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With Abandoned Gas Wells, States Are Left With The Cleanup Bill
"When energy booms go bust, the public is often left responsible for the cleanup."
"Companies put up bonds to cover their cleanup costs in the event they go bankrupt. But the bonds they pay upfront are almost never enough."
"There is a way to ensure there's enough money for cleanup: make companies pay for all of it upfront. But that's not on the table in Wyoming, or anywhere else in the country."
The oil/energy industry is in no way unique in attempting to shift/externalize/socialize costs.
PEP's and KO's main products are material contributors to chronic metabolic disorders (diabetes, obesity, etc.) --- perhaps explicit, dedicated fees/levies should be directed their way to remediate those costs?
Financial/lending institutions, while the TARP recipients repaid the Govt loans, millions of households were first put into homes they could not afford, then foreclosed on when the inevitable happened. The lenders systemically failed to do appropriate underwriting, because it did not fit into their business models at the time. No remuneration for harm caused was ever made.
The OP asked "why not" as to why an industry is not required to cover their "sunk costs". Simple, laws are written by legislators who are beholden to corporate/industry contributions. This is simply "the way things are", and is not limited to the energy industry. Legislators' interests are not aligned with the general public interest....
Regarding PEP and KO, that comparison is somewhat more complex because those particular products are made available at the retail level, so the consumer has a direct veto over the use of those products.
It's a somewhat different issue with respect to taxpayers having no effective input to the use (or not) of a commercial product, but being required to pay for the damage those products create.
Since the cleanup/shutdown costs of these well sites is fairly well known, why would an operating license not require a partial payment (maybe 50%) up front as part of a license fee, and then progressive payments as a well is brought into production, until the approximate cleanup costs are secured? At an estimated cost of $10,000 per well, we're not talking a lot of money on a per-well basis, but we are talking a lot of money on an aggregate basis (some $30m, in the case of Wyoming).
How on earth can a "conservative" state government, presumably dedicated to keeping taxes low, tolerate what is nothing more not less than a tax imposed upon the state by a private for-profit company? What manner of twisted logic could they possibly use to justify such a situation? Oh, wait... surely it's all Obama's fault.
"Since the cleanup/shutdown costs of these well sites is fairly well known, why would an operating license not require a partial payment (maybe 50%) up front as part of a license fee, and then progressive payments as a well is brought into production, until the approximate cleanup costs are secured? At an estimated cost of $10,000 per well, we're not talking a lot of money on a per-well basis, but we are talking a lot of money on an aggregate basis (some $30m, in the case of Wyoming)."
You must understand the Fed's and States took the monies and some of it was used for other objectives. Just like the Feds used some of your SS pmts. for other then your benefits there is no such thing as a lock box. I bet a complete independent audit if performed would show that at one time the funds were there.
Gary, The government cannot hold money in a mattress. Any entitlement surpluses are usually held as government securities/bonds, better known in this century as IOUs. If you want to see what the OASI program holds as of the last trustee's report, here it is: http://ssa.gov/oact/TR/2015/VI_A_cyoper_hist.html#297482
If you have a friend that works for the government and has been close to the financial side, ask them about what the government can and cannot do with excess revenues. No matter what the source or designation of the incoming money, it must be spent/used. So if a designation fund has an excess in a given year, that excess is spent/used and, usually, becomes IOUs to the designation mission and, for entitlements, this means government securities of one form or the other. (That I know of, only existing law limits SS surplus to the purchase of securities.) Had the SS fund not contributed to the revenue for the year, the government would have needed to replace the revenue by selling bonds to someone else or raising taxes. If bonds were sold to someone else besides the American working class, I am sure all would acknowledge the debt repayment obligation. The yearly amount of excess funds originating from SS hasn't really been that great until the turn of the century but it adds up and the interest, interest on interest, etc. can add to it. So we have 2.7T in "IOUs" to SS and other debt to similar funds. Even part of the 401k plan of the federal government has one of these funds that is used kind of like a stable value fund (the G-fund). During sequestration threats, the executive holds back the contributions to this fund to artificially reduce the deficit and help extend the days until reaching the debt ceiling. Since government employees purchase shares of the G-fund from their own money, I am sure they expect to have their individual accounts that are invested in the entitlement type "special issues" honored after retirement.
@GARY "I bet a complete independent audit if performed would show that at one time the funds were there."
