http://www.pothole.info/2010/05/seven-things-you-should-know-about-gas-taxes-in-2010/

SEVEN THINGS YOU SHOULD KNOW ABOUT GAS TAXES IN 2010

American highway construction and repair is dependent on the Highway Trust Fund, which is largely generated through taxes on auto and truck fuel consumption. The tax has risen significantly in the past 30 years, but fuel taxes imposed by the Federal government date back to the Depression era.

This is a primer on how the gas tax works, where the money is spent, how gas taxes were used to reduce budget deficits – and may need to be reconfigured in the future as vehicles adopt ever more stringent fuel efficiency standards.

1. WHAT IS THE CURRENT GAS TAX PER GALLON?

Gas taxes vary by state and county, but the Federal Highway Motor Fuel tax is applied to every drop of gas sold in the U.S., and is currently at 18.4 cents per gallon. Annual consumption is approximately 132,649,310,000 gallons/year, putting revenues for the Highway Trust Fund (the primary source for highway and bridge building and maintenance) at more than $24.4 billion (as detailed below, there are other sources of this funding as well).

2. WHY DO GAS TAXES DIFFER FROM STATE TO STATE AND EVEN COUNTY TO COUNTY?

In addition to the federal gas tax, states and counties can raise additional revenues for their own use with extra taxes on gas.

The mean state gasoline tax was 29.3 cents per gallon in the first quarter of 2010, plus the federal 18.4 cents per gallon tax, bringing the mean total to 47.7 cents per gallon. State variances on gasoline taxes are significant: Following are the top ten and bottom ten states by the total of federal plus state taxes paid per gallon:

State Taxes/gallon

Top Ten

California 67.0

Hawaii 63.5

New York 63.3

Connecticut 61.0

Illinois 58.8

Washington 55.9

Michigan 54.2

Indiana 53.2

Florida 52.8

Nevada 51.5

Bottom Ten

Virginia 38.0

Arizona 37.4

New Mexico 37.2

Mississippi 37.2

Missouri 35.7

Oklahoma 35.4

South Carolina 35.2

New Jersey 32.9

Wyoming 32.4

Alaska 26.4

Taxes on diesel fuel averages higher: the mean state tax was 26.6 cents per gallon plus 24.4 cents per gallon for the federal tax (a total of 50.8 cents per gallon). The variable tax rates on diesel roughly corresponds with low and high states list for gasoline, with notable differences between regions:

Region Taxes/gallon

West 61.5

Mid Atlantic 58.3

Northeast 55.6

Midwest 52.5

Mountain 46.0

South 44.7

3. HOW ARE GAS TAX REVENUES USED?

Revenues from fuel taxes are deposited into the Highway Trust Fund, which in turn is distributed to several accounts. Percentages to those accounts vary by fuel type, but the majority (approximately 83 to 87 percent) is deposited into the Highway Trust Fund account. This is used on road construction and maintenance. Most of the remainder – approximately 11 to 15 percent – goes to the Mass Transit Account. About 0.1 cents per gallon goes to the Leaking Underground Storage Tank Trust Fund. (Believe it or not, this is referred to as the LUST Trust Fund by the Federal Highway Administration.)

The specific oversight of federal surface transportation funding is SAFETEA-LU, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A legacy for Users. This was signed into law in 2005 by President George W. Bush. Features of SAFETEA-LU are:

Funding addresses safety, traffic congestion reduction, improved freight movement efficiency, increased intermodal connectivity and environmental protection.

Focus on transportation matters of national significance, while allowing state and local transportation decision making where appropriate. This includes permission to states (singly or in a compact of two more more) to increase collection of tolls on Interstate highways, bridges and tunnels.

The Equity Bonus Program ensures that states are guaranteed 90.5 percent of funds (2005-2007) and now 92 percent (since 2008) are returned to the states in which they are generated.

The nature of the bill is that it needs frequent reauthorization. It is currently approved through the end of 2010.

