Friday, February 27, 2009

Oil is a Strategic Resource, And Some Countries Get It

One of the major pillars of Obama's new budget is to choke off domestic oil exploration and production through the use of increased taxes:

$5.3 billion - excise tax on Gulf of Mexico oil and gas
$3.4 billion - repeal expensing of tangible drilling costs
$62 million - repeal deduction for tertiary injectants
$49 million - repeal passive loss exception for working interests in oil and gas properties
$13 billion - repeal manufacturing tax deduction for oil and natural gas companies
$1 billion - increase to 7 years geological and geophysical amortization for independent producers
$882 million - eliminate advanced earned income tax credit

Add in the decision to shut down shale oil development, and it is clear that the goal is to make domestic oil so expensive that inefficient that uneconomic "green" energy looks better.

In the mean time China knows that oil is here for a long time. It is cheap, efficient, transportable and is crucial for tactical and military operations. China is currently on a spending spree to obtain access to oil reserves, the latest their purchase of a Canadian Oil Company. If you watch the news they buy another oil company or set of reserves every few months. The Chinese realize that oil is here to stay and access to it will be important in the long term. They get it, the democrats do not.

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