How much do oil companies save under Venezuela windfall tax cut? (reposted)

(Reposted, because when I posted this the other day, I was using some incorrect assumptions. It’s all much better now. Crummy old version of post can be seen here.)

So Venezuela’s legislature approved the cut in the “special contribution for exceptional international oil prices” or whatever they call it. Windfall tax, in effect. And people wonder, how much do the oil companies save?

I don’t know, since when you save money on one tax you often end up paying more on some other tax. But here’s what the chart looks like on the windfall prices tax, which isn’t a tax but a “special contribution” (meaning it goes right to the presidential slush fund, rather than being shared with state and local governments):

Venezuela windfall oil taxes as of 2007, 2011 and 2013. Click for full size

At $100 a barrel, under the 2011 rates, oil companies had to contribute $31 a barrel. Under the new rates, you contribute only $21. According to my math, anyway. At $110 a barrel, the difference grows to $10.50 per barrel, and stays there — from there on up, the difference is always $10.50.

Several of the big joint ventures in Venezuela are aiming for output of 200,000 barrels a day. The private partners generally own 40%, so they can count 80,000 barrels a day as their production. At that output, a difference of $10.50 a barrel works out to $306 million a year ($307.4 million in leap years).

But that isn’t exactly how much the oil companies save. Because that $306 million is pretax income, and all sorts of other