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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.'"
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.
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.
Those numbers are bullshit...the Diesel and Gas numbers are obvious BS too. No one would ever make gasoline or diesel if it took more fossil fuel to produce than it yielded. It just wouldn't be worth it.
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.