Raise taxes, REDUCE federal revenue? Senator banned for mask violations.

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The Dumbest Tax IncreaseBiden’s capital-gains rate of 43.4% would reduce federal revenue.
Editorial Board, The Wall Street Journal, April 25, 2021

If you need more evidence that ideology more than common sense is driving the Biden Presidency, look no further than its trial balloon to raise the top tax rate on capital gains to 43.4%. It’s the dumbest way to raise taxes for many reasons, not least because it will cost the government revenue.

The premise behind the tax increase is that a preferential tax rate for long-term capital gains is an unjustified loophole. (Gains on assets held for less than a year are taxed at the individual income rate.) Yet that preferential rate has persisted for decades, through Democratic and Republican administrations. The current top rate is 23.8%, which includes a 3.8% ObamaCare surcharge. Even in the economically irrational 1970s the top capital-gains rate never broke 40%, as the nearby chart shows.

There are good economic and fairness reasons for the preferential rate. First, under current tax rules, all gains from investments are fully taxed, but all losses are not fully deductible. Losses can offset gains in any given year, but losses that exceed gains can only be offset against personal income up to $3,000. The preferential rate compensates for this asymmetry.

Second, gains in asset values aren’t adjusted for inflation, so investors who hold assets for an extended period pay taxes on increases that are partly illusory. Other parts of the tax code, including the income-tax brackets, are indexed for inflation, but not capital gains that arguably need it the most since assets are often held for decades.

Third, a capital-gains tax is a second tax on corporate income. A neutral revenue code would tax all income only once. But the U.S. also taxes business profits when they are earned, and President Biden wants to raise that tax rate by a third (to 28% from 21%). When a business distributes after-tax income in dividends, or an investor sells the shares that have risen in value due to higher earnings, the income is taxed a second time.


Oil falls on India’s COVID surge, supply increase
Yuka Obayashi, Bozorgmehr Sharafedin, Reuters, April 26, 2021

Oil fell on Monday on fears that surging COVID-19 cases in India will dent fuel demand in the world’s third-biggest oil importer, while the end of a force majeure on exports from a Libyan terminal and an expected supply increase from OPEC+ added to pressure.

Brent crude was $1.08, or 1.6%, lower at $65.03 a barrel by 1329 GMT. U.S. West Texas Intermediate (WTI) crude was down 97 cents, or 1.6%, at $61.17 a barrel.

Both benchmarks fell about 1% last week.

“The market is tending to focus more on the bad news from India and Japan at present, where the number of new coronavirus cases has risen sharply, prompting increased mobility restrictions to be imposed,” said Commerzbank analyst Eugen Weinberg.

Japan is the world’s fourth biggest crude oil importer.

India ordered its armed forces on Monday to help tackle surging new coronavirus infections that are overwhelming hospitals, as countries including Britain, Germany and the United States pledged to send urgent medical aid. read more

Consultancy FGE expects gasoline demand in India to drop by 100,000 barrels per day (bpd) in April and by more than 170,000 bpd in May. India’s total gasoline sales came to nearly 747,000 bpd in March.

Diesel demand, which at about 1.75 million bpd accounts for about 40% of refined fuel sales in India, may slump by 220,000 bpd in April and by another 400,000 bpd in May, FGE says.

In Japan, a third state of emergency in Tokyo, Osaka and two other prefectures began on Sunday, affecting nearly a quarter of the population as the country attempts to combat a surge in cases of COVID-19. read more

Consultancy FGE expects gasoline demand in India to drop by 100,000 barrels per day (bpd) in April and by more than 170,000 bpd in May. India’s total gasoline sales came to nearly 747,000 bpd in March.

Diesel demand, which at about 1.75 million bpd accounts for about 40% of refined fuel sales in India, may slump by 220,000 bpd in April and by another 400,000 bpd in May, FGE says.

In Japan, a third state of emergency in Tokyo, Osaka and two other prefectures began on Sunday, affecting nearly a quarter of the population as the country attempts to combat a surge in cases of COVID-19. read more

“It is not clear whether India’s surging cases will be enough to prompt the (OPEC+) group into action (to halt a gradual easing of output restrictions), but the latest increases in cases, particularly in the Asia-Pacific region, are a cause for concern,” said StoneX analyst Kevin Solomon.

The Organization of the Petroleum Exporting Countries and allies led by Russia, a group known as OPEC+, will discuss output policy at a meeting this week.