I guess I am saying that if the funds were once there, they still are because nothing has really changed in law, investment or how the government spends revenue. All that changes is how the accounting is done to obscure truth and that is easily deconvoluted by truth seekers.
One other thing - politicians who make deals to attract investment usually justify costs to state and local taxpayers by pointing to "job creation" and growth trickling down to pay for any inconveniences.
You failed to get the heart of my statements. The cost to administer government programs has grown far above the original intent. Need far fewer government employees to administer SS program and all other programs.
Can you tell me what is the cost to manage the SS program or where these funds come from? Or how has costs have increased from say 1940 to the present? Also how the number of employees it takes to run the program has changed? Can you tell what the cost to administer the program is as a % of payout? Can you tell me what the SS has invested in Fixed Assets and how this compares to use of funds. How has that changed since 1940?
Also I don't know the cost to administer for oil field clean up operations I'm sure the boat is overloaded not enough life vests for every one. An independent audit would indicate this.
Everyone wants to be an empire builder. They can but not with SS funds!!!
Gary, Gary, Gary, Were you asleep during the Clinton/Gore gutting of the civil service???? As far as admin costs (which probably should be normalized if looked at historically. I suggest you could use per retiree corrected for bureaucratic productivity or something related to expectation of increased or decreased cost. Your problem to decide how. I use per dollar of benefits managed. Might be better to add all the cash flow, both collections and benefits.) Now I know nothing about state expenditures on oil stuff so I suggest you research and discover the answers to your own questions. As far as admin cost of SS, I suggest you start with the OASDI report I linked before. What you want is on another table on the same page. I must admit that it confuses me that you would ask for data that you probably have already seen. Anyway, 1940 is there but admin is not given but, 1950 says administering 1B in benefits cost .1B and administering 706.8B in 2014 cost 3.1B If Table VI.A1 is to be believed. Looks like a time win, win to me but that is for you to research and analyze (lots of footnotes to consider as well as arrive at enough of an understanding to decide just what you mean by "administrative cost".) Anyhow, the SS fund pays it's admin costs from the SS revenue. I'll get you started with a quote from the text to give you some assurance that admin expenses actually do come from SS funds (bold mine): "The primary expenditures of the OASI and DI Trust Funds are: (1) OASDI benefit payments, net of any reimbursements from the General Fund of the Treasury for unnegotiated benefit checks; and (2) expenses incurred by the Social Security Administration and the Department of the Treasury in administering the OASDI program and the provisions of the Internal Revenue Code relating to the collection of contributions. Such administrative expenses include expenditures for construction, rental and lease, or purchase of office buildings and related facilities for the Social Security Administration. The Social Security Act prohibits expenditures from the OASI and DI Trust Funds for any purpose not related to the payment of benefits or administrative costs for the OASDI program. "
If you really want to lock down the "truth" by whatever definitions you establish, SS looks easy. I don't have your objections and, thus, don't share your interest. I'm a retiree, not a urban legend ninja. And I surely am not, unlike others, a channeler of any unreported original intent of my forefathers as to cost of admin of entitlements.
I'll leave you to do your own digging. You'll trust the results better, I'm sure.
Comments
PEP's and KO's main products are material contributors to chronic metabolic disorders (diabetes, obesity, etc.) --- perhaps explicit, dedicated fees/levies should be directed their way to remediate those costs?
Financial/lending institutions, while the TARP recipients repaid the Govt loans, millions of households were first put into homes they could not afford, then foreclosed on when the inevitable happened. The lenders systemically failed to do appropriate underwriting, because it did not fit into their business models at the time. No remuneration for harm caused was ever made.
The OP asked "why not" as to why an industry is not required to cover their "sunk costs". Simple, laws are written by legislators who are beholden to corporate/industry contributions. This is simply "the way things are", and is not limited to the energy industry. Legislators' interests are not aligned with the general public interest....
It's a somewhat different issue with respect to taxpayers having no effective input to the use (or not) of a commercial product, but being required to pay for the damage those products create.
Since the cleanup/shutdown costs of these well sites is fairly well known, why would an operating license not require a partial payment (maybe 50%) up front as part of a license fee, and then progressive payments as a well is brought into production, until the approximate cleanup costs are secured? At an estimated cost of $10,000 per well, we're not talking a lot of money on a per-well basis, but we are talking a lot of money on an aggregate basis (some $30m, in the case of Wyoming).
