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$9 Billion Loophole for Synthetic Fuel
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.'"
Does anyone think congress reads any of these bills?
And if something sneaks by, everyone (the public) gets riled up for a few days, and then forgets about it. Short attention spans of the public are great for politicians...
And All I Ask is a Tall Ship And a Star to Steer Her By
I'm not surprised in the least. Too much good legislation is full of hot air and turgid prose that completely strips it of any power.
"I lie right back and turn the radio on..."
Wasn't this the whole point of George Bush's State of the Union address?
Of course nobody knew about it. I can't even file my income taxes without the aid of a computer program and a book. It's the same story with the earmarked discretionary spending in transportation bills. None of the representatives could read the entire bill even if they wanted to, and so "pork" is jammed through and the tax payers are left soaked. The lesson is: if the bill is too complicated for ordinary individuals to understand, it's too complicated period.
The natural progress of things is for liberty to yield and government to gain ground. - Thomas Jefferson
Yeah the nazi's used to make oil from coal during WWII because of the US embargo.
I'm glad this has been found and is being proffered to the public to read.
It is important that the public is aware when this type of thing is smothered in mind-numbing pages of legal pap. If it makes you mad, write your representative/senator. I did.
A Passionate Independent Musician
I mean, this administration has already buried us way beyond repair. I personally have started reading brochures from our future owners, namely China.
My diesel automobile could easily run biodiesel refined from old fry grease from the McDonald's down the street if only Uncle Sam would shove Big Oil out of the way and let it be refined. Nevermind that the process could easily be done for under $1.00 a gallon. Nevermind that it doesn't depend at all on the Middle East. Nevermind that it burns cleaner than either regular diesel or gasoline. Bah.
Jesus told him, "I am the way, the truth, and the life. No one can come to the Father except through me. - John 14:6 NLT
This really goes a long way toward making the fair tax seem even better.
http://fairtax.org/
Anyway, it'll be interesting to see how long this synfuel "industry" lasts. Probably some unscrupulous entreprenuers are poring over the tax code looking for a new loophole to exploit before anybody notices.
--Chag
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.
Although people think of programs like welfare when they hear the term socialism, govt. incentives to help business are the same thing. You can argue that giving incentives to companies to produce technology in areas the US needs to be headed in is a good thing, but don't be surprised when the money is ill spent. Unlike in a corporation, where people are fired for wasting money, in govt. you win elections for getting tax dollars into your district, even if they are being spent on something completely non-productive.
Vote for Pedro
Make them read these bills.
I don't see huge tanker trucks offloading oil at McD's like I see them do at the gas stations. And it's only cheap because there's so little demand for used cooking oil.
So, why doesn't Congress use a revision control system? When the day comes to vote on a bill, you check for changes since the last time you read it. If there are changes, you know who made them and when. Your basic audit trail.
I suspect that one of the reasons something like this hasn't been implemented yet is that most politicians are habitual defectors rather than cooperators; they may not want their enemies to be able to use dirty tricks, but they'd like to be able to do it themselves.
Ah, besides. Can you imagine Congressional debate on whether to use CVS, svn, or... what am I thinking? Free software wouldn't even be on the table.
Republicans and Democrats alike pledging to crack down on influence peddling,
Riiiight. Pardon my underwhelming response, but I seem to remember a similar effort to "crack down" on campaign finance abuse. Oh wait...that has yet to happen. And this is something else that will also probably never happen. Any elected person worth their weight in salt (literally) knows that exercising care not to bite the hand that fills the campaign trough is far more pressing than more mundane issues - like maintaining a sense of integrity. I'm filing this in the "I'll believe it when I see it" category.
Well, the green (little g) ones with lots of zeros on them, anyway. Besides, Frist is probably not the only one to have stock, and it would only take a few to have stock in companies investing in synthetic fuel for that 9 billion to work out to be a hefty profit, even without a single kickback. (Which we all know they're likely to get anyway.)
It's a small world and it smells funny; I'd buy another if it wasn't for the money; Take back what I paid (SoM)
In Soviet America, synthetic fuel burns you!
