From “As Oil Industry Fights a Tax, It Reaps Subsidies” by DAVID KOCIENIEWSKI
"When the Deepwater Horizon drilling platform set off the worst oil spill at sea in American history, it was flying the flag of the Marshall Islands. Registering there allowed the rig’s owner to significantly reduce its American taxes.
The owner, Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008, maneuvers that also helped it avoid taxes.
At the same time, BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.
With federal officials now considering a new tax on petroleum production to pay for the cleanup, the industry is fighting the measure, warning that it will lead to job losses and higher gasoline prices, as well as an increased dependence on foreign oil.
But an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process. According to the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.
And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by various credits. These companies’ returns on those investments are often higher after taxes than before."
"Oil industry officials say that the tax breaks, which average about $4 billion a year according to various government reports, are a bargain for taxpayers. By helping producers weather market fluctuations and invest in technology, tax incentives are supporting an industry that the officials say provides 9.2 million jobs.
The American Petroleum Institute, an industry advocacy group, argues that even with subsidies, oil producers paid or incurred $280 billion in American income taxes from 2006 to 2008, and pay a higher percentage of their earnings in taxes than most other American corporations.”
'The Senate Finance Committee on Wednesday announced that it was investigating whether Transocean had exploited tax laws by moving overseas to avoid paying taxes in the United States. Efforts to curtail the tax breaks are likely to face fierce opposition in Congress; the oil and natural gas industry has spent $340 million on lobbyists since 2008, according to the nonpartisan Center for Responsive Politics, which monitors political spending.
Jack N. Gerard, president of the American Petroleum Institute, warns that any cut in subsidies will cost jobs.
“These companies evaluate costs, risks and opportunities across the globe,” he said. “So if the U.S. makes changes in the tax code that discourage drilling in gulf waters, they will go elsewhere and take their jobs with them.”'
"Some of the tax breaks date back nearly a century, when they were intended to encourage exploration in an era of rudimentary technology, when costly investments frequently produced only dry holes. Because of one lingering provision from the Tariff Act of 1913, many small and midsize oil companies based in the United States can claim deductions for the lost value of tapped oil fields far beyond the amount the companies actually paid for the oil rights.
Other tax breaks were born of international politics. In an attempt to deter Soviet influence in the Middle East in the 1950s, the State Department backed a Saudi Arabian accounting maneuver that reclassified the royalties charged by foreign governments to American oil drillers. Saudi Arabia and others began to treat some of the royalties as taxes, which entitled the companies to subtract those payments from their American tax bills. Despite repeated attempts to forbid this accounting practice, companies continue to deduct the payments. The Treasury Department estimates that it will cost $8.2 billion over the next decade.”
"Over the last 10 years, oil companies have also been aggressive in using foreign tax havens. Many rigs, like Deepwater Horizon, are registered in Panama or in the Marshall Islands, where they are subject to lower taxes and less stringent safety and staff regulations. American producers have also aggressively exploited the tax code by opening small offices in low-tax countries. A recent study by Martin A. Sullivan, an economist for the trade publication Tax Analysts, found that the five oil drilling companies that had undergone these “corporate inversions” had saved themselves a total of $4 billion in taxes since 1999."
"Despite the public anger at the gulf spill, it is far from certain that Congress will eliminate the tax breaks. As recently as 2005, when windfall profits for energy companies prompted even President George W. Bush — a former Texas oilman himself — to publicly call for an end to incentives, the energy bill he and Congress enacted still included $2.6 billion in oil subsidies. In 2007, after Democrats took control of Congress, a move to end the tax breaks failed.
Mr. Menendez said he believed the Gulf spill was devastating enough to spur Congress into action. But one notable omission in his bill shows the vast economic reach of the industry. While the legislation would cut many incentives over the next decade, it would not touch the tax breaks for oil refineries, many of which have operations and employees in his home state, New Jersey.
Mr. Menendez’s aides said the senator thought it was legitimate to allow refineries to continue claiming a manufacturing tax credit that he wants to eliminate for drillers because refining is a manufacturing business and because refineries do not benefit from high oil prices. Mr. Menendez did not consult with New Jersey refineries when writing the bill, his aides said."
From “Arid Australia Sips Seawater, but at a Cost” by NORIMITSU ONISHI
“In one of the country’s biggest infrastructure projects in its history, Australia’s five largest cities are spending $13.2 billion on desalination plants capable of sucking millions of gallons of seawater from the surrounding oceans every day, removing the salt and yielding potable water. In two years, when the last plant is scheduled to be up and running, Australia’s major cities will draw up to 30 percent of their water from the sea.”
‘“We consider ourselves the canary in the coal mine for climate change-induced changes to water supply systems,” said Ross Young, executive director of the Water Services Association of Australia, an umbrella group of the country’s urban water utilities. He described the $13.2 billion as “the cost of adapting to climate change.”