4. ARE THERE OTHER SOURCES OF FUNDS FOR THE HIGHWAY TRUST FUND?

Under current laws, the tax on gasoline is only one part of what funds the Federal Highway Trust Fund. Other sources:

Fuel/non-fuel sources Tax rate Highway allocation Mass transit allocation

Gasoline 18.4 15.44 2.86*

Gasohol 18.4 15.44 2.86*

Liquefied petroleum gas 18.3 16.7 2.13

M85 (85% methanol) 9.25 7.72 1.43

Compressed natural gas 48.54** 38.83 9.71

*0.1 cents/gallon of gasoline, gasohol, diesel fuel and M85 goes to the Leaking Underground Storage Tank Trust Fund.

** Cents per thousand cubic feet

Non-fuel sources Tax rates (all goes to the HTF)

Tires No tax under 3,500 pound load capacity 9.45 cents per 10 pounds capacity over 3,500

Truck/trailer sales 12 percent of sales price (trucks over 33,000 pounds and trailers over 26,000)

Heavy vehicle use Trucks (55,000-75,000 pounds): $100 plus $22/1000 pounds over 55,000 pounds; over 75,000 pounds = $550 annually

5. WHAT IS AMERICA’S HISTORY WITH GAS TAXES?

The first gas tax in American history was imposed by President Herbert Hoover, in 1931 (one cent per gallon of gas and fuel oil) as part of an overall deficit reduction bill that also included taxes on amusements, firearms, cameras, furs, electricity, telephones, jewelry, refrigerators and car tires, along with increases in estate, capital gains and corporate taxes. It was not explicitly imposed to fund road building and repair, as auto ownership was limited at the time. As is evident by the other items taxed, this was essentially a luxury fee.

This tax on gas was meant to be temporary, set to expire at the end of June 1933. But by then, President Franklin Roosevelt had passed the National Industrial Recovery Act of 1933, which both extended and increased the tax to 1.5 cents per gallon (the half-cent increase was rescinded a year later). The tax continued to be considered temporary for ten years, until 1941, when the tax was made permanent and increased again to 1.5 cents per gallon as an anticipatory build-up to World War II.

After World War II, the tax was challenged by the auto, oil and travel industries. States also claimed that if anyone was to tax gas (and use the proceeds), it should be them. A state governors’ conference argued for elimination of the federal gas tax and instead allow the states to charge the tax by an equal amount. America’s involvement in the Korean War, beginning in 1951, overrode that idea and extended the federal tax until 1954.

President Dwight Eisenhower fought to extend the tax renewal each of the first four years of his presidency, long enough for the tax to become part of the growing movement for a national interstate highway system. Debate in hearings before Congress that preceded passage of the Federal-Aid Highway Act of 1956 reveals how control of the tax was finally ceded to the federal government by the states.

“The approach here is simply a realization of the practical political facts of life that the Government is not going to get out of that gas-tax field. So it is a question of relaxing and enjoying it, I think, rather than changing our minds.”

Said Wisconsin Governor Walter J. Kohler, Jr. in that hearing:

“I would like to point out that, so far as I know, the governors still, if polled, would adhere to their position that the Federal Government should get out of the gas-tax field and leave that to the States.

“The approach here is simply a realization of the practical political facts of life that the Government is not going to get out of that gas-tax field. So it is a question of relaxing and enjoying it, I think, rather than changing our minds.”

With the act, the tax was raised to 3 cents per gallon. Those revenues, along with excise taxes on tire rubber, tube rubber, and purchases of new trucks, buses and trailers were deposited into the new Highway Trust Fund (which is simply an accounting of dollars that are put into the general treasury).

The tax was raised later in Eisenhower’s term to 4 cents per gallon, which President John Kennedy affirmed with the Federal-Aid Highway Act of 1961, which stipulated it remain at that level through September of 1972. In fact, it remained at that level until the Surface Transportation Assistance Act of 1982, signed by President Ronald Reagan, which raised it to 9 cents per gallon. An amendment under Reagan in 1986 added 0.1 cents per gallon to fund clean up of leaking underground storage tanks (the LUST fund).

