Some of you may know about fracking, some of you may have personally experienced the effects that fracking can have on the environment; whether you like it or not, those responsible for fracking are making millions in profit and not caring about the destruction they cause in those states. Go to the website I have posted below, make an account if you’re not already a member and sign the petition to put more tax on Fracking. Let’s get some money circulating in the states to help out with our overall debt. It’s time to make a difference, are you willing to be a part of this change?

Unlike others in the world, I believe every little difference make. There’s probably millions out there with the same opinion of “my vote won’t matter” well, in reality, if those million people voted then it would matter… so take a chance and just try something different, I did!

https://wwws.whitehouse.gov/petitions/!/petition/put-more-tax-fracking-and-protect-citizens-are-affected/tSSSsnc5#thank-you=p

First and foremost, the greatest benefit of fracking is that it will immediately provide jobs. What is often overlooked, however, is how many jobs it will undoubtedly destroy in the long run. Fracking consumes huge amounts of drinking water and uses toxic chemicals. When spills occur (which is inevitable in any man-made operation), those toxic chemicals are released into the environment, right into the path of drinking water sources. Aside from the hazardous chemicals used in the process, fracking also releases naturally occurring deposits of dangerous substances, including radioactive materials, found in high levels in the Marcellus Shale where the NY fracking would take place. There will be many sites flunking their radon tests if fracking is allowed in New York.

Such chemicals have ended up in the water sources at hundreds of places in New Mexico and Colorado, which has suffered over three-hundred spills of chemically contaminated fracking waste water. In Pavilion, Wyoming, the EPA found high levels of cancer-causing substances that are often used in fracking, in the water supply of over forty homes. Residents in this city have also contracted a number of neurological ailments from exposure to these chemicals. The residents of this city had fresh clean water until the fracking began, at which point their water began to turn black as well as smelling and tasting like gas.

Perhaps the most alarming fact is that fracking is exempt from the Clean Water Act of 2005. Fracking companies are exempt from disclosing what toxic chemicals they use in the process. In short, they can pump what whatever toxins they want into the drinking water, reap the profits from the gas produced, and be long gone while the residents are left to deal with the aftereffects.

Due to these ecological impacts, people who will be adversely affected include, but are not limited to, farmers whose livelihood depends greatly upon water availability. Waiters, cooks, and others in the restaurant industry when tourism rates fall due to polluted water sources. Hotels workers for the same reason. People involved in real estate will be affected, as banks know the impacts of fracking and are reluctant to loan to those in the vicinity of fracking wells. Not to mention the fact that property values plummet in the wake of fracking fallout due to contamination.

Gas is not a gift that keeps on giving. With our current rate of consumption, it is something that will inevitably run out. Therefore it is ludicrous to destroy so many lives for a few extra years worth of what is ultimately a finite resource. The ones who profit are the ones who will be least affected by the aftermath of fracking; the gas companies. The rest of us pay for the gas companies’ greed.

People often tout fracking as a way of gaining energy independence. This is a misleading claim, however. Fracking produces natural gas, a liquid that is used largely for home heating. America’s larger energy consumption, however, is petroleum. This oil is used in everything from cosmetics to plastics to medications and of course is the gasoline that fuels American automobiles. In fact America consumes more oil than any other country in the world. The oil for this country’s guzzling appetite is fueled largely by other countries such as the Middle East which hold the largest deposits of oil. No amount of fracking will change that, and therefore will never lead to energy independence.

The natural gas produced by fracking is claimed by supporters to be a “cleaner” energy source, and while it is cleaner than oil (most of which doesn’t come from this country anyway), it actually leaks more emissions than coal. Robert Howarth, a professor at Cornell University conducted a study on the emissions produced by natural gas and found that “Compared to coal, the footprint of shale gas is at least 20 percent greater and perhaps more than twice as great on the 20-year horizon and is comparable when compared over 100 years.”

Additionally, hydrofracking has been found to cause earthquakes, just one more way fracking will harm people and their properties. Cuadrilla Resources, a British hydrofracking company actually admitted that their fracking well did cause multiple, minor earthquakes. Unlike seismic events on the west coast, where the damage is generally more localized, quakes on the east coast are often felt throughout an area ten times larger than the west coast, due to the fact that the east coast ground is colder and more intact. East coast quakes are often felt throughout several states, making the damage area more widespread. Also the locations of many fault lines on the east coast are unknown, making it all the more difficult for fracking companies to avoid. Just one more reason to keep fracking out of New York.