But desalination is also drawing fierce criticism and civic protests. Many homeowners, angry about rising water bills, and environmentalists, wary of the plants’ effect on the climate, call the projects energy-hungry white elephants. Stricter conservation measures, like mandating more efficient washing machines, would easily wring more water from existing supplies, critics say.
Desalination has also helped dampen the enthusiasm for a “big Australia,” the previous,immigration-friendly government’s projection that the country’s population will rise to 36 million in 2050, from 22 million now.
“Big waste of money,” said Helen Meyer, 65, a retired midwife in Tugun, the town where the northeastern state of Queensland opened a $1 billion desalination plant last year. “It cost a lot of money to build, and it uses a lot of power. Australia is a dry country. I think we just have enough water for 22 million people. What are we going to do when we’re up to 36 million?”’
‘Besides restricting water use and subsidizing the purchase of home water tanks to capture rainwater, the state spent nearly $8 billion to create the country’s most sophisticated water supply network. It fashioned dams and a web of pipelines to connect 18 independent water utilities in a single grid. To “drought proof” the region, it built facilities for manufacturing water, by recycling wastewater, to use for industrial purposes, and by desalinating seawater. Production of desalinated water can be adjusted according to rain levels.
“When the last of the assets were coming online, it rained, as it always does,” Mr. Dennien said, adding that the region now has enough water for the next 20 years.
“We’ve got a method of operating the grid that the next time any sign of drought occurs, we can just,” he snapped his fingers, “build something else or turn something else on, and we’ve got enough water supply.”’
‘Many environmentalists and economists oppose any further expansion of desalination because of its price and contribution to global warming. The power needed to remove the salt from seawater accounts for up to 50 percent of the cost of desalination, and Australia relies on coal, a major emitter of greenhouse gases, to generate most of its electricity.
Critics say desalination will add to the very climate change that is aggravating the country’s water shortage. To make desalination politically palatable, Australia’s plants are using power from newly built wind farms or higher-priced energy classified as clean. For households in cities with the new plants, water bills are expected to double over the next four years, according to the Water Services Association.
But critics say there are cheaper alternatives. They advocate conservation measures, as well as better management of groundwater reserves and water catchments. “Almost every city which has implemented a desalination plant has nowhere near maxed out or used up their conservation potential,” said Stuart White, director of the Institute for Sustainable Futures at the University of Technology, Sydney. Even without restrictions, cities could easily save 20 percent of their water, Mr. White said.
He said cities should practice “desalination readiness” by drawing plans to build a plant, but should carry them out only as a last resort in the event of a severe drought.
Mr. Young of the Water Services Association said desalination in Australia costs $1.75 to $2 per cubic meter, including the costs of construction, clean energy and production. The prices are probably the world’s highest, said Mr. Pankratz of the International Desalination Association, adding that desalination was cheaper in countries with less strict environmental standards. He said the cost at a typical new plant in the world today would be about $1 per cubic meter.
Opponents of desalination say that a cheaper and environmentally friendlier alternative is recycling wastewater, though persuading people to drink it remains difficult and politically delicate. The SEQ Water Grid Manager, for instance, retreated from its initial plan to introduce recycled wastewater into its drinking reservoirs after it began raining.
“There’s a stigma against recycled water,” said David Mason, 40, a resident of Tugun.
“But since there’s only so much water in the world, and it’s been through somebody’s body or some other place over the past 250 million years, maybe it’s not that bad. At least, it might be better than desalination.”’
From “Complaint Box | The Beach as Landfill” by KATHY STEVENSON
“One of the pleasures of beachgoing, much like the joy of hiking through our national parks or using other outdoor oases that are shared by the public, is enjoying the pristine state of nature. On my walk this morning I was treated to the sight of a watercolor-washed sky in shades of blue and gray and lavender, and I walked up to my ankles in a low tide that was the clearest and cleanest I had ever seen it. But each time I moseyed up to the sand, I faced an unwelcome reminder of someone’s thoughtlessness.”
“How sad it was this morning at 7 when I passed a beefy guy holding a bottle of beer and smoking a cigarette, whose big dog (off the leash, of course) squatted in the sand to do his business (nary a cleanup bag in sight) — and how sad that I, because of my fear of how this stranger might respond to me, had to walk on by without saying a word. Maybe, ultimately, that was the real travesty.”
From “Analysis Triples U.S. Plutonium Waste Figures” by MATTHEW L. WALD
“The amount of plutonium buried at the Hanford Nuclear Reservation in Washington State is nearly three times what the federal government previously reported, a new analysis indicates, suggesting that a cleanup to protect future generations will be far more challenging than planners had assumed.”