The group agreed at a meeting at the start of April to ease production curbs by 350,000 barrels per day (bpd) in May, another 350,000 bpd in June and a further 400,000 bpd or so in July. read more


Long-term US-China liquefied natural gas trade will bring strategic benefits to both countries
Serena Su, Atlantic Council, April 26, 2021

Despite a wide range of challenges within the US-China relationship, liquefied natural gas (LNG) trade is one of the few areas that brings strategic benefits to both countries. In the United States, building and operating LNG infrastructure provides significant economic benefits to communities across the country. Internationally, to achieve the Biden-Harris administration’s global climate ambitions, cooperation between the United States and China on cleaner sources of fuel will not only have the highest impact on reducing global carbon emissions but will also encourage other countries to adopt more ambitious climate commitments. In China, the long-term supply of US LNG supports Beijing’s climate and air quality goals by replacing coal with much less carbon-intensive natural gas across industrial, power, and residential sectors and by complementing the increase in the share of renewable in the power sector. Additionally, Henry Hub-linked US LNG reduces China’s exposure to oil price-linked contracts across its imported energy portfolio and improves the long-term stability of energy prices in China.

Currently, the United States has the third largest LNG export capacity in the world, after Qatar and Australia. In the contiguous United States, there are six LNG export facilities that are in operation and another two under construction. A number of other projects are also fully permitted, including expansion plans at several operating export facilities. While not all of these projects will go forward, expanding existing US LNG export capacity and facilities will provide near-term economic and job growth across the Gulf Coast and the United States, accounting for billions of dollars in new investment in the country.

Climate is at the center of both the US and Chinese leaders’ top priorities. China and the United States are the world’s top two COemitters, together accounting for over 40 percent of the world’s CO2 emissions. Despite the tensions on display during the recent meeting of Chinese and US officials in Alaska, climate remains one of the key areas for potential bilateral cooperation. The two governments released a joint statement on climate on April 16, committing to cooperate with each other to tackle the climate crisis in support of the Paris Agreement and the upcoming COP26 in Glasgow this November. Both sides also agreed to implement policies to reduce emissions, including methane, and direct investment in support of low-carbon energy in developing countries. This statement builds on President Biden’s Climate Day executive orders and efforts to work with world leaders to enhance global action on climate change, as well as the targets laid out in China’s recently announced 14th Five-year Plan. In the plan, China reaffirmed its climate goal of peaking carbon emission by 2030 and reaching carbon neutrality by 2060. The plan also includes a target to decrease CO2 emissions intensity by 18 percent by 2025. In addition to reducing their own emissions, the United States and China will need to cooperate to secure any meaningful success in combating climate change.

Coal accounts for 78 percent of China’s carbon emissions and 62 percent of China’s power generation. The transition towards a low-carbon economy will lead to a growing role for natural gas, which not only emits 50 percent less greenhouse gases than coal when used in power generation, but also provides essential stability to the power grid as more renewables are integrated into the electricity system. The midstream reforms that have happened within the natural gas sector are also expected to provide a wide range of gas buyers with easier access to pipeline and LNG import infrastructure and in turn stimulate new demand for natural gas.

US LNG provides an affordable and practical solution for China’s decarbonization efforts. Based on a study by the National Energy Technology Laboratory, every US LNG cargo shipped to China has the potential to displace greenhouse gas emissions of approximately 140,000 metric tons CO2e. Each 5-MTPA train of LNG, which can produce seventy cargoes per year for twenty years, for example, would reduce 200 million metric tons of CO2e, equivalent to taking two million passenger cars off the road for twenty years.

US LNG also brings the strategic long-term benefit of reducing the price volatility in China’s energy imports. Today, the prices of non-US LNG and most of the pipeline gas imported to China are linked to oil, resulting in significant price volatility. Considering China is already the world’s largest consumer of oil—and more than 70 percent of China’s oil supply is also imported—further linkages of imported gas to oil markets expose China’s energy costs to even more risk. Different from LNG prices offered by other LNG exporters, the US LNG price is composed of the NYMEX Henry Hub price and a fixed fee reflecting the cost of liquefaction. According to IHS Markit, more than 1,100 trillion cubic feet of gas resources, or equivalent to more than thirty-five years of US domestic gas consumption, is available in the US lower forty-eight at below $3 per million British Thermal Units. With the abundant and cheap gas resources in the United States supporting the long-term stability of Henry Hub prices, US LNG brings long-term price stability to China’s oil and gas portfolio. Based on data from 2016-2020, the estimated volatility of a long-term US LNG price to China would have been less than half of that of a Brent-linked LNG contract. This price stability would be particularly beneficial in Northern China, where winter LNG demand could be up to ten times higher than summer demand due to seasonal heating requirements.

Climate change is a global issue that requires international cooperation to bring about large-scale, generational change, and a unique opportunity exists for the world’s two largest economies to engage and work together on climate issues. US LNG is well positioned to provide China with a clean, affordable, and reliable energy source. In turn, multi-decade investment in new LNG infrastructure will bring well-paying jobs across the United States and support much needed post-pandemic economic recovery. LNG trade between the United States and China serves the strategic interests of both countries for the long term and is a win-win that both governments should be pursuing.