In the end, I think there’s one phrase that sums up the situation. Don’t frack with my water supply! Don’t frack with New York!

According to the New York Times, “The Republican-led House passed three bills in the last 10 days that would significantly expand and accelerate oil development in the United States, saying the administration was driving up gas prices and preventing job creation with anti-drilling policies.”

Palin received a lot of flack after the BP oil spill for her slogan on drilling. But ever since the recent sky-rocketing prices at US gas pumps, the tides seemed to have taken a complete turn since Obama’s promise for more domestic drilling.
 
“Obama needs to really get serious about drilling domestically,” Sarah Palin, former half-term governor of Alaska said on Fox News last month. She went on to say, “We need to concentrate on domestic drilling,” and “extract responsibly the God-given resources that we have domestically.” She also added that the rising fuel prices were a result of supply and demand.

But Palin still has her critics, according to greentechmedia.com, “…it’s not supply that the U.S. has to increase. In fact, in a global oil market, no amount of increase in U.S. production will influence oil prices given the relative size of our oil reserves. “Drill, baby, drill” is an economically and environmentally bankrupt policy. The United States is already the world’s third largest producer of crude oil. Adding some incremental production is not going to impact the price at the pump in a global petroleum market.

Kevin Boyles, CEO of California based oil and gas company, Team Resources had this to say on Palin and her policies. “She definitely is a fiery, animated and interesting person. “Drill baby drill”?  I do support drilling in Alaska and offshore. I also believe we should take special care when drilling in eco sensitive areas. Maybe some of the additional regulations which I expect to be imposed following the BP incident could help move this initiative closer to a reality.”

Regardless of Palin’s countless critics, perhaps she was right on the money with this one. And hopefully in the near future, Americans will feel the beneficial effects of domestic drilling at the pumps and ultimately, in their wallets.

You can get more information about Oil Gas by visiting Team Resources.

05/15/2011

The Rich Get Richer: Legalized Wealthy and Corporate Tax Dodging

            A hybrid sports car costing one hundred thousand dollars or a one hundred foot yacht as a new primary residence is considered a reasonable tax write off in the United States’ current tax system. Need is not differentiated from extravagant luxury purchases when it comes to corporate business expenses. Budget cuts, rising health care costs and the impending collapse of our economy (whose budget is never balanced) sends our country deeper into debt each and every year. According to the article In Oregon, Regional Colleges Struggle to Overcome Shortfalls, author  Karin Fischer explains that “budget cuts, due to Oregon’s unstable tax structure, forced the university to fire twenty-four faculty members and raise tuition in order to keep the university open at all” (2007, p.A16). Our government needs more revenue to support important causes such as Planned Parenthood, education and basic public health care. At the same time, Oregon voters have repeatedly voted down measures such as a sales tax as well as other increased taxes that would boost tax revenues. Are we simply victims of a capitalist system, doomed to let any form of socialism disappear from the face of our country because we don’t want to pay more taxes? I contend that we do not need more taxes but we need to reform our tax structure. This can be achieved shifting the tax burden from the poor to the wealthy, and closing the loopholes that allow wealthy individuals to hide behind their corporations and itemize their tax deductions until they pay little to no taxes at all. Tax advocates and other reformists tend to focus on implementing new taxes, which are resisted in the voting booth, tend to be regressive and are hard to integrate into our current tax system. Tax reform can be slow and complicated and requires active participation by voters, but the results are necessary and worth every bit of effort.

            Closing tax loopholes for wealthy individuals seems to be the quickest, fairest and most effective method of raising tax revenues as opposed to creating new regressive taxes such as a national sales tax. Examination of the IRS’s Schedule A form reveals a very conspicuous loophole. Author Cassandra Ingraham (accountant and tax class instructor in San Francisco) reports, “if a household’s income is over $156,400(couple) or $78,200(individual) there is no limit on the number of exemptions that household can claim on their tax return,” in the article, Understanding the IRS’s Largest Tax Loopholes, Can Lead to Your Own Financial Growth (2010, p.1). Additionally, itemized deductions are limited for households/individuals who earn less than the aforementioned amounts. Is it fair or logical that people who make more money should be allowed to claim more tax relief than those who make less money? Big Oil and national gas companies are recording record profits, wealthy businessmen are showing no profit for an entire year by abusing tax deductions, and landowners can pay no property taxes by exploiting agricultural tax loopholes. Many of these loopholes are unknown to the public and seem to lack common sense that most people use in their daily lives. Germany’s tax structure solved many loophole issues and requires the wealthy to carry an increased tax burden in an equitable manner. Germany should be used as an example for the US tax system, because our current tax system allows the wealthy to claim as many tax refunds they want while forcing the poor and the middle class to carry the heaviest tax burden.