The Omnibus Budget Reconciliation Act of 1990, under President George H.W. Bush, added 5 cents (bringing it up to 14.1 cents per gallon), however 2.5 cents were siphoned off to fund general deficit reduction.

The Omnibus Budget Reconciliation Act of 1993, signed by President Bill Clinton, added 4.3 cents per gallon to the tax, effective bringing the total tax to 18.4 cents per gallon. But the entire increase went to deficit reduction, adding nothing new to the Highway Trust Fund. Four years later, President Clinton approved the Taxpayer Relief Act of 1997, which redirected the 4.3-cent increase of 1993 back to the Highway Trust Fund.

In 2010, the federal gas tax remains at 18.4 cents per gallon.

6. IS THE HTF/GAS TAX REVENUE FAIRLY DISTRIBUTED?

This is the subject of differing opinions.

The Department of Transportation, Federal Highway Administration statistics (through 2007, the last year available) that compare dollars paid into the system versus those spent, by state, indicate some states benefit more than others. Following are the top five winners and losers in this equation:

Winners:

District of Columbia

Alaska

Rhode Island

Vermont

Montana

Losers:

Texas

Utah

North Carolina

Nevada

Indiana

Note: the “loser” states are all relatively close in the ratio of their payments-in versus funding-out of the system. But numbers for the “winners” show highly skewed ratios: DC and Alaska, for different reasons, receive 5 and 3.6 times what they pay into the system. Both are characterized by relatively little gas consumption relative to road and public transportation funding.

The Environmental Working Group, a non-profit group focused on public health, asserted in 2003 that a metro-area analysis (city by city instead of state by state) of how gas tax funds shows an allocation that disfavors cities. Their claim:

“A first ever investigation of metro area transportation spending by the Environmental Working Group found that commuters in 176 metropolitan areas paid a total of $20 billion more in federal gas taxes than they received in federal highway trust fund money for both transit and highways from 1998 through 2003. Taxpayers in fifty-four metropolitan areas lost an estimated 100 million dollars or more during the 6-year period analyzed … members of Congress [fight] to ensure that states receive federal transportation funds equivalent to what the states contribute in gas taxes.

“Local transportation spending, however, has a far greater impact on congestion, air pollution, and sprawl. The top money losers were drivers in Los Angeles/Riverside, where there was an estimated $1.16 billion shortfall in federal highway trust fund expenditures compared to gas taxes paid during the six years examined. Commuters in Dallas/Fort Worth were the second biggest losers with an estimated six year shortfall of about $1.1 billion, followed by Phoenix at an estimated $904 million, Atlanta at $787 million, and Detroit/Ann Arbor with an estimated $639 million disparity between gas taxes paid and federal highway trust fund money spent in the metro area.”

The non-partisan Tax Foundation, a taxpayer education organization, argues the federal interstate highway system, begun in the 1950s, should now be considered a “completed, federally-designed project.” Their position includes the following:

“There is little reason for a county road in Nebraska to be funded by taxpayers across the entire country as it is of no concern to the 99.999 percent of the nation who will never drive on the road. Bridges from one state to the next may need some federal government involvement, as well as general planning of new interstate routes and U.S. highways, but how many more new interstates will there be? Even with bridges that connect two states, the states involved can likely come to a financial agreement with one another that would merely be enforced by the federal government.

“Some argue that such a policy would leave some states with too few roads due to sparse populations. However, taking a position that rural states should receive more funding due to size even though their roads and bridges serve far fewer people is an extreme violation of the entire benefit principle of gas taxes funding transportation. Why should a person driving in an urban location be forced to subsidize the transportation of those driving in rural locations? If the answer is that they shouldn’t, then local control should be the priority, and the role of the federal government in transportation should be minimal.”