"Speaking the Truth in times of universal deceit is a revolutionary act." -- George Orwell
And what's worse, a VW Golf tdi (turbo diesel) that gets 45mpg on biodiesel with emissions far below that of high efficiency gasoline cars are not elliable for the green car tax credit. I would love to see a comparison of exhast emissions mass per mile comparison between the Prius and the Golf tdi. The Prius should win in city driving, but I would bet on the Golf for highway.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
This is not news. This was in Time a few years ago. Apparently there are several Pennsylvania and West Virginia coal mining companies that paid little to no taxes for 5 years by rigging up some tar spraying system over their coal cars.
This is another example of why you cannot rely on the government to "solve" these fuel problems. They end up making bad situations worse. Take the oil crisis of the mid 70's. The government tries to solve the problem by implementing price controls instead of letting market forces take hold and lowering demand. They end up running half the stations out of business for a time and creating huge lines at the ones that do manage to stay open. I'm not a Bush fan, but he should be praised for leaving things alone after Katrina. Gas prices worked themselves out because people became concious of their consumption. Demand fell, prices fell. The Market worked.
I say we convince a congressman somewhere to sneak a small snippet into some must-pass law oen of these days. A snippet that would allow me once a year to show politicians what I think of their work by requiring each politician to allow me to smack them upside the head. And make a big shindig of it all, invite the press, hire a caterer, and of course all a tthe taxpayers' expense. This snippet of law would not allow anyone to back out of getting smacked. What a great way to spend one day a year, and it could be a heck of a party. National Politician Smacking Day, everybody gets off work to watch it on TV and everything.
Do you think they'd start actually reading what they vote for if something like this happened a few times?
This is almost in the ballpark of reasonable behavior in the grand scheme of things. Considering this is a gigantic buearacracy, it's standard behavior, regardless of party.
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.
Interesting how they tie the giveaway to current Republicans and Democrats and yet who is mentioned supporting the giveaway in the article?
* Charles Grassley, Republican (IA)
* Rick Santorum, Republican (PA)
* Gordon Smith, Republican (OR)
* Orrin Hatch, Republican (UT)
Who is mentioned as being against the giveaway?
* Lloyd Doggett, Democrat (TX)
So maybe it's the so-called "liberal media" who is just raking the GOP over the coals. Or, maybe it's representative of trying to show the corrupt GOP Congress as being bipartisan in a weak attempt to appear "fair and balanced."
In this case, I suspect it's the latter. YRMV.
Support a few technologists in Washington.
Cool! I'm spraying my house and car with pine tar. Hell I'm spraying thew cat with pine tar! Come on tax break!
"spraying coal with pine tar qualifies" I wouldn't be surprised if Robert "pork addiction" Byrd (D. WV), knew about this.
why, when all but the most hardened oil tycoons can see global warming happenening all around us, are energy companys being subsidised to slightly alter coal then burn it when coal is one of the least efficient of fossil fuels to burn.
This is what happens when you elect an oil tycoon puppet. I'm not American, but as far as i can see, all America is interested in is making sure oil is as cheap as possible. This is wrong on so many levels.
We need to be drastically cutting our carbon emmissions not some vauge time in the future when it suits us, but now. It is quite possibly too late to stop a global catastrophe that could wipe out most of the planets population. Everyone can see the effects of global warming happening, more extremes of weather, and anyone who tels you otherwise stems from the same group that have corrupted washington.
America is probably the only nation with the power to kick start a lasting change in the worlds energy policy, yet their flat denial of the situation puts the whole world in jeprady.
Actually, if you'll read the article, you'll see that they're not even necessarily making oil. That's the outrage.
It's huge tax scam, and language buried in a budget bill has changed the rules to prevent the credit from expiring now that oil prices have risen to where it would theoretically be competitive.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
man, you guy are *easy*!
who, exactly, do you think adds this crap into the bills, martians that we can no longer look for due to budget cuts?
this is *exactly* why these unethical people work so hard to get into congress! it isn't the salary, people!
just stop, relax and think this through to its logical conclusion.
btw, cut th fair tax crap. it is just another way to shift more of the burden onto the poor and away from the wealthy.
hint, if the poor / lower class / middle class end up paying more taxes, guess who pays less?
again, think this through, people.
at leats make it challenging for those who pillage all your stuff!
"Go back to start"...
The beauty of the FairTax is its naive idea that the tax rate would remain universal. This was also the beauty of the income tax system before reality came crashing down on it. Politicians will find ways of handing out favors to campaign donors so long as there are campaign donors and no association between government spending and government revenues.