Regressive taxes and the need for reform (focus on a national sales tax)

            Tax reform is a liquid topic and there are many methods and theories on what is the best way to meet our budget demands. An example is the proposed national sales tax that would eliminate income taxes altogether. At surface level, this idea appears to be fair and progressive. Closer examination shows that a single national sales tax is regressive and will weaken our overall tax structure. The concept of a national sales tax is easy to grasp. Proponents of a national sales tax suggest we remove the federal income tax, and raise all government tax revenue through products people buy. The idea that people are only taxed on what they purchase seems fair, but there are several issues that make sales taxes hard to enforce and a less viable alternative. In fact, a national sales tax may actually create new loopholes. Most states do not collect sales taxes for goods purchased on the internet. What a convenient way to circumvent a sales tax… Just buy your next TV, T-shirt or DVD player on the internet. Oversimplifying a tax structure may make revenue streams much less stable. Diversity typically provides stability within a tax structure and lack of stability creates problems that may lead to revenue loss. Oregon and Washington provide excellent examples of the absence of tax diversity. Washington does not have an income tax and compensates by having a higher sales tax. Oregon has no sales tax and compensates with higher income and property taxes. Oregon and Washington are facing almost identical budget shortfalls and every year face the largest budget cuts to education, health care and other social programs due to lack of diversity. These two states provide a profound example why oversimplifying our tax system by changing to a national sales tax is a questionable or bad idea.

            A less apparent issue of a regressive sales tax is the fact that poor and middle class families and individuals must spend larger proportions of their income than the wealthy. According to author David Cay Johnston in the article Eat the Poor, “the average income for the bottom half of taxpayers was $15,300 per year in 2007” (2011, p.9). People making less than $9,350 per year are exempt from any federal income taxes but still pay taxes such as import taxes, gas taxes, sales taxes and many others. While these taxes are necessary to support our economy the poor people of our society spend a much larger portion of their income in order to survive. Increased taxes on food and clothing penalize the poor who must spend more of their money in relation to how much they make. Saving money is often not an option at all as people struggle to put food on the table, and provide the many essentials of life for their families. The disposable income of middle class and poor families has steadily decreased since 1975.  In the past, people used to be able to graduate from high school find a “regular” job purchase a house, buy two cars and support a family. In 2011, it is nearly impossible for a high school graduate to accomplish family goals without some kind formal education outside of high school. Competition for jobs is intense. The increased need for education, not only removes a person from the workforce, but often requires them to go into debt in the form of financial aid. Present circumstances dictate that we must consider how we can fairly increase revenues to support our state and federal governments.

Capital gains/losses and the Job Creation Act of 2004

            Tax deductions called “capital losses” are commonly exploited tax loopholes. Most capital losses benefit the wealthy as they typically apply to landlords and corporations. Real estate write-offs account for some of the most commonly abused tax laws in the US. Landowners such as Donald Trump can literally show no net profit for entire year by itemizing deductions. If a corporation has outstanding loans used to pay for land or buildings, the amount can be deducted from their tax returns. In addition, hazard insurance is another common form of tax evasion. Donald Trump, as an example, can deduct all of the hazard insurance on his many hotels from the overall net profits generated by his empire. Unfortunately, the average citizen is not permitted to deduct home-owner’s insurance (almost identical to hazard insurance) from their overall tax bill. Ironically, our government gives multi-billion dollar corporations tax breaks for the same type of insurance. Real-estate property taxes are deductible as well. While this may help some families it really does not help anyone who does not own their own home and in the case of large corporations, may account for large tax deductions allowing the corporation to avoid contributing to the US economy. There are several other deductions that corporations and wealthy landowner’s take advantage of as well. These include: property management costs, legal costs and lawyer’s fees, as well as settlements and accountant’s fees. All of these deductions benefit the wealthy since many poor and middle class families and individuals are not even aware of their existence.

