OPEC may have Helped U.S. Shale Oil Production

Me, "With OPEC's deal to reduce Oil exporting to prop up the price of a barrel of oil they have inadvertently helped U.S. Shale Oil drillers, (Frackers). I have written about this previously. With the conclusion being that even as OPEC tries to save itself by increasing the price of Oil, U.S. production may surge. Why is this important? Any increase in Oil production here in the U.S. helps increase energy jobs and can led to lower prices at the U.S. pump if not around the world as OPEC's cut is balanced out. The problem becomes what will OPEC do about this? They tried to drive U.S. Oil Frackers out of business by lowering the cost of oil. With that not working, Frackers just stopped drilling and waited OPEC out,  more curtailing of production may be hotly debated at future OPEC meetings. Since most of the OPEC countries did not want to cut production, the future of oil price is in question. Whatever happens, oil production will continue to be a speculators market."

From article, "Shale Specter Haunts OPEC’s Feast as Oil Seen Rallying Into 2017"

“OPEC is aiming for a much-needed lift to the oil price, given the stretched fiscal balance sheets of every producing nation,” said Ed Morse, head of commodities research at Citigroup. “The question really should be what happens afterwards -- how fast is U.S. shale going to come back?”

At 8.8 million barrels a day, the U.S. is already pumping almost as much crude as two years ago, with just a third of the rigs it operated at the peak, data from Baker Hughes Inc. and the Energy Information Administration show. Since May, drillers have added about 200 rigs, taking advantage of rising prices as talk of an OPEC supply cut circulated.

After three years of turmoil, there are already signs of a rebirth in America’s shale fields as prices have risen and stabilized at around $50. If they jump by another $10, shale output that’s now at 4.5 million barrels a day could quickly rise by 500,000 barrels, Citigroup’s Morse wrote in a Dec. 22 research note.

A bigger boost in prices could mean a million-barrel shale surge from the U.S., Macquarie Research analysts Vikas Dwivedi and Walt Chancellor noted in a Dec. 12 report to clients. That would all but obliterate the cuts OPEC agreed to in November.

A Fairer Tax Plan?

Me, "While I am a little concerned about the fact that most of the Tax Overhaul would benefit the wealthiest taxpayer, the best part of the Republican Tax Overhaul is how corporations would be taxed on where they produced and sold an item. It would encourage exporting of goods because there would be no taxes levied on it. But would put a tax on imports and on goods produced here. Right now, the tax code encourages jobs and corporations to be located outside of the U.S.. With this new tax code, businesses would be encouraged to keep production in the U.S. (and keep jobs here) making up for taxes on it with no tax on exports (which would increase export production)." 

From article, "Republicans have a massive plan to overhaul the tax code — here's how it would work"

(This is one of the most controversial parts of the House Republicans' tax plan. It is also key to making it work.

Under current law, the United States taxes the profits of U.S.-based companies, even if the money is made overseas. However, taxes on foreign income are deferred until a company either reinvests the profits in the U.S. or distributes them to shareholders.

Critics say the system encourages U.S.-based corporations to invest profits overseas or, more dramatically, to shift operations and jobs abroad to avoid U.S. taxes.

House Republicans want to scrap America's worldwide tax system and replace it with a tax that is based on where a firm's products are consumed, rather than where they are produced.

Under the system, American companies that produce and sell their products in the U.S. would pay the new 20 percent corporate tax rate on profits from these sales. However, if a company exports a product abroad, the profits from that sale would not be taxed by the U.S.

There's more: Foreign companies that import goods to the U.S. would have to pay the tax, increasing the cost of imports.

Exporters love the idea. But importers, including big retailers and consumer electronics firms, say it could lead to steep price increases on consumer goods. The lobbying has already begun.)