The only two things that could fix this are:
It doesn't matter how revenue is accumlated if there's an incentive to spend it unwisely and an ability to hide it from the people.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Posting AC for obvious reasons.
The council is directed by one of Washington's premier tax lobbyists, Kenneth J. Kies, managing director of the Clark Consulting Federal Policy Group.
I am familiar with Clark Consulting. Their tagline: "Helping You Keep Your Best People." Best people = executives and salespeople only (usually the same; with all the title creep, everyone in sales was a VP). CEO, Chairman of the Board, majority shareholder - all the same guy. They sell insurance to businesses, primarily, used to be Corporate Owned Life Insurance (COLI), where key employees (executives) would be insured. In case they met a tragedy, the company would collect. There was also a pretty good tax benefit to this kind of thing - until tax laws were changed, after some companies started taking out these kinds of policies on random employees without their knowledge (janitor's insurance). I have no knowledge that Clark Consulting ever did that kind of thing, but the change in tax law pretty much wrecked COLI.
So now there's Bank Owned Life Insurance (BOLI), which I'm presuming is pretty much the same thing, except for banks, and with the tax benefits. Clark acquired Long, Miller and Assoc - who was their big competitor for BOLI. Clark also acquired Federal Policy Group, a lobbying group headed by Ken Kies, presumably to lobby in favor of keeping the tax benefits of BOLI, among other things.
All this is publicly available information. What I see of this, from a "I'm not a finance or sales or insurance person" -- they develop insurance products that hinge on tax benefits (without tax benefits, there wouldn't be a market), then sell those products to businesses. It's just another way to shelter businesses from taxes, thereby shifting the tax burden more to people and companies that don't earn enough to build tax shelters. And take a cut off the top for the shareholder(s).
I have long been a proponent of this idea, but it needs to expand beyond each bill and its amendments. If you've ever read a huge bill like the Patriot Act, you know that a lot of any bill is modifications to existing law.
We need to be able to see diffs on existing law in addition to diffs on the bill being passed. In addition, any amendments should show what was changed in the bill and existing law. The main problem with this idea is that it would rely on either natural language processing or interns (which could screw up or deliberately not flag certain changes).
I want this desperately, and if I ever win the lottery or something, I'm going to fund its creation.
If it's for-profit but free, you're not the customer -- you're the product (e.g., the Slashdot Beta's "audience").
Outside of Social Security and Medicare?
Hell I pay more than that in taxes.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
For some reason, you all seem to assume that congress reads it in the first place. Knowing what's changed doesn't affect them when they don't know what was originally there.
There are literally thousands of pages being debated and voted on daily, and it would be physically impossible to read them all. They have aids to help, but they would be unable to spot the implications of a single, innocuous looking line as the one described in the article. Being able to track changes would be of no use.
"I am the coolest thing in the room".
"Speaking the Truth in times of universal deceit is a revolutionary act." -- George Orwell
I work in the power industry and this has been going on for 5 or more years. Take coal and spray junk tar, bunker C type oil or whatever on it then sit back and take your tax break and profit!.
One site I was at had the stuff congeal in their coal bunkers. They had to blast and hydro the gunk out. The bunkers are 20+ ft in diameter, 80+ ft tall, about 6 of them. The only place they had flow was in about 3 foot of the center of each bunker. It had to cost a ton of money to get the stuff cleaned out and also in lost generating revenues, but they didn't care because of millions in tax breaks.
A power station near Charlotte, NC is adding the capabilty to mix this "syn-fuel" costing millions in infrastructure which will be recovered in a couple of years (to be fair, the same and other plants are adding various pollution controls and the cost of $1.25+ billion spread over several plants, see here for some PR info on the pollution controls and here for a blurb about both the synfuel and pollution controls.
I just didn't realize it was still going on. I remember reading about this several years ago. What was kind of disgusting was how obvious it was that all involved were well aware they were ripping off taxpayers. One "Synfuel" factory had a conveyor belt carrying the finished product away from the factory. Of course on the section of conveyor that passed by a public road they made sure to cover it so that no one could see that the finished "Synfuel" was just coal sprayed with diesel fuel.
and make biodiesal from the used oil and sell it to my niebors for 1.00 a gallon.
Im gonna be rich
rich i tell you
but without it there would be no space travel!!