Property depreciation deduction is currently one of the largest loopholes in the US tax structure concerning corporations. According to tax consultant Mark E. Battersby (financial and tax consultant in Pennsylvania) in the article, Depreciation deduction available for leased property, “property owners are allowed to deduct up to 30% of a building’s overall value in the first year of ownership” (p.43). The IRS assumes that a building will depreciate to a value of $0 over a period of 27.5 years. After the first year the owner can continue claiming tax deductions for depreciation for that building for the next 26 years. Let’s imagine building is owned by a wealthy person, such as Bill Gates, and he leases this building owns to a corporation called Microsoft. Bill Gates the landowner can deduct any improvements made to that building even though he is leasing it to a corporation he owns. Closing this loophole will lower deductions Bill Gates can claim from property depreciation. Improvements that increase a building’s value can be taxed, but not surprisingly, there is a way around this as well. If the Microsoft Corporation deems that the workspace does not meet their work requirements and chooses to make improvements to the leased space, the Microsoft Corporation can write off these improvements as business expenses. As a landowner, Bill Gates did not pay for any improvements to the property himself, and therefore, can still claim property depreciation while the Microsoft Corporation gets a tax break for business expenses. The current US tax structure is systemically inequitable.

Not only do corporations and wealthy individuals enjoy a plethora of ever increasing tax loopholes, but they are taxed at a reduced rate on capital gains made in other countries. Capital gains loopholes are justified by the idea that keeping tax rates low will return money to the US economy. Unfortunately, the Job Creation Act backfired. In the article Eat the Poor, author David Cay Johnston explains that “A corporate tax rate that is too low actually causes job loss” (p.11) He goes on to explain that the “Job Creation Act let over eight-hundred companies return profits to the US at a 5.25% tax rate instead of the normal 35% tax rate” (p.11). In other words, the US government allowed these companies to skip out on taxes after they had outsourced thousands of jobs, making the assumption that extra money brought in at a lower tax rate would somehow create jobs. This has had the opposite effect on our economy. We have lost revenue that would have been generated from outsourced business and lost jobs at the same time. The Job Creation Act actually encourages companies to outsource their jobs because labor is cheaper and tax rates are lower in many other countries. Johnston to explains, “Almost one-hundred thousand job losses can be linked to the Job Creation Act of 2004” (p.11). The federal government is coming up with more and more tax cuts with idea that they will stimulate the economy, when they simply need to sew up the holes they have created in the first place. Instead, we are creating new holes in our tax structure and wondering why the US tax bag fails to hold water.

Agricultural “ag tax” loophole.

Another great example of a tax loophole pertains to land tagged as agricultural property. Colorado offers huge property tax discounts to farmers in order to offset real costs of maintaining a functioning farm. While, I don’t disagree that many small farmers could not function without these tax breaks, it is extremely easy for non-farmers to exploit this particular loophole. According to an article in the Denver Post titled Close overused ag tax loophole, “There is no minimum acreage for land (in Colorado) to be considered used for agriculture purposes and there are no minimum time limits for its agricultural use or production values.” (2010, Denver Post). This means that wealthy homeowners can allow cattle to graze on their land for less than a week and receive an agricultural land designation. The Denver Post provides an example, stating: “A commercial lot valued at $425,000 would normally pay a little over $11,000 dollars in property taxes. If designated as agricultural land the property value changes to $38 and the property tax decreases to 95 cents.” (2010, Denver Post). Oregon and other states have similar laws that allow landowner’s to legally avoid paying property taxes. With tax loopholes such as these, it is easy to see why our country is experiencing problems generating tax revenue.

Big Oil and natural gas company loopholes.

            Natural gas and oil companies claim a large portion of US tax breaks as well. According to author Sima J. Gandhi in the article Eliminating Tax Subsidies for Oil Companies, “oil companies currently claim four billion dollars a year in federal tax relief” (2010, AmericanProgress.org). Natural gas and oil companies are producing record profits. According to Daniel J. Weiss and Valeri Vasquez in the article The Facts of Big Oil’s tax loopholes and windfall profits, “oil companies’ profits have increased 38% in the first quarter of 2011 compared to the first quarter of 2010. While banking record profits Oil companies only pay federal tax at a rate of 17.6% annually compared to the 20.4% of average Americans” (2011, ClimateProgress.org). Despite hefty tax breaks, gas prices continue to rise in the US and big oil and natural gas companies make larger unprecedented profits while average Americans tighten their belts.