7. WILL FUEL EFFICIENCY IMPROVEMENTS OF VEHICLES AFFECT THE GAS TAX REVENUE EQUATION?

In all likelihood, yes. The Corporate Average Fuel Economy (CAFE) standards, as adjusted in 2010 for the years 2012-2016, mandate an increase in U.S. car and light-truck fleet fuel efficiency to 35.5 miles per gallon by 2016.

While this has the benefit of saving 1.8 billion barrels of oil over the life of the vehicles sold after 2016, it is pretty easy to see that a per-gallon system will short the leading source of highway funding.

While some argue against the CAFE standard increase on this basis, other suggest it is time to consider a different means of levying taxes to fund surface transportation. This could include funding on a per-miles-traveled, or levying of tolls in congested areas, in place of a fuel consumption model. There currently is no definitive solution to this question.

Edited March 19, 2012 by Why_Me

[one...two...tree 2,762]

The problem with the green energy sycophants is force, coupled with a morbid sense of superior intellect. Because the public and the taxpayers don't quite get it - they must be forced to except the green energy boondoggle and fund it to the tune of untold billions. Yes, the public is too stupid to swallow "hook-line-and-sinker" the sustainable green energy black-hole as it is today. Which has yet to sustain even one fleet of commercial trucks, sustain one commercial aircraft at 35,000 ft or produce an affordable automobile that performs equally to a gas powered vehicle -- without the need for a gas powered engine as the main source of power. Let us know when you can pull up to a pump and fill your automobile's tank with algae.

Regardless of what the green energy sycophants and the politicians that beat that drum think, the public is pretty good at picking winners.

Cell phones vs home phones

DVD vs VHS

CD vs cassette

McDonald's vs Burger King

Walmart vs mom-n-pop

snail mail vs email

Apple and its array of 'i' gadgets

No one had to force the public or decide what was best for them, the public willingly forked over their hard earned cash for those products which fueled (no pun intended) the technology to improve and sustain those industries.

It's always amusing to hear Ayn Randian philosophy played out into people's own political ideology. Using the coded word 'forced' is classic Libertarian fanboi talk. It implies a sense of victimhood by the anarcho-capitalists who believe that somehow if government would just 'get off our backs' we'd have a thriving economy right now. It's beyond absurd because it completely ignores the facts and reality. And more amusing that you referred to all these supposed examples to prove, in your mind at least, that free market picks the winners, and winners = best. The irony in your argument is that more often than not, government plays a key role in whether a new technology thrives or not.

The internet is a perfect example, which came about through government research. I'll bet you didn't know that little tidbit of information, otherwise you wouldn't have tried to use it as an example of a free market choosing its own winners and loser. But that's okay, lets move on to your list.

Cell phone technology happened in large part from government research (look it up)

DVD vs VHS - while there was no significant government involvement, the Betamax format was far superior to VHS when that technology first came about. VHS 'won' the market battle because Sony refused to allow any other manufacturers to use their format. So there's a perfect example of the market NOT picking the best as the winner.

McDonald's vs. Burger King - I won't even touch that because I'm not sure you even know what you are trying to argue for. Both of them have enjoyed market success for decades even though McDonald's has a bigger share of the market. Using your logic, the best cars made are the ones that are sold the most, which isn't the case at all. Quality can have an impact, but to think a free market chooses the best and brightest is nothing but Libertarian fantasy. So I take it you have all of the Back Street Boys music back when they were topping the charts, right?

Walmart vs. mom-n-pop - wow, not sure what to say about that, but if I were a betting man, I would guess you drink your beer from a can and never pay more than $3 for a six pack. I can only imagine your personal sense of quality in how that manifests itself in your home furnishings, automobiles, clothing, etc.

snail mail vs. email - again, look it up as to who was behind the creation of electronic mail (oh God no...not the gubmint)

Apple - do you even know the history of Apple computers? They had some early success followed by years of failure and most recently more success. I was one of the few Apple owners back when everyone said Microsoft was the best. The reality is, the free market rarely, if ever chooses the very best because there are a myriad of circumstances and outside forces that effect the market. Most people who actually work the market know this. It's only the Ayn Randian cult followers who turn the market into some kind of pure religion - who most often are quite ignorant about how the market actually works.

