Hey everyone! Let's talk about something happening in the oil world as we wrap up 2023. Texas is buzzing because there's a ton of oil heading out, especially overseas. Why? Because the U.S. is producing oil like never before, and traders want to avoid a big tax hit on their stock.
So, what's going on? US Crude oil exports are through the roof, averaging about 4 million barrels per day (bpd) this year. That's half a million more than last year, and it's not just the numbers that are high – production's hit a crazy 13.2 million barrels per day, according to Reuters.
The cool part? US oil, especially the West Texas kind, is cheaper than the global benchmark Brent by about $4.50 per barrel. This price cut is making U.S. oil super appealing to refineries in Europe and Asia. Matt Smith, a pro analyst at Kpler, says there's a big rush, especially for cargoes heading to China.
Here's another twist: there's this year-end tax in Texas on stored oil. To dodge it, exports might hit around 5 million bpd in the last two weeks of December. Traders are moving barrels away from the Gulf Coast fast, says Kpler's Smith.
And for those who can't ship by sea? They're trucking the oil to places with lower taxes, like the huge storage facility in Cushing, Oklahoma. The tax rate there is about 1%, way less than Texas' 2.50% to 2.75%. So, inventories in Cushing have been climbing, reaching 30.8 million barrels from 21 million.
It's a fascinating time in the oil biz, with loads of action and strategy as we close out the year. Texas oil is on the move, and it's all about smart plays and big numbers!
What are some of the taxes you may pay for storing oil?
In the United States, the taxapplicable to storing oil, especially in ports, can vary based on several factors, including the location (state and local jurisdiction), the type of oil, and the specific use of the storage facility. However, there are a few general types of taxes that might be relevant:
Property Taxes: Storage facilities, like tanks in ports, are subject to property taxes. The rate can vary significantly depending on the state and local municipality where the port is located.
Ad Valorem Taxes: Some states may impose ad valorem taxes, which are based on the assessed value of the oil stored. These are more common at the state level.
Inventory Taxes: Some states or local jurisdictions might have taxes on the inventory of goods, including oil, stored within their borders. This can be a significant consideration for companies deciding where to store their oil.
Federal Taxes: At the federal level, there can be taxes related to oil storage, especially if it's part of the Strategic Petroleum Reserve. However, for private storage, federal taxes are more likely to be related to the production and sale of the oil rather than its storage.
It's important to note that tax laws and regulations can change, and they can be complex, particularly when dealing with a commodity like oil. Companies typically consult with tax professionals or legal experts to understand the specific tax implications for storing oil in various locations across the U.S.
Comments