One tax break Natural Gas and Big Oil companies receive is titled “Intangible Drilling Costs.” Vague titles seem to be a norm for tax loopholes. This loophole allows oil companies to deduct virtually all of their expenses including employee wages, equipment, repair costs shipping and almost everything that oil companies purchase to drill for oil. According to author Sima J. Gandhi, “this tax loophole alone will cost the US approximately $7.85 billion over the next ten years” (2011, AmericanProgress.org). Another tax exemption for oil companies includes the “deductions for tertiary injectants.” This term is included in US tax code and literally refers to the chemicals that the companies use to extract oil and natural gas from the earth. Fracture drilling is a common method of extracting natural gas and has serious environmental consequences. Tertiary injectant costs can also be included under the “intangible drilling costs loophole,” but there is a new category called “tertiary injectant deductions” to ensure that the company will not have to pay for the chemicals they use daily. Gandhi goes on to explain that “Another allowable deduction is called percentage depletion allowance, allowing oil and gas companies to deduct 15% of the total revenue that has been generated by well as long as it is still producing some oil” (2011, AmericanProgress.org). This is very similar to the aforementioned property depreciation deduction. Imagine a well that formerly produced oil valued at five hundred million dollars. This well no longer produces oil at the same rate did six months earlier. A skeleton crew can be kept working on the site and as long as they can produce any measurable amount of oil from that well, the company is allowed to deduct 15% of the five hundred million dollars from their tax bill. Other tax deductions available to oil companies include: passive investments, domestic manufacturing tax deductions, geological and geophysical expenditures, foreign tax credit, enhanced oil recovery credit and marginal well production. According to Gandhi, “All of these deductions will total about $45 billion over the next ten years” (2011, AmericanProgress.org).

German tax structure: Policy and success

            Germany provides an excellent example of a balanced tax structure that promotes business and economic growth, while protecting the poor and middle class at the same time. Germany has seven clear categories which have taxable income and these include: agriculture and forestry, trade and business, independent personal services, employment, capital investment, rents and royalties, and other sources of revenue. These categories are subject to different tax rates based on the needs of the economy and their effects on job creation. Income taxes are individually based. Individuals that make less than EUR7,664 ($10,964) do not have to pay less than 15% in income taxes. Individuals that earn between EUR7,664 ($10,964) and EUR52,152 ($74,606) pay a 15% income tax rate and individuals that earn over EUR52,152 ($74,606) pay a 42% income tax. These amounts are doubled for all married couples who file jointly. Understandably, these rates are applied to protect the poor and middle class and make the wealthy carry a larger portion of the tax burden. German tax laws also tax corporations while promoting economic growth. All German based companies and companies who have branches in Germany must pay 25% of their total profits. According to the Lubek Business Development Corporation (LBDC) in the report German Tax System, “The corporate tax rate is 25% without regards to distribution or retention” (2005, p.4). This means that the company must pay the 25% tax rate even if they reinvest the money into their company. This straight forward approach makes collecting taxes from large corporations much less complicated. Dividends and profits are taxed at a higher rate when they are paid to individuals. According to the LBDC, “This is called the half-income method. Only half of the total amount paid can be taxed and therefore only half of a company’s expenses can be deducted on their tax return” (2005, p.4). While the tax rate is high, it still encourages German companies to reinvest in their companies because the profits are taxed at the lower rate of 25% when they reinvest profits in the company. Germany’s gross domestic product has been growing even with the increased tax rates and the current tax system provides many services for the people of Germany.

            The German tax structure pays for education, health-care and social-welfare. Tuition is not required to attend most German Universities. Students are admitted based on merit and desire, while options exist for vocational or trade schools for students looking for an education directly applicable to a specific trade. German citizens all benefit from universal health care. Workers are required to sign up for a health care plan which is financed by each workers income tax and is deducted from their paycheck. According to Kaiser EDU in their online section pertaining to International Health Systems, “Nearly all 82 million people of the German population are covered by health insurance, with the only exception being some wealthy individuals who opt for private health insurance,” (2010, p.1). The income tax covers long-term care, accident insurance and all other health insurance. Furthermore, most German hospitals are publicly run while private practices and personal doctors tend to be private practices. German residents pay higher taxes, but their government provides services to justify the higher taxes.