So, yes, you don't want to be 'forced' into supporting alternative energy because that's not letting the market choose the winners. Keep smoking that pipe if it makes you sleep easier at night. In spite of the anti-science rhetoric out there on the internetz, Global Warming is real and is a significant threat to not only the environment, but to our quality of life, our economy and even our national security (that's right, read what the Dept. of Defense has to say). It's only yahoos out there, GW denialists who refuse to accept real science because doing so shatters their whole Randian philosophy that we don't need government to help us find solutions to today's problems.

Edited March 19, 2012 by Mister Fancypants

[luckytxn 2,265]

That's a lot of money the Government gets from Oil. It is not even figuring in the payroll taxes they collect from any that work in that industry. Also there are a lot of companies that service these companies. All in all the industry is a huge tax generator.

[I AM NOT THAT GUY 5,715]

That's a lot of money the Government gets from Oil. It is not even figuring in the payroll taxes they collect from any that work in that industry. Also there are a lot of companies that service these companies. All in all the industry is a huge tax generator.

And yet, they still manage to make a profit harvesting national resources. The oil companies don't own that oil, the people do. The oil companies are just providing a service, that the people through the government should do themselves.

[luckytxn 2,265]

And yet, they still manage to make a profit harvesting national resources. The oil companies don't own that oil, the people do. The oil companies are just providing a service, that the people through the government should do themselves.

And the companies pay a nice royalty to the landowners that do own the oil. The people who own the land own the oil. The oil companies are among the largest employers in this country and pay a nice wage to the union workers. They pay through the nose the fuel taxes but that cost is passed on to us people. The one thing that us people need to remember is that the oil companies actually don't pay any taxes but pass along the tax on the product. It is us the people that pay the taxes.

[I AM NOT THAT GUY 5,715]

The people who own the land own the oil.

Not always.

http://geology.com/articles/mineral-rights.shtml

[luckytxn 2,265]

Not always.

http://geology.com/a...al-rights.shtml

When I buy land I make sure I own the mineral rights also. In my state it must be specified in the deed transfer.

[lostinblue 1,989]

And the companies pay a nice royalty to the landowners that do own the oil. The people who own the land own the oil. The oil companies are among the largest employers in this country and pay a nice wage to the union workers. They pay through the nose the fuel taxes but that cost is passed on to us people. The one thing that us people need to remember is that the oil companies actually don't pay any taxes but pass along the tax on the product. It is us the people that pay the taxes.

In some areas, oil-gas lease offers have doubled in 5 months

Lease offers in Athens County also see steep rise

By Terry Smith

The bidding war for oil and gas leases in northeast Ohio has substantially increased the potential windfall for rural landowners, if a lease offer letter obtained last week by The Athens NEWS is any indication.

The letter, from an independent landman representing Hilcorp Energy I, L.P. in Houston, offers $5,000 per acre for a five-year lease for a rural property in Carroll County. The offer includes an option to extend the lease an additional five years for another $5,000 an acre. It also includes an 18 percent royalty on the sale of oil and gas extracted from the land.

Carroll County, southeast of Canton, is among several northeast and eastern Ohio counties where oil and gas development is booming. Relatively new technology – horizontal hydraulic fracturing (or fracking for short) – has allowed the development of deep underground shale layers. The boom, which started in Pennsylvania, has spread west into Ohio, where the Utica shale layer is being targeted along with the western fringes of the Marcellus shale beds.

The fracking boom has generated a storm of controversy at local, state and national levels. It's essentially the mother of all "jobs vs. environment" debates, generating controversy anywhere where it's happening, in both the East and out West. That conflict has been raging in Athens County, despite the fact that no horizontal fracking wells have been permitted or drilled here. In addition, geologists have expressed doubts about whether the shale underlying our county has the sort of promise for oil and gas development seen in areas such as Carroll, Jefferson, Belmont, Tuscarawas, Columbiana and other counties to the north and east of southeast Ohio.