“But the problem is most severe at Hanford, a 560-square-mile tract in south-central Washington that was taken over by the federal government as part of the Manhattan Project. By the time production stopped in the 1980s, Hanford had made most of the nation’s plutonium.
The plutonium does not pose a major radiation hazard now, largely because it is under “institutional controls” like guards, weapons and gates. But government scientists say that even in minute particles, plutonium can cause cancer, and because it takes 24,000 years to lose half its radioactivity, it is certain to last longer than the controls.
The fear is that in a few hundred years, the plutonium could reach an underground area called the saturated zone, where water flows, and from there enter the Columbia River. Because the area is now arid, contaminants move extremely slowly, but over the millennia the climate is expected to change, experts say.
The finding on the extent of plutonium waste signals that the cleanup, still in its early stages, will be more complex, perhaps requiring technologies that do not yet exist. But more than 20 years after the Energy Department vowed to embark on a cleanup, it still has not “characterized,” or determined the exact nature of, the contaminated soil.
The department has been weighing whether to try to clean up 90 percent, 99 percent or 99.9 percent of the waste, but because the extent of contamination is unclear, so is the relative cost of the options. For now, the preferred option is 99 percent.
Government officials recognize that they still have a weak grasp of how much plutonium is contaminating the environment. “The numbers are changing,” said Ron Skinnerland, a radiation expert at the Washington State Department of Ecology, which is trying to enforce an agreement it reached with the Energy Department in 1989 for the federal government to clean up Hanford.
So far, the cleanup, which began in the 1990s, has involved moving some contaminated material near the banks of the Columbia to drier locations. (In fact, the Energy Department’s cleanup office is called the Office of River Protection.) The office has begun building a factory that would take the most highly radioactive liquids and sludges from decaying storage tanks and solidify them in glass.
That would not make them any less radioactive, but it would increase the likelihood that they stay put for the next few thousand years.”
“The biggest issue is the amount of plutonium that has leaked from the tanks, was intentionally dumped in the dirt or was pumped into the ground.
Mr. Skinnerland said much of the waste was 90 or 100 feet underground, too deep to dig out. Some contaminants can be pumped out, but that does not work well for materials that contain low concentrations of plutonium.
The Energy Department has researched the possibility of shooting electric currents through the soil to create glasslike materials that would lock up contaminants, but it has not analyzed whether the technique would work at those depths.”
“Another problem raised by the inaccuracies in the 1996 figures is that they could complicate the negotiation of new agreements with Russia or other countries about destroying bomb fuel, said Frank N. von Hippel, a professor of public and international affairs at the Woodrow Wilson School and a co-chairman of the journal’s board of editors.
Gerry Pollet, executive director of the environmental group Heart of America Northwest, said the government should embrace a cleanup plan that assures that even thousands of years into the future, an unsuspecting public will not be overexposed.
“What is reasonably foreseeable is that there are people who will be drinking the water in the ground at Hanford at some point in the next few hundred years,” Mr. Pollet said. “We’re going to be killing people, pure and simple.”
Plutonium was first manufactured in World War II for use in bombs. (The one that destroyed Nagasaki in 1945 originated with plutonium made at Hanford.) For decades, the government produced it in military reactors by bombarding a natural element, uranium, with subatomic particles called neutrons, converting uranium to plutonium, and then using chemical processes to harvest the plutonium.
The new analysis indicates that the chemical separation process was not nearly as efficient as the government claimed and that a lot of the plutonium was left behind in various stages.
It also suggests that estimates of plutonium production by the Energy Department and its predecessors, including the Atomic Energy Commission and the Manhattan Project, were not nearly as accurate as scientists and bureaucrats said they were.
Releasing declassified figures in 1996, the Department of Energy said that 111,400 kilograms (about 123 tons) of plutonium had been produced at Hanford or taken there from civilian reactors or foreign sources.
Of that, 12,000 kilograms were “removed,” the department said. Some of that plutonium was consumed in weapons tests or in bomb attacks like the one on Nagasaki, but 3,919 kilograms of plutonium were stored as waste at Hanford, it reported.
However, Mr. Alvarez’s analysis, based entirely on Energy Department documents, shows that the amount discarded as waste was actually 11,655 kilograms, nearly three times as much, and that the total inventory of plutonium produced and acquired was closer to 120,000 kilograms, not 111,400.
Mr. Alvarez’s estimate indicates that enough plutonium is buried at Hanford to create 1,800 Nagasaki-size bombs, he said, but he played down any possibility of a weapons threat. “I don’t think anybody stole anything,” he said.”
It’s going to take a lot of balls, but the only way to save the environment is to save yourself. Certain habits can influence the way that you do things and the way that you think about things.