 The opposition argues that providing these government services would discourage people from working and ultimately lead to greater unemployment and the eventual demise of the country. Sweden is currently facing this issue because their welfare system pays too much money to unemployed individuals. While this idea makes sense at face value, the statistics collected on the Germany tax structure do not support this hypothesis. According to New York Times author Judy Dempsy in her article titled German Unemployment Down for 12th Straight Month, “Unemployment  declined in Germany from 7.7 percent to 7.5 percent in one month alone,” (2010, p.1). Weekend shifts are being added and companies are thriving. The US’s current unemployment rate is currently sitting at 8.7 percent and the trend has been increasing unemployment rather than reducing it. In addition to falling unemployment rates, the German gross domestic product has been increasing. This is a strong indicator that their current tax structure is encouraging people to work and businesses to expand. The graphic below shows the regular growth of the German GDP from 1970 to 2009 with an over three trillion dollar increase

(World Bank, World Development Indicators, 2011)

over the last 40 years. The German system is working effectively and provides an excellent example of sustainability and success in a tax structure.

Final thoughts and conclusions

In conclusion, tax reform is an obvious need and should be a priority in the United States. I do not expect that change will happen overnight, but we must start closing tax loopholes that make the poor and middle class carry an unfair tax burden in relationship to wealthy individuals and corporations. While some tax breaks are necessary to business, the idea of tax breaks to stimulate the economy has been taken to extremes in the US and the system does not work.  Every year schools face more, budget cuts, our health care system threatens to bankrupt the country and we rely on foreign loans which send our country deeper and deeper into debt. Limiting itemized deductions that are available to the wealthy should be a priority. Closing loopholes such as the property depreciation deductions, and clearly and logically defining exemptions such as agricultural land, is essential in reaching a balanced and equitable taxation system. Oil companies cannot be allowed to pay reduced tax rates via tax deductions while they are raising prices and recording record profits. Excuses no longer remain for not implementing new reforms when there are clear successful examples of balanced tax structures like Germany that can provide successful financial models for the United States. The time for reform is now and the wealthy won’t help us. Every American has the responsibility to spread the word and help implement a progressive and equitable taxation system.

Works Cited

Battersby, M. E. (2002). Depreciation deduction available for leased property. Urology Times pp. 43-44. Retrieved on May 14, 2011 from www.urologytimes.com.

Dempsey, J. (2010). German unemployment down for 12th straight month. [Electronic version]. New York Times, 1.

Denver Post, The. (2010). Close overused ag tax loophole. The Denver Post. [Electronic version] Retrieved on May 10, 2011 from http://www.denverpost.com/opinion/ci_16577628

Fischer, K. (2007). In Oregon, regional colleges struggle to overcome shortfalls. Chronicle of Higher Education, 53(37), A16-A17. Retrieved from Academic Search Premiere on May 14, 2011.

Gandhi, S. J. (2010, May). Eliminating tax subsidies for oil companies. Center for American Progress. Retrieved on May 15, 2011 from http://www.americanprogress.org/issues/2010/05/oil_company_subsidies.html

Ingraham, C. (2010). Understanding the IRS’s largest tax loopholes, can lead to your own financial growth. Ezine Articles. Retrieved May 15, 2011 from http://ezinearticles.com/?Understanding-The-IRSs-Largest-Tax-Loopholes,-Can-Lead-To-Your-Own-Financial-Growth&id=822052

Johnston, D. C. (2011, April). Eat the Poor. The Source Weekly, 11.

Kaizer EDU. (2011). International health systems: Germany. KaizerEDU.org. Retrieved on May 20, 2011 from

http://www.kaiseredu.org/Issue-Modules/International-Health-Systems/Germany.aspx

Mackey, S. (2000). The other face of e-commerce: can the sales tax survive cyberspace?. Government Finance Review, 16(1), 27. Retrieved from Academic Search Premiere on May 15, 2011.

McIntyre, R. S. (1991, Fall). How should we tax?. Social Policy, pp. 2-6. Retrieved from Academic Search Premiere on April 27, 2011.

Rubin, R. (2011). Fair tax: a simple idea full of complications. Bloomberg Businessweek, 4224, B10-B12. Retrieved from Academic Search Premiere on April 27, 2011.

Weiss, D. & Vasquez V. (2011, May). The facts of big oil’s tax loopholes and windfall profits. Climate Progress 1. Retrieved May 16, 2011 from http://climateprogress.org/2011/05/12/the-facts-of-big-oils-tax-loopholes-and-windfall-profits/

In 2005 the SDWA was amended to exclude hydraulic fracturing, a process used for the extraction of natural gas. The process has caused a number of problems for homeowners. In Texas, the minor earthquakes have been linked directly to practice, but the main concern is contamination of wells.

Hydraulic fracturing causes fractures in the rocks beneath the earth. The process makes it easier for businesses to reach natural gas and to get more of it. Some kind of fluid is injected into the fracture, along with sand or other material that can withstand the open fracture.

