Via Think Progress we learn that Missouri is among the ten states that got the most disaster aid in 2011 and 2012. Lots of that aid was in response to events that reflect the increasing toll that human activity is taking on the climate:

There is new evidence that climate change played a role in the extreme weather events of 2012. A recently released analysis from the American Meteorological Society, for example, determined that:

Approximately half the analyses found some evidence that anthropogenically caused climate change was a contributing factor to the extreme event examined, though the effects of natural fluctuations of weather and climate on the evolution of many of the extreme events played key roles as well.

Think Progress notes the interesting fact that these states are responsible for many of the climate-science deniers in congress:

Interestingly, many of the states that received the most federal recovery aid to cope with climate-linked extreme weather have federal legislators who are climate-science deniers. The ten states that received the most federal recovery aid in FY 2011 and 2012 elected 47 climate-science deniers to the Senate and the House. Nearly two-thirds of the senators from these top 10 recipient states voted against granting federal emergency aid to New Jersey and New York after Superstorm Sandy.

As I have pointed out previously, you can count the Missouri GOP delegation among those 47 climate-science deniers in Congress. Think Progress also does well to note the hypocrisy involved – GOP Senator Roy Blunt, who voted against Superstorm Sandy aid, has been first in line demanding relief from the numerous climate disasters that have struck Missouri’s farmers over the past several years. Blunt was not alone – all the GOP members of the Missouri House delegation voted against Superstorm Sandy relief, while grubbing for every cent they can get for Missouri’s misfortunes. Part of the GOP resistance to Superstorm Sandy aid was based on the fact that it called for funds to rebuild in ways that could mitigate future damage from frequent repeats of the superstorm, implicitly endorsing the findings of climate scientists that predict increasingly violent weather events.

What can motivate individuals who join a political party that has for decades boasted of its fiscal conservatism to blindly persist in a spurious climate-science denialism that is proving increasingly costly to both their constituents, the welfare of their state, and to the nation as a whole? After all, it’s clear that playing mean when the disaster strikes New Jersey, New York or other states and throwing cash around liberally when it hits home won’t balance the books in the long run.

I’m sure that the answer to that question is complex, but there are some simple aspects involved and they have to do with Big Oil money and the struggle for partisan advantage that animates today’s GOP. Just consider that:

HSBC Securities’ analysis shows that oil companies will lose up to 60 percent of their value if a policy aiming for the internationally-recognised two-degree climate policy objective is implemented.

Then stop and think how much  Big Oil money goes into Republican coffers (see also here and here for some specifics). Makes that disaster aid seem kind of puny – for the time being at least.

While conceding the destructive potential of climate change in her reaction to President Obama’s plans to fight climate change, Democratic Senator Claire McCaskill echoed the same faux economic worries that she has cited in the past and that her colleague, Republican Senator Roy Blunt, put forward more forcefully yesterday. She’s worried, she claims, about the potential of curbing carbon emissions to increase energy prices:

Sen. Claire McCaskill, D-Mo, asserted that climate change “is a real and growing threat to the health and livelihoods of Missourians.” But she offered faint praise for some of Obama’s proposal and questioned others.

Proposed carbon rules for existing power plants, McCaskill said, “will need serious review to ensure they don’t harm working families.” She added her preference that the regulations be directed by Congress rather than executive order.

Regulations directed by Congress? Really? Remind me what Congress has done to date to regulate carbon emissions. As I recollect, congressional inaction – or even outright hostility to action – has been the norm in spite of the fact that leading climate scientists have testified in congressional hearings that our current path will lead to disaster. In the face of the congressional politicization of a life-and-death issue, I’m surprised that McCaskill has the chutzpah to try to squelch action with more politics, but, as I am beginning to realize, that’s the way our girl rolls.

I can only repeat what I said apropos of Senator Blunt’s entirely predictable “war on jobs” reaction:

If we could get politicians like Blunt to stop whining about imagined or short-term economic impacts and do something constructive to help us cope with climate change, we’d realize some positive economic benefits as well as an improved quality of life.