How on earth can a "conservative" state government, presumably dedicated to keeping taxes low, tolerate what is nothing more not less than a tax imposed upon the state by a private for-profit company? What manner of twisted logic could they possibly use to justify such a situation? Oh, wait... surely it's all Obama's fault.
"Since the cleanup/shutdown costs of these well sites is fairly well known, why would an operating license not require a partial payment (maybe 50%) up front as part of a license fee, and then progressive payments as a well is brought into production, until the approximate cleanup costs are secured? At an estimated cost of $10,000 per well, we're not talking a lot of money on a per-well basis, but we are talking a lot of money on an aggregate basis (some $30m, in the case of Wyoming)."
You must understand the Fed's and States took the monies and some of it was used for other objectives. Just like the Feds used some of your SS pmts. for other then your benefits there is no such thing as a lock box. I bet a complete independent audit if performed would show that at one time the funds were there.
http://ssa.gov/oact/TR/2015/VI_A_cyoper_hist.html#297482
If you have a friend that works for the government and has been close to the financial side, ask them about what the government can and cannot do with excess revenues. No matter what the source or designation of the incoming money, it must be spent/used. So if a designation fund has an excess in a given year, that excess is spent/used and, usually, becomes IOUs to the designation mission and, for entitlements, this means government securities of one form or the other. (That I know of, only existing law limits SS surplus to the purchase of securities.) Had the SS fund not contributed to the revenue for the year, the government would have needed to replace the revenue by selling bonds to someone else or raising taxes. If bonds were sold to someone else besides the American working class, I am sure all would acknowledge the debt repayment obligation. The yearly amount of excess funds originating from SS hasn't really been that great until the turn of the century but it adds up and the interest, interest on interest, etc. can add to it. So we have 2.7T in "IOUs" to SS and other debt to similar funds. Even part of the 401k plan of the federal government has one of these funds that is used kind of like a stable value fund (the G-fund). During sequestration threats, the executive holds back the contributions to this fund to artificially reduce the deficit and help extend the days until reaching the debt ceiling. Since government employees purchase shares of the G-fund from their own money, I am sure they expect to have their individual accounts that are invested in the entitlement type "special issues" honored after retirement.
@GARY "I bet a complete independent audit if performed would show that at one time the funds were there."
I guess I am saying that if the funds were once there, they still are because nothing has really changed in law, investment or how the government spends revenue. All that changes is how the accounting is done to obscure truth and that is easily deconvoluted by truth seekers.
One other thing - politicians who make deals to attract investment usually justify costs to state and local taxpayers by pointing to "job creation" and growth trickling down to pay for any inconveniences.
You failed to get the heart of my statements. The cost to administer government programs has grown far above the original intent. Need far fewer government employees to administer SS program and all other programs.
Can you tell me what is the cost to manage the SS program or where these funds come from?
Or how has costs have increased from say 1940 to the present?
Also how the number of employees it takes to run the program has changed?
Can you tell what the cost to administer the program is as a % of payout?
Can you tell me what the SS has invested in Fixed Assets and how this compares to use of funds.
How has that changed since 1940?
Also I don't know the cost to administer for oil field clean up operations I'm sure the boat is overloaded not enough life vests for every one.
An independent audit would indicate this.
Everyone wants to be an empire builder. They can but not with SS funds!!!
"The primary expenditures of the OASI and DI Trust Funds are: (1) OASDI benefit payments, net of any reimbursements from the General Fund of the Treasury for unnegotiated benefit checks; and (2) expenses incurred by the Social Security Administration and the Department of the Treasury in administering the OASDI program and the provisions of the Internal Revenue Code relating to the collection of contributions. Such administrative expenses include expenditures for construction, rental and lease, or purchase of office buildings and related facilities for the Social Security Administration. The Social Security Act prohibits expenditures from the OASI and DI Trust Funds for any purpose not related to the payment of benefits or administrative costs for the OASDI program. "
If you really want to lock down the "truth" by whatever definitions you establish, SS looks easy. I don't have your objections and, thus, don't share your interest. I'm a retiree, not a urban legend ninja. And I surely am not, unlike others, a channeler of any unreported original intent of my forefathers as to cost of admin of entitlements.
I'll leave you to do your own digging. You'll trust the results better, I'm sure.
"The cost to administer government programs has grown far above the original intent."
Uh huh. (Data quotes from ssa.gov)