Murkowski bill would speed permitting process for mineral mining
Linda F. Hersey, Fairbanks Daily News Miner, April 25, 2021

Sen. Lisa Murkowski has introduced legislation to speed up the review process for mineral mining on federal land, as demand for Alaska’s metals and rare earth minerals surges. 

Sen. Dan Sullivan is among eight co-sponsors of the bill, which aims to reduce U.S. reliance on imports from China for critical minerals and metals used in smart technology and renewable energy, from solar panels to cell phones.

“America’s reliance on foreign countries for the production and recycling of our critical minerals is a vulnerability to our national security, a disadvantage to our economy, and a hindrance to our global competitiveness,” Murkowski said when she introduced the Senate bill last week.

The legislation was referred to the Committee on Energy and Natural Resources for a hearing. It would “improve the quality and timeliness of federal permitting and review processes with respect to critical mineral production on federal land, and for other purposes,” according to the legislation.

Murkowski described the existing federal permitting and review process as “painfully inefficient” and a “major deterrent” for producers, refiners, and recyclers.

The U.S. permitting process for mineral production is among the longest in the world, Murkowski said, describing it as a threat to the nation’s economy and security.

The new legislation would:

• Improve the process for applications, operating plans, leases, licenses, permits and other authorizations for critical mineral-related activities on federal land.

• Create “quantifiable permitting performance goals” and track progress toward those goals.

• Involve agencies, stakeholders, projects sponsors and state, local and tribal governments to resolve concerns.

• Make the review process more efficient, cost-effective, and timely.


Alaska Airlines bans Reinbold for violating mask rules
Associated Press, April 25, 2021

Alaska Airlines has banned an Alaska state senator for refusing to follow mask requirements.

“We have notified Senator Lora Reinbold that she is not permitted to fly with us for her continued refusal to comply with employee instruction regarding the current mask policy,” spokesman Tim Thompson told the Anchorage Daily News on Saturday, adding that the suspension was effective immediately.

RELATED: Senate votes to remove Reinbold as chair of Judiciary Committee

Reinbold, a Republican of Eagle River, said she had not been notified of a ban and that she hoped to be on an Alaska Airlines flight in the near future.

Last week, Reinbold was recorded in Juneau International Airport arguing with Alaska Airlines staff about mask policies. A video posted to social media appears to show airline staff telling Reinbold her mask must cover her nose and mouth.

Reinbold told the newspaper that had been inquiring about a “mask exemption with uptight employees at the counter.”

“I was reasonable with all Alaska Airlines employees,” she said, adding that she was able to board the flight to Anchorage.

Reinbold has been a vocal opponent to COVID-19 mitigation measures and has repeatedly objected to Alaska Airlines’ mask policy, which was enacted before the federal government’s mandate this year.

Last year, she referred to Alaska Airlines staff as “mask bullies” after being asked by flight attendants to wear a mask aboard a flight, the newspaper reported. After the incident, she reportedly sent a cake to some flight attendants bearing the inscription: “I’m sorry if I offended you.”

Alaska Airlines has banned over 500 people.

Thompson said the length of Reinbold’s ban will be determined by a review.

It wasn’t immediately known how Reinbold, who was in Southcentral Alaska this weekend, would be able to get to Juneau where the legislative session resumes Monday. No other airline has scheduled flights between Anchorage and Juneau, and a ferry trip could take several days.

Lawmakers can participate in committee meetings by teleconference but cannot vote on the House or Senate floor remotely under current procedures.


From the Washington Examiner, Daily on Energy:

THE PROBLEM WITH KERRY FLOATING A CARBON IMPORT TAX AGAIN: Fresh off the climate summit, Kerry is reiterating that Biden is interested in imposing a border adjustment tax on other countries with high pollution.

The problem is the administration is not promoting the passage of a carbon tax at home because of its political toxicity, and most experts agree the U.S. can’t credibly impose a tax on imports of carbon-intensive goods unless it has a pricing system in place.

“Biden is particularly interested in evaluating the border-adjustment mechanism,” Kerry told Bloomberg as one of a round of interviews he did after the climate summit. “He wants to see if that’s something we need to deploy.”

Kerry noted the European Union is poised to establish a carbon import tax on countries that do not impose levies on their own goods, a prospect he has been pushing back on.

In warning the EU not to act while floating the prospect of a U.S. border adjustment, Kerry seems to be pressing the Europeans to give the administration more time to impose carbon pricing down the line, so the U.S. would be in good standing and not subject Europe’s tax.