Substitute McCaskill for Blunt and add that the road to progress could do without politicians who are more concerned with covering their backsides than doing the right thing, and the assertion would be just as true. Of course, to be fair, McCaskill, who dithered and arguably helped kill the American Clean Energy and Security Act of 2009, sounds a lot more tentative in her response than she did in 2009. Perhaps if she understands that there are Missourians who support vigorous action on climate change, she’ll work harder to educate those among us who, because they have been misled by corrupt politicians and fossil-fuel industry spokespeople, don’t understand the urgency of the climate change challenge. As noted by the Union of Conerned Scientists:

Climate change carries serious consequences both for humans and for ecosystems. This is a crisis that will affect our food, our national security, our water, our ability to live where we choose, and other basic human needs. Whether and how we address global warming is not a question of science, it’s a question of values.

Kinda makes McCaskill’s implied concerns about energy prices rising a few cents seem kind of puny, doesn’t it? Maybe today would be a good time to send our Democratic Senator an educational email on the topic. Contact her here if  you’re so inclined.

The situation: As per Think Progress, a staffer for climate denialist, big-oil loving James Inhoffe actually told the truth – and made a few oil lobbyists uncomfortable. The staffer wrote to “top oil and gas lobbyists” to express the Senator’s displeasure with the industry’s collaboration with the Obama White House on fracking regulations. The email didn’t pull any punches when it came to describing the cozy relationship between Republicans and the oil and gas industries:

Moving forward, we-your partners-would kindly ask for better coordination and communication from you to prevent the Obama administration from pulling similar stunts in the future.

Think Progress also notes that this “partnership” between Big Oil and the GOP is far from one sided. In return for the coordinated “attacks on behalf of industry interests,” GOP congressional types have pulled in a mighty monetary haul – literally millions – over the past few years.

The Missouri angle: Lately Missouri’s GOP Senator Roy Blunt has been highly vocal about rising gas prices – to an almost comic extent. He implicitly and explicitly blamed the Obama administration’s effort to regulate drilling in sensitive areas, subject the Keystone XL pipeline to environmental regulation, and to enact fuel efficiency standards. The underlying theme is, of course, nothing new for Blunt – over the years, he has managed to work it into almost every issue from jobs to taxation. He’s also done his best to insure that the industry keeps pulling down those big taxpayer subsidies – the icing on its highly profitable cake.

The high cost of doing business with Roy Blunt: Blunt has been well rewarded for the services he renders. According to the Center for Responsive Politics (via Think Progress), since 2006 he has pulled in $363,950 in campaign donations from the oil and gas industries. Only nine senators have higher totals for the same period and almost all of them are from big oil producing states or prominent in the GOP leadership (such as Mitch McConnell). It’s a sure thing Blunt isn’t getting the money just because he’s from Missouri. Missouri’s other senator, Democrat Clare McCaskill has received only $55,058 in Big Oil money since 2006. Wonder why Roy gets a bigger handout?

Just keep these facts in mind next time you hear or read statements by Roy Blunt haranguing us about energy policy or ranting about the effect of “job-killing” regulations on the oil and gas industries. Although, come to think about it, intelligent and careful regulation of the oil and gas industries could kill lots of highly rewarded senatorial jobs.      

No big surprise that Roy Blunt does his best to pay off his Big Oil patrons. Alternet’s Tara Lohan didn’t characterize him as “Exon’s man”  for no reason after all.

Yesterday he voted against the Buffett Rule. No big surprise there either. What’s the connection? Check out what Blunt had to say on his Facebook page about his Buffett Rule vote (and try not to laugh out loud):

I voted against the Buffett Tax today because it would do nothing to jumpstart job creation or lower gas prices – a fact my colleagues across the aisle readily admit. Americans are struggling with high unemployment and skyrocketing fuel costs, and the last thing job creators need is greater uncertainty. We must work together to pass bipartisan solutions like the Keystone XL Pipeline and a pro-growth tax structure that will encourage businesses to invest and hire more workers.