Being a resident of Oregon , after reading the article, I sent a brief note to my congress critter Mr Smith. Have you done the likewise?
You suppose sawdust could be considered an alternative fuel?
NB: Actualy is was; Grew up in houses heated by sawdust and worked at a university that was heated by hogd fuel (chopped wood waste).
It says so in TFA, for cryin' out loud. The kneejerk reaction of the left-wing idiots is to blame Bush for everything. This has been around for 25 years and it was the brain child of the LEFT, not BUSH.
"... spraying coal with pine tar qualifies..."
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!?"
"Don't let fools fool you. They are the clever ones."
I agree a revision system would be very handy, so they could quickly read just the changes. More than that though, Rider bills are the biggest piece of political bullshit I've ever heard of. These need to be made illegal ASAP. (But of course they won't). If something is not popular enough to pass on its own, why the hell should you be able to hide it in another bill that you're sure will pass? Fuck that. I hate fucking politics.
Joseph?
Anyway, it'll be interesting to see how long this synfuel "industry" lasts.
Err, That should be sinful industry...
Honestly, I hold out little hope for Congress changing their reading habits (or lack thereof). *However*, having a viewcvs kind of interface (annotate/diff/etc through a web interface) *would* make it far easier for people to see who's making what changes and holding them accountable later on.
Imagine being able to have people point to changes (for instance, on their blogs, or in emails) made in a bill the same way we can point to code diffs now thanks to tools like view{cvs,svn} - it'd be great!
Various ramblings
Sheesh...ptm
Support TBI Research: http://www.raisinhope.org
To see classified stuff, you must have two things:
1. clearance (assumed for members of congress)
2. need-to-know (not assumed for anyone)
Having a TOP SECRET clearance doesn't grant you access to very much at all. You must have a need-to-know requirement.
I should say that China does not own the most U.S. foreign debt. China is the second highest owner of U.S. foreign debt, but Japan is the country ranking #1, with three times more debt bought than China. This does not enter news reports, of course, because people are much less worried about Japan's integrity.
"And I hear there's an E95 for diesels, which has 5% gasoline in it."
Noooo, putting any gasoline through a diesel engine is a big no no! I think you are confusing E95 with B95, which is a blend of 95% bio-diesel and 5% petro-diesel. B95 has no gasoline or ethanol!
Most biodiesel bought at retail stations is B20 (20% biodiesel) although it is possible to find B100. Willie Nelson's new biodiesel fuel Willie Diesel (I kid you not) is B20.
The main advantage of using B20 is that it greatly reduce exhaust emissions over 100%petro-diesel. B100 adds the benefit of eliminating mid-eastern oil dependence. My diesel auto runs B100 and it is a great feeling to know that not one penny of my fuel cost goes to the Saudi royal family or Exxon. On the downside, B100 costs about $0.35 more per gallon than petro-diesel and provides slighty worse fuel mileage. To me the trade-off is well worth it.
Let me get this straight:
- Synfuel is meant to be a petrol and diesel replacement produced from coal (for mor information look at the South African company Sasol: almost half the country's requirement of petrol are made of coal. And yes, it works just fine.
- At high oil prices owning real synfuel technology is like a licence to print money. You take cheap coal and turn it into expensive petrol.
- You may argue that synfuel production is unprofitable at low oil prices and therefore, subsidies are needed at low oil prices to make companies invest into this technology.
And the last thing is precisely what the US government intended with its tax break. I don't want to say that it is sensible tax break, but I think some people would argue it is.
So, to summarise:
High oil prices -> Synfuel producers make money because they can sell their synpetrol at high prices
Low oil prices -> Synfuel producers make money because they get a subsidy.
HOWEVER, the companies described in the article do not produce synfuel. They simply make a nonsense modification to the coal that qualifies them for the taxbreak. Therefore, they do not benefit from high oil prices as a real synfuel producer would.
So now, they are lobbying to get their taxscam going that has NO benefit to the public at all.
What lawmakers should do: Tighten the definition of synfuel so only real synfuel producers qualify for the tax break. These will be happy with high oil prices and although they will still want the tax break at high oil prices, they shouldn't get it as they are making enough money on their own.
SmilingBoy.
I have this funny feeling that once enough people start burning biodiesel the used cooking oil won't be free anymore
Even those who arrange and design shrubberies are under considerable economic stress at this period in history.