One problem is that gas companies will not disclose the materials used in the process. According to a PBS documentary, the materials used by gas companies include toxins, carcinogens, explosive gases and heavy metals.

In Colorado and Pennsylvania, the pollutants mentioned in the film have been found in wells. Benzene is an example of a cancer-causing chemical has been found in wells in Colorado. The pollution caused by benzene is hydraulic fracturing.

An attempt was made in 2009 to amend the Clean Water Act and to repeal the exemption for hydraulic fracturing, but the bill was not enacted.

The SDWA gave EPA the authority to set maximum contaminant levels for public systems, the test samples for contaminants and require suppliers to correct problems when found. If the industry is to be the cause of pollution, the EPA can fine the company and force them to pay for the cleanup of the disaster, but as companies that use hydraulic fracturing are exempt from the Clean Water Act, the EPA has no power.

In 2010, the Agency found arsenic, copper, vanadium and adamantane in groundwater near the hydraulic fracturing operations. The EPA also found methane gas in underground aquifers in Pennsylvania.

A 2011 study conducted by Duke University established a clear link between the extraction of natural gas and methane contamination of groundwater throughout the area known as the Marcellus Formation, which includes parts of New York, Pennsylvania, Ohio, West Virginia, Maryland, Kentucky, Virginia, Tennessee, Georgia and Alabama. Drinking Water Act currently provides little protection against contamination that may result from hydraulic fracturing.

The process is not only used in the U.S.. The contamination of groundwater in Australia, Canada and elsewhere has been associated with the extraction of natural gas.

Moreover, the hydraulic fracture is not the only industry that causes pollution of fresh water. Even if governments were able to prohibit the practice, still have chlorine in most public fountains and traces of lead in most homes.

Not a good idea to have the Safe Drinking Water Act or any regulation to protect his family. Some of the water purifiers in the home available today can protect us from all contaminants. That’s something you can trust.

My two cents worth:

Look, I am all for the environment, so when I see something stating that it is going to increase oilsand revenue, it doesn’t exactly make my day.  Ironically, that is exactly what this news did, the fact that Obama is trying to lower the use of overseas oil as well as increase the amount of cleaner energy sources is a great thing for the environment.  Go Obama.

Get used to Oil, it ain’t going away for many years. We complain about importation of oil especially from countries who dont see us as friendly. So, we have a good record of oil drilling in this country. Yes, there was the Gulf of Mexico spill but this is one out of so many rigs and years of drilling there. Other countries are drilling where we USED to drill. We cant stop them and they dont have the federal safety restrictions placed on them as we do our teams of drillers. So, I guess some would prefer we not drill and buy expensive energy from the Middle East. Me thinks that we are digging our own energy graves by not taking advantage of our own shorelines. What will replace the GAP between fossil fuels and the so called Green energy sources. Do we go to oil lamps and wood stoves until this new tech comes into play in all of our lives?

The Arabian gulf region consists of countries like the United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait, Bahrain and Iraq. The middle eastern region as we know, is an oil rich region. The oil has been the major source of income for most of these countries. And since the demand for oil is so high all around the world, these countries have become very rich and prosperous as a result.

The discovery of oil in the middle east is not a recent phenomena. Oil was discovered a long time back and the oil was discovered on the pretext of searching for water in the hot, desert region of Arabia. What they found however, made them rich beyond their wildest dreams.

The main source of income for these countries were pearl diving and fishing. Though pearls are an expensive commodity, the trade for pearl diving started to die as there was too much competition from other countries and the low margins that came with it. Not only that, pearl diving was a pretty dangerous trade in itself and combined with the new discovery of oil, the trade was pretty much dead by the time serious oil drilling began and oil companies all around the world started scrambling to explore and drill new regions for oil.

Image via Wikipedia

The discovery of oil prompted the opening up of thousands of industries which was, at least initially, oil based. The population in these areas were not that much especially when the oil was discovered, so there was a need to employ more workers. The Arabs hired expatriates in order to fill up jobs which were necessary in order to make full use of the oil. They needed more people on the oil rigs. As the oil industry flourished in the Arabian gulf, the industries started to diversify. It started of as oil-related industries such as oil refining, transporting and the others. As more and more oil was discovered, more and more firms were opened, and there was a need to hire more and more people.