Tell me again what tax fairness has to do with gas prices – or Keystone XL? Apart from the big tax subsidies with which we the taxpayers gift the oil companies – thanks to GOP pols like our Senator Blunt – most of us, I’m pretty sure, would say not too much. Unless, of course, like Roy, you’ve been working double-time to use higher gas prices to club the opposition while drumming up support for letting the oil companies run wild and free.

Given that Blunt’s so worried about gas prices that have nearly reached levels that last prevailed under his pal George W. Bush, he will surely be pleased to support the President’s latest initiative to deal with factors that actually affect prices – and no, they have nothing to do with the Buffett Rule:

With average gasoline prices at $3.90 nationwide and higher in various regions, the Obama administration will announce this morning new measures to boost federal oversight of oil markets, tougher penalties on market manipulation and requirements for empower energy traders to put more money behind to back their commodity transactions.

You’re correct, of course, that I shouldn’t hold my breath waiting for Blunt’s endorsement. We all know that while he’ll come out swinging in defense of the big guys who, incidentally, richly finance his political campaigns, he’s no more interested in asking oil company execs and financial types to do their part and act responsibly than he is in taking a stand for tax fairness.

* Last paragraph slightly edited for clarity.

Teresa Hensley’s (D) campaign released a video of Rep. Vicky Hartzler’s (r) recent town hall denial about about accepting big oil contributions. Ouch:

[Rep. Hartzler takes some questions from citizens]

Question: How do you and other House Republicans giving tax breaks of five billion per year for oil companies when they had combined profits of a hundred and seventy billion in two thousand eleven? Is this possibly a payback?

Representative Vicky Hartzler (r): Well, first of all, I’ve never gotten any money from any oil companies, so that doesn’t affect me. That, that question, that last implication…

[rewind]

Representative Vicky Hartzler (r): Well, first of all, I’ve never gotten any money from any oil companies…

[Fact: Congresswoman Hartzler’s taken $36,850 from the oil and gas industry in her career

Source: Center for Responsive Politics]

[rewind]

Representative Vicky Hartzler (r): Well, first of all, I’ve never gotten any money from any oil companies…

[Fact: Congresswoman Hartzler’s took $5,000 from ExxonMobil March 11, 2011

Source: Federal Election Commission]

[rewind]

Representative Vicky Hartzler (r): …last implication…

[Denying the truth?

What does that imply?]

[Paid for and authorized by Hensley for Congress]

Armed with facts, engaging in a battle of wits with unarmed right wingnuts.

Pass the popcorn.  

Yesterday, GOP Senator Roy Blunt’s office sent out a press release touting his co-sponsorhip of legislation that would permit congress to authorize the construction of the Keystone XL Pipeline:

This project would create 20,000 American jobs, generate $20.9 billion in new private sector spending, reinforce America’s energy security, and benefit 1,400 American job creators – all without costing taxpayers a dime,” Blunt concluded. “This project is good for America’s job creation and energy independence, and that’s why I’m proud to join my colleagues to co-sponsor this bill.

As is often the case with the esteemed Senator Blunt, the statement above is replete with misstatements and exaggerations:

— Unbiased studies put the number of jobs that XL Keystone would create at 6,000 temporary jobs tops, and some estimates are as low as 2,000 – or even that the project will kill more jobs than it will create.

— The U.S. is now a net exporter of products made from crude oil; any oil piped to the Gulf along Keystone would be sold to the highest bidder, countries like Mexico and China. Consequently, completion of the pipeline has little to do with energy independence.

So why is Blunt overstating the benefits?  There are two likely reasons:

1. Political gamesmanship:  Congressional Republicans are, as TPM’s Sahil Kapur argues, trying to exploit Democratic divisions and push Obama into a corner politically:

… It’s a question of whether we’d rather have the pipeline or the issue,” a GOP aide said in December. They chose the issue, bringing into question how much they care about the pipeline itself. Indeed, not forcing a decision would have neutralized the politics surrounding the matter.