That opinion has been evolving in recent weeks, however, as lease bonus offers have begun to increase in this area, and one drilling company in particular, Cunningham Energy of West Virginia, has made no secret it intends to use horizontal hydraulic fracturing to access oil reserves underlying Athens County.

The local debate has been fueled to some degree by an influx of Cunningham and other energy companies trying (and succeeding in many cases) to sign oil and gas leases with Athens County property owners. Until recently, it seemed that lease offers hereabouts were significantly lagging behind those farther to the north and east.

However, a local property owner informed The Athens NEWS Sunday evening that she had been offered a lease with a $2,500 an acre signing bonus for mineral rights to her western Athens County land, plus 16 percent royalties. (This is related to an effort organized by local attorney John Lavelle to offer property owners in Waterloo and Lee townships, near his farm, a special "landowner-friendly" lease, with those terms, in exchange for a $50-an-acre fee. Cunningham is the company they're dealing with.) That lease also offers $1,250 an acre for a "no-drill" option, which apparently means the oil and gas company would get the rights to their gas or oil, but then would have to retrieve it from a drilling site on a nearby property.

The property owner said that she had been offered just $100 an acre for those drilling rights less than a year ago.

The same sort of inflation in lease offers is happening farther north and east, though on a larger scale. The Carroll County property owner who received the offer of $5,000 an acre in mid-November just five months ago received a lease offer from a different energy company for less than half of what Hilcorp Energy is now offering.

In early July, Kenyon Energy of North Canton offered the Carroll County property owner $2,000 per acre for five years, with an option to extent another five years at the same price. That letter offered 15 percent royalties, as opposed to the 18 percent royalty offer now on the table from Hilcorp. At the time, the property owner, whose permanent residence is in the Athens area, declined the offer.

Royalties are a percentage of the proceeds from gas and oil sales from a property. Traditionally, oil and gas royalties have been 1/8th (12.8 percent) of production, according to the Oil Gas website (described as "a comprehensive objective resource for landowners and other parties involved in oil and gas lease agreements").

The rapid inflation in both lease payments and royalties, coupled with the increasing debate over the negative environmental impacts of fracking, present an excruciating dilemma for rural property owners.

Do they sign a generous oil and gas lease offer for their property, and risk losing out on a much greater windfall in a few months? Or do they delay, anticipating a much bigger payoff, only to see the boom turn to bust? Finally, do they sign over the rights to drill on their property, triggering negative environmental and quality-of-life consequences that ruin the property's value for any other use?

Whether that sort of painful dilemma becomes routine in this area will have to wait till someone actually drills a horizontal fracking well and finally learns what sort of recoverable oil or gas underlies our fields and forests.

athensnews.com

The working wells produces about $6.36 million per year in royalties to property owners

[Bad_Daddy 2,209]

And yet, they still manage to make a profit harvesting national resources. The oil companies don't own that oil, the people do. The oil companies are just providing a service, that the people through the government should do themselves.

The government? lol? Name one government business that doesn't have their head up their #######. It would be a complete monkey fck if you let the government get into the oil producing business.

btw all that gas that's being fracked across the country...most all of it is on private land where the oil companies have paid the land owners for mineral rights.

But I do agree the oil companies make a killing...and a big killing at that. Their profits are through the roof...but then again it's us who continue to pay their bs prices and it's the states who continue to tax fuel to stuff their own coffers.

Edited March 19, 2012 by Why_Me

[Usui Takumi 1,562]

Its going to take years if not decades to develop alternative energy technologies. If we let the free market drive research and adoption, we will probably just be starting research now. Energy prices would be quite high before we got any alternative solution.

Alternative energy is also long term strategy, also well outside the window of return for most investors. I don't know too many investors that will invest in something that make take longer than just a few years to produce returns.