Image via Wikipedia

The people mainly came from India, Pakistan and the Philippines. There was a mixture of roles played by the expatriates. Expatriates were needed to perform all kinds of roles ranging from skilled to unskilled labour. Expatriates suddenly started pouring in. And the demand for more labour was there because these countries were developing extremely fast.

Soon, there were new industries developing. These were not just oil or petroleum based. New construction started, there were several projects, the governments spent their newly acquired money into infrastructure. The governments’ budgets ran into surplus. They had a lot of money to spend.

As these countries began to develop further, there was high employment. Surprisingly, the Arabian gulf still found itself in a position where they were short on a proper workforce. Though it was surprising, it was pretty understandable. An extremely large number of projects were initiated and it had aimed to develop the country and provide it with proper infrastructure and for that it required a really huge workforce.

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Expatriates from other countries were keen on coming to the Gulf region too. First of all, expatriates came from countries where there are few opportunities for employment. Second of all, the Gulf were paying really handsome salaries to workers. Third of all, the gulf was developing and modernizing extremely fast and that provided for a much higher standard of living.

As more money came in, there was demand for many more goods and services. A lot of industries came up which produced food items, plastic goods and many other consumer items. The governments encouraged this too. They did not want to import something as basic as food from other countries. Though they import most of their food grains, fruits and vegetables from other countries, they are processed all in their own countries. And to man these industries, there was a need for more labour which was cheap, so they kept hiring more and more people, especially expatriates.

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Now the situation was as such, that the Arabs who are the employers of the huge number of expatriates that they hired, started constituting a minority in the country. This is because the number of expatriates far exceeded the number of Arabs. In the United Arab Emirates, 80% of the population is Indian. Arabs constitute only about 10% of the population, the rest are other expatriates. The situation is like that in the gulf region as of now.

But that has led to a very interesting insight.

The Gulf economy is no longer run by oil now. Cities like Dubai have given up oil drilling and have started searching for opportunities in other sectors like tourism and real estate.

The gulf economy is still employing a lot of expatriates to fill up jobs. And people are literally pouring from outside to the gulf. This in itself has created such a huge market.

The gulf economy doesn’t need to run on exports in order for its economy to thrive. The large number of expatriates it has added into its population has resulted in this huge internal market where the economy actually runs.

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Expatriates in the gulf are paid pretty well and they are good consumers. As long as they stay in the gulf, they spend in the gulf. They spend a lot of money. Especially when expatriates settle there, they spend even more. Some of them have their families in the gulf and there is a need to put their children in schools and the economy grows stronger that way.

Since the Gulf countries do not charge taxes on salaries, the people have more disposable income which they can spend on consumer goods. And since some of them are pretty well paid, they consume goods on a pretty large scale. When expatriates go back home for holidays, they take a lot of goods with them for their friends and relatives back home. So the holiday season in the gulf is a bonanza for the gulf economy.

In fact, the Dubai Shopping Festival which is conducted every year is testimony to this very fact that it is not oil that rules the gulf economy, it’s the people buy consumer goods. The Dubai shopping festival was made to tap the demand of the people in the gulf. So people from all over the gulf, however far they are, come to Dubai and shop for that whole month. And it is no secret that the Dubai Shopping festival is a financial success.

And the very fact that more and more firms catering to consumer goods are building their factories in the gulf stands testimony to the fact that the demand for goods is high. There are a lot of people there who want more and more things.

The governments in the gulf know that the oil is not going to last for a really long time. That is why most governments are trying to divert their resources into building industries and improving tourism in their countries. And they are trying to woo the very people they brought into their country to work on their oil fields and rigs.

10) Netherlands 

The Netherlands comes in tenth with a GDP of $40,571.

9) Sweden

Sweden comes in 9th with a GDP of $42,383.

USA 

The US comes in 8th with a GDP of $44,190.

7) Ireland

Ireland ranks 7th with a GDP of $44,500.

6) Denmark

Denmark pulls in a GDP of $50,965.

5) Switzerland

Switzerland’s GDP of $51,771 puts it in 5th place on this list.

4) Iceland

Believe it or not, Iceland has a GDP of $54,858.

3) Qatar

Yup, Qatar is the world’s richest source of Natural Gas, and after only ten years of refinery has a GDP of $62,914. But believe me, its rising fast, and for a long time to come.

2) Norway

Norway’s GDP, at $72,306 places it second in the world.

And the Richest Country?

1) Luxembourg

Luxembourg pulls in a cool annual GDP of $87,955, making it the richest country in the world!

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