But now Republicans have turned it into a weapon, and the politics are win-win for them. Their base overwhelmingly supports the pipeline and its capacity for some temporary job creation puts them on the right side of the most important issue on voters’ minds in this election year.

For Democrats, the issue is a headache because their constituencies are split: environmentalists oppose it, while labor and big business have forged an unlikely alliance in its favor. The GOP push may not yield anything substantive, but it forces Obama to keep taking sides within his base, and answer to Republican attacks that he’s blocking a job creation opportunity.

2. Money. When the senator in question is Roy Blunt, money always seems to enter the equation somewhere down the line.  As Think Progress reports, senators who have supported Keystone XL have been well paid by PACs representing Big Oil. Of the 35 senators listed by Think Progress,  Senator Blunt, as befits a new member of the senate leadership, has done very well for himself, having received $39,000, the third largest contribution.

Once again we are about to see corruption and political games trump reasoned and careful policy making. And, once again Roy Blunt’s right in the middle of it all. If you’re nostalgic for the Good Old Days in the Bush administration, it seems like your time has come again – if it ever went away, a proposition that may have been put to the lie by the election of Roy Blunt to the Senate.

For instance, on Big Oil:

Senator Claire McCaskill (D): Good morning. In Missouri today most Missourians are suffering and thinking about gasoline prices. They are not worried about what committee hearings are being held in Washington and they’re not worried about what letters are written. They’re just really worried about their family’s budgets because gas prices have really delivered a gut punch to, uh, most of the people who, uh, live and work in my state.

There are actually three parts to the price of gas. One is supply, one is demand, and one is speculation. And today we want to focus in on the first of those three, supply.

In May of two thousand and ten the refineries in this country were operating at an eighty-eight percent capacity. In other words they were using almost, uh, ninety percent of their ability to refine.

So, why is it today that these same refineries are only operating at eighty-one percent capacity? It is not because there is not enough crude oil in storage. There is plenty of crude oil in storage.

Refineries are the gateway of supply of gasoline in this country.

That is why the letter has been written to the FTC [Federal Trade Commission] to drill down, pardon the expression, and take a look at the refinery decisions that are being made.

This diagram shows you the refiner’s profit margin at that point in the process. They have obviously enjoyed a great deal of increase in profit just because they decided to deliver less fuel to Missourians and Americans across this country.

I think, um, the American people have, have every right to be cynical about the Big Oil and its influence on Washington. And this is just another piece of the puzzle that we need to get at as we try to take away taxpayer subsidies to Big Oil and hold big oil accountable for whatever may be going on in the supply chain that is hurting the families that I work for.

And then, to contrast, there’s Representative Todd Akin (r) who wants to be the junior senator from Missouri starting in 2013.

On preserving the Section 199 domestic manufacturing tax credit for the five largest oil companies, you know, corporate welfare for “the five biggest most profitable corporations in the history of the planet”:

FINAL VOTE RESULTS FOR ROLL CALL 293

H RES 245      YEA-AND-NAY      5-May-2011      10:59 AM

QUESTION:  On Ordering the Previous Question

BILL TITLE: Providing for consideration of H.R. 1229, to amend the Outer Continental Shelf Lands Act to facilitate the safe and timely production of American energy resources from the Gulf of Mexico; and for consideration of H.R. 1230, to require the Secretary of the Interior to conduct certain offshore oil and gas lease sales

—- YEAS    241 —

Akin

[emphasis added]

Yep, there is a difference.

“…If the proposed changes in tax policy result in increases in the price of gasoline, it would generally be through an increase in the price of oil. However, the price of oil is determined on world markets and tends not to be sensitive to small cost variations experienced in regional production areas. In the recent market environment, with the price of oil averaging approximately $90 per barrel over the period December 2010 through February 2011, and the current price over $100 per barrel, prices are well in excess of costs and a small increase in taxes would be less likely to reduce oil output, and hence increase petroleum product (gasoline) prices…” – Congressional Research Service, May 11, 2011

Senator Roy Blunt (r) never seems to miss an opportunity to promote corporate welfare:

Blunt Slams Higher Oil Tax Plan

Thursday, May 12, 2011

With gasoline prices approaching $4 a gallon in Missouri, and even higher elsewhere, Democrats in Congress,including Senator Claire McCaskill are calling  for higher taxes on domestic oil and gas production.