Here's another article from Jan 2004.
http://www.thehill.com/business/012104_fuel.aspx
Web 2.0 == Giant Blogspam Circle Jerk
"If you really want the streets to be safe then consider legalizing drugs"
Yes, because a dark alley with drunk (i.e. legally drugged) people in it is so safe.
And streets driven on by drunk (legally drugged, if not legally driving) people are also safe.
And we have no societal costs from legal alcohol and tobacco (the #3 and #1 preventable killers in the US).
Wrong again.
You assume a certain stereotype for Republicans.
The people that fit that stereotype have grandfathers that can actually support themselves, and don't need to rely on their descendents.
Also, the people that fit that stereotype are more likely to have strong family relationships, and not mind taking care of family.
The real Republicans are just as human an anyone else, and are no more or less likely to take care of their families.
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!
I would never walk across a picket line
Solidarity forever, don't mean it just some times
So long live the union, cross my heart and hope to die
If I should ever walk across a picket line!
The fact that you generally need to be a lawyer to read and understand the law is... well, criminal. Google Law to the rescue, anyone?
If other reasons we do lack, we swear no one will die when we attack
In the movie "Superman", Perry White, editor of the daily planet says -
"I want the name of this paper and Superman to go together like peanut butter and jelly, like politics and corruption...."
The problem is basically this - you have created an office that gives the holder permission to spend the peoples money that they exert no effort in earning. THEN you have created an election process that requires millions of dollars to be spent to achieve that position of authority. How many seconds does it take the average fool to figure out that you can use those "public funds" and give them to firms that will kick back a fraction of the proceeds as the legalized bribery that we call "campaign contributions".
Then you act surprised that federal spending is full of "gifts" to large companies. Sheesh - did you go to school on the short bus?
There is one good way to fix this -
A constitutional amendment that disempowers Congress and substitutes a direct democarcy. Every taxpayer - along with their federal tax return, gets to say where the money they are "contributing" gets spent. Congress would assemble a sales catalog of possible federal programs, and taxpayers would pick and choose how much to spend on each one. Taxpayers would also get to vote each year on raising or lowering the tax rates.
THAT would put some radical reform into the federal government!
"Sic Semper Path of Least Resistance"
Well, if someone owns 3 restaraunts and $8m in stocks and complex property trusts, then they
might not have the 2 hrs/day to do it. Their own time might be worth $200/hr, so why waste it doing
taxes, pay someone $50 to do it, and have relaxing fun.
On the other hand, if we just made everything flat tax 10% or no more than 15% like china, then all
accoutants and accounting software would die.
Liberty freedom are no1, not dicks in suits.
Just like 300 bad programmers doing opensource on something with each one adding whatever feature they like.
In the worst coding style possible and with no one testing the code at all.
Liberty freedom are no1, not dicks in suits.
If you are that bitter, why not go into business for yourself?
Who the hell wants to work for someone else? There are thousands of things you can do right out of your house. It isn't easy, nor do you have the "security" of employment (although I would argue that "security" in employment is becoming less and less) but at least you are your own boss and your potential earned income can be huge.
I am self-employed and I just don't get why people want "a job"
Libertas in infinitum
Congess knows of this. It's been going on for years (at least seven that I've been aware of. And this is not even a drop in the bucket. Americans are dumber than jackasses and gutless to boot. There have been gas bills in Georgia to heat a normal residence of $950 for one month. This is because the, "Gas Guy, Sonny Purdue, Governor", accepted $100,000 from natural gas contributors (i.e. Veeps, lawyers and private investors in the gas company) so when these people say defecate, "Gov Gas Guy", is wiping. Why do you think Osama blew the towers:? Answer: To get to the evil corporations in America, was the major reason.
At least 4 or more years old... So it was recycled back into whatever bill this is about... but the programs / loopholes have been around for years... I remember reading about this the first term of G. And I wouldn't be surprised if it wasn't around before then... It's not the party, it's not the person in office, it's politics in general.. EVERYONE has capacity for EVIL... So No, I'm not a troll against or for any particular group...
Besides, The Ori will straighten them all out soon enough... now wer'd I' put my ZET?
--- Relax, that mass muderer is just trying to reduce our carbon footprint, one fetus at a time...