$9 Billion Loophole for Synthetic Fuel 328
Rondrin writes "CNN has an article detailing a $9 billion loophole in the tax code to spur synthetic fuel development. Unfortunately, spraying coal with pine tar qualifies. From the article: 'The wording is so bland and buried so deep within a 324-page budget document that almost no one would notice that a multibillion-dollar scam is going on. Not the members of Congress voting for it and certainly not the taxpayers who will get fleeced by it. And that is exactly the idea.'"
9 Billion over three years (Score:5, Informative)
FTA: From 2003 through 2005, TIME estimates, the synfuel industry raked in $9 billion in tax credits. That means the lucky few collectively cut their tax bills by that amount, which would be enough to cover a year's worth of federal taxes for 20 million Americans who make less than $20,000 a year and pay income taxes.
So while this tax loophole sucks, it's $3 billion a year not $9 billion. That means it's a year's worth of taxes for 6.6 million people who make 20K, not 20 million.
Re:This ought to be good... (Score:1, Informative)
I seem to remember Senator John Sununu billing taxpayers for a bunch of private trips. He was punished by being put in charge of finance reform. If milk just squirted out your nose, I empathize.
The rage is lost on me. (Score:1, Informative)
Consider this rationale: The American synfuel folks have a role to play in developing alternatives to oil. If the credit dies due to oil price fluctuations, they die. Killing them off isn't going to help anybody if USA is serious about energy independence. Therefore, tweak the rules as a stopgap measure, then do something more permanent in 2007.
Furthermore, we are talking about a corporate tax. People think that corporate tax somehow "sticks it to the man." This is ridiculous. The tax is always passed down to Joe Consumer, only it is hidden, folded into a purchase price. The fact that some supplier in the chain pays less in taxes is public record. All parties negotiating with them are privy to the record and can use it against them. In a competetive environment, the savings will show up at the final sale.
It's probably was the most expedient way to handle the situation.
Re:Meanwhile... (Score:3, Informative)
Biodiesel production is much more efficient the Ethanol, and contains significantly more energy per volume.
Biodiesel is also more stable, not as caustic, more efficient, and less poluting in a Diesel car then Ethanol in a Petrol car.
-Rick
Re:Government screwups (Score:4, Informative)
This cap was placed in to improve predictability. Oil was above that mark and they decided that the companies investing in this should get a subsidy if the price of oil went down. So when gas is cheap, producers get a subsidy, and when it got expensive they would have to make it on their own (it should be economic when oil is very expensive). The basic idea is to help them make it through any short term dip in oil prices.
Now, Senator Hatches office claims that removing the cap is necessary to reduce unpredictability b/c of the fluctuating price of oil. I'm not sure I understand the logic.
OK, I'll bite... (Score:3, Informative)
Ummm.. ok, so what's wrong with that? Last time I checked, carbonization (heating and compressing wood) produce coal tar and pine tar which also is used to produce acetic acid, methanol, and turpentine.
Excerpt from Wikipedia about acetic acid:
"Liquid acetic acid is a hydrophilic (polar) protic solvent, similar to ethanol and water. With a moderate dielectric constant of 6.2, it can dissolve not only polar compounds such as inorganic salts and sugars, but also non-polar compounds such as oils and elements such as sulfur and iodine. It readily mixes with many other polar and non-polar solvents such as water, chloroform, and hexane. This dissolving property and miscibility of acetic acid makes it a widely used industrial chemical."
Another word, it gives off extra Hydrogen when mixed with water. So it's used to produce hydrogen cheaply... hmm that's a bad thing?
Excerpt from Wikipedia about methanol:
"Methanol is used on a limited basis to fuel internal combustion engines, mainly by virtue of the fact that it is not nearly as flammable as gasoline. Methanol blends are the fuel of choice in open wheel racing circuits like Champcars, as well as in radio controlled model airplanes, cars and trucks. Dirt circle track racecars such as Sprint cars, Late Models, and Modifieds use methanol to fuel their engines. Drag racers and mud racers also use methanol as their primary fuel source. Methanol is required with a supercharged engine in a Top Alcohol Dragster and all vehicles in the Indianapolis 500 have to run methanol. Mud racers have mixed methanol with gasoline and nitrous oxide to produce more power than gasoline and nitrous oxide alone."
hmm... sounds like alternative fuel to me... or maybe I'm not getting this article's punch line.
Umm.. so what am I missing here? Is there supposed to be a punch line in the article where I supposed to go "Ah, those GOP rascals!?"
Re:Jimmy Carter started this in 1980 (Score:3, Informative)
I looked through the comments, and only one person even mentioned Bush (technically, his administration). Neither the writeup nor the article blames Bush. So if you're seeing "left-wing idiots" everywhere, maybe it's time to increase your medication.
Re:Meanwhile... (Score:4, Informative)
You obviously haven't thought much about this. Here is a quote from the original "bullshit" article: "Petroleum diesel's life cycle yields only 0.83 units of fuel energy per unit of fossil energy consumed."
You used this information to reach the incorrect conclusion that no one would ever do that because there would be no profit, and therefore the numbers have to be wrong. You are confusing efficiency and profit. Even though it takes more energy to get that gallon of fuel in your car than the gallon produces, you PAY more for it than it cost the oil company to get it there. Oil field to refinery to gas station to car is a very inefficent fuel delivery system, but it is a VERY efficient profit-making system.
Before you go shouting "bullshit" next time you should think about the problem more thoroughly.
Re:Um (Score:3, Informative)
You're thinking of the President and Congress. The US military has never unilaterally decided to invade anyone.
Marriot Corp laughing to the bank (Score:3, Informative)
They bought four "synfuel" plants in Oct 2001 for $46 million in cash. The next year, those plants generated $159 million in tax credits. So instead of paying an annual income tax of around 36.1%, like they did in 2001, they only paid 6.8% in 2002, "due primarily to the impact of our synthetic-fuel business."
Not bad for "a few pole barns and conveyor belts where coal was sprayed...with small amounts of diesel oil, pine tar resin, and other substances."
After making $370 million in five years, I'd be ready to bail out too. That's just over 800% ROI. Buy low, sell high!