Missouri’s junior Senator Roy Blunt says that’s a recipe for economic disaster. Blunt says while nobody wants to defend big oil, we should be doing more to encourage domestic production.

Blunt says not only will higher taxes be passed along at the pump, it will make  us MORE dependent on foreign oil not less.

Blunt made his comments on the KSGF Morning Show with Nick Reed.

Wrong again, Roy.

The full Congressional Research Service memorandum:

Congressional Research Service

MEMORANDUM May 11, 2011

To: Honorable Harry M. Reid

Subject: Tax Policy and Gasoline Prices

This memorandum is written in response to your request for an analysis of the extent to which proposed tax changes on the oil industry are likely to affect domestic gasoline prices. The specific tax proposals that you requested be considered are the Section 199 deduction for domestic production, the repeal of the current expensing of intangible drilling costs provision, revision of the dual capacity taxpayer rules, percentage depletion, and the tertiary injectants deduction.

Background

The oil and natural gas industries benefit from existing tax policies. These provisions of the tax code, which many identify as tax subsidies, reduce the tax liability of the industries, and/or result in tax treatment that differs from that applied to other industries. As a result, these tax provisions encourage related activities to a greater extent than under a more neutral tax system, possibly altering the decisions made by affected firms with respect to investment, output, and pricing. If these provisions are repealed, it is likely that the economic behavior of the industries might be altered to an extent related to the size of the tax changes. The economic theory of taxation takes the point of view that corporations do not have an independent capability to pay taxes, only people can pay taxes. The implication of this viewpoint is that corporate income tax payments will ultimately be shifted to shareholders, owners of the factors of production, or consumers. Using this framework, the question of whether the tax provisions identified in your request will affect gasoline prices is one of whether the nature of the tax provision is such that forward shifting of the burden of the tax to consumers is likely, or whether the tax burden will fall on the shareholders in the form of reduced profit. The price of gasoline is composed of four components. The largest component of the price is crude oil,67%, followed by federal, state, and local excise and sales taxes on gasoline sales, 13%, refining expenses, 11%, and distribution and marketing expenses, 9%. If the proposed changes in tax policy result in increases in the price of gasoline, it would generally be through an increase in the price of oil. However, the price of oil is determined on world markets and tends not to be sensitive to small cost variations experienced in regional production areas. In the recent market environment, with the price of oil averaging approximately $90 per barrel over the period December 2010 through February 2011, and the current price over $100 per barrel, prices are well in excess of costs and a small increase in taxes would be less likely to reduce oil output, and hence increase petroleum product (gasoline) prices.

Section 199

The Section 199 deduction for the oil industry is a 6% deduction from net income, capped by limitations of payroll size. For the purpose of economic analysis, the repeal of the Section 199 deduction is equivalent to an increase in the tax on corporate profit. It is widely accepted that a proportional change in taxes on profit affects neither the firm’s incremental costs or revenues, and therefore does not change its behavior with respect to output. Since output does not change, there is little reason to believe that the price of oil, or gasoline, consumers face will increase.4Because Section 199 provides an incentive for domestic production compared to foreign production, some have claimed that the result of repeal would be greater dependence on foreign sourced oil and natural gas. In the short-run it is unlikely that this would occur due to the nature of oil and natural gas production. Once a well is in the producing phase, production tends to be maximized, within the limits of sound oilfield management techniques. With current oil prices at, or near, $100 per barrel in the United States, it is unlikely that firms will slow production, or close wells as the result of the loss of the Section 199 deduction.