The government will be involved in shaping and investing a long term energy strategy, just like they are with fossil fuels.

I think this is by far the most important post of this thread. Simply put, fossil fuels will decline at some point in the future. They are finite. Its looking like the peak of oil production has probably been postponed due to new productions methods or more likely, we are on a plateau.

This issue is this. At somepoint we are going to have a decline and there are a few scenarios that can occur.

Scenario 1. Its a mild decline over a decade and the market response is calm. We see a steady increase in price.

Scenario 2. Its a mild decline, but the market is is volatile, with small crashes and spikes.

Scenario 3. Its a sharp decline and the market crashes outright.

Renewables will only come online in scenario 1 with only the free market system. In scenario 2 and 3 we as a civilization are toast. Look at the markets for the last few years. I think scenario 1 is very unlikely.

We as a species are at, in my opinion, the most pivotal point in planetary history. We must transition from fossil fuels to renewable soon. If we don't our civilization will collapse and future generations will not have the easy access to energy we've had to make this happen. It took millions of years to develop the energy we use now.

Its important we push the technology now, while we still have time.

[Dan J 277]

That is bunk. The technology has to stand on its own. It is not the Feds role to force us to use any technology. It is a huge overreach of the Feds to try and force a technology on us when there is no need to do so. As it stands now the U.S. has enough fuel to power this country for a long time.

I have no problems with driving a battery powered car. The electric car has been trying to become a reality for decades. It is a great idea but it is impracticable as battery technology is not there.....yet. Want to make a electric car that can stand on its own then figure out the battery storage problem that is making the car a joke as it stands now. And do it at a comparable price to a carbon engine car. If the Feds want to really help and not hinder then spend money on the few things stopping that technology by research funds. Right now the Feds are wasting money and time and thus hindering what needs to be done.

In most cases it eventually does. But government funding has been significant in development of many technologies we rely on today. Many companies are reluctant to do the kind of investment and research some of the alternative technologies need. It could be too expensive, have too long of a window to realize returns or be considered too risky. This is where the government can step in an help provide research that would benefit most people.

This is not to say that every single investment made by the government is going to go well. Some are going to end up producing no results and costing a lot of money. But often times it provides some knowledge on at least what not to do. If the government is as risk adverse as corporations when it comes to research, then forget about it, we are screwed.

[luckytxn 2,265]

In most cases it eventually does. But government funding has been significant in development of many technologies we rely on today. Many companies are reluctant to do the kind of investment and research some of the alternative technologies need. It could be too expensive, have too long of a window to realize returns or be considered too risky. This is where the government can step in an help provide research that would benefit most people.

This is not to say that every single investment made by the government is going to go well. Some are going to end up producing no results and costing a lot of money. But often times it provides some knowledge on at least what not to do. If the government is as risk adverse as corporations when it comes to research, then forget about it, we are screwed.

Sounds good but the Feds are not funding research here. They are trying to force an inept technology on us. It is wasteful and uneeded at this time. The ones that solve the problems will become rich and known through history. The Feds doing this is setting back progress and hurting the economy.

[Usui Takumi 1,562]

Sounds good but the Feds are not funding research here. They are trying to force an inept technology on us. It is wasteful and uneeded at this time. The ones that solve the problems will become rich and known through history. The Feds doing this is setting back progress and hurting the economy.

Ever heard of NREL?

Also how is the government forcing people to adopt current technology? There is no Prius mandate in the healthcare plan lol.

Edited March 19, 2012 by Sousuke

[luckytxn 2,265]

Ever heard of NREL?

Also how is the government forcing people to adopt current technology? There is no Prius mandate in the healthcare plan lol.

We are talking about different technologies here at the same time. Does government force utilities to buy more costly green energy?Has government been forcing companies to buy carbon credits? The list goes on.

When government by law forces compliance then they are mandating.

Edited March 19, 2012 by luckytxn