Intangible Drilling Costs

Repeal of the immediate expensing of intangible drilling costs provision and replacement with a form of cost amortization more consistent with depreciation methods common in other industries likely will have no effect on current U.S. oil production, and hence no effect on current gasoline prices. The purpose of the expensing provision is to enhance the investment returns for investors in what has historically been a risky activity: exploring for, and developing hydrocarbon resources. Since the provision has little effect on wells already in production, available output and prices should be unaffected if the provision is repealed and replaced with less favorable amortization procedures. Wood MacKenzie, a consultancy, determined that the sum effect of eliminating the Section 199 deduction and the repeal of the expensing of intangible drilling expenses would have an effect on the rate of return to exploration, lowering the return of marginal projects, and reducing over-all domestic exploration and development activity by U.S. firms. However, the conclusion is sensitive to the level of oil and natural gas prices. High prices can raise rates of return substantially. Natural gas projects are more likely than oil projects to be affected by the tax changes because they are experiencing low market prices due to the volume of non-conventional gas production that has entered the market in the past several years. The Wood MacKenzie study did not conclude that U.S. gasoline prices would be affected by the tax changes.

Dual Capacity Rules

The oil industry has benefited from the ability to deduct very broadly defined foreign income tax payments from their U.S. tax liability since the 1950s. If the definition of what constituted an actual income tax payment were tightened and foreign governments did not reduce their charges correspondingly, the industries’ domestic, as well as total income tax burden would likely increase. However, this provision again is a tax on profit, and in line with the economic theory of taxation, should have no effect on the firms output or pricing decisions, and therefore no effect on the price of gasoline. The incidence of the tax would appear to be on shareholders. The change in the dual capacity tax payer rules might make over
seas investment that leads to foreign profits less attractive to the companies than investment in the United States. This could lead the firms to enhance domestic capital spending leading to increased domestic production and reduced oil dependency.

Percentage Depletion

The percentage depletion allowance was repealed for the major oil companies by the Tax Reduction Act of 1975 (Pub.L. No. 94-12). Percentage depletion remains generally in effect only for the independent oil companies. As a result the percentage depletion allowance should no longer be a factor in investment, output and pricing decisions by the five major oil companies.

Teritiary Injectants Deduction

Costs associated with the use of tertiary injectants are currently treated as deductible expenses. Expensing of these costs encourages their use and enhances oil production levels. For smaller, independent exploration and development firms the cost incentive could be important. However, the five major oil companies, to which repeal would apply, earned over $32 billion in net income in the first quarter of 2011. Repeal of the deduction for the industry is estimated by the Obama administration to yield only $6million in revenue in 2012. Only a part of the $6 million revenue estimate would be paid by the five major oil companies. As a result, it is likely that repeal of the deduction, with a change to capitalization, or amortization, of these costs, would have only a small effect on oil production or pricing, especially in a market where oil returns over $100 per barrel. In periods of low oil prices the repeal of the deduction could have a larger effect. The effect on domestic gasoline prices is likely to be small.

General Considerations

The magnitude of the revenue effects of these tax changes might be important in evaluating their effects on the oil industry. The five provisions, taken together, are expected to raise approximately $1.2 billion in 2012. For the calendar year 2010, the revenues of the five largest oil companies were approximately $1.5 trillion with additional revenues accruing to the non-majors. The net incomes, after tax, of these five companies totaled over $76 billion with additional earnings accruing to the non-majors. The total expected tax revenues are only 5% of the earnings of the five largest firms in the industry and a smaller percentage of the total industry. Even if the changes in taxes did impact domestic, or overseas exploration and development activity, that does not necessarily imply that less oil would be available in the U.S. market. More might be imported, with little or no effect on gasoline prices. Political unrest, expectations effects on financial markets, macroeconomic growth trends, the value of the dollar and a host other factors have contributed to fluctuations in the price of oil and gasoline. Any effect due to changes in the tax treatment of the oil industry would be hard to separate from the changes due to other factors, given the size of the relative magnitudes.

Previously: Senator Claire McCaskill (D): end giveaways for Big Oil (May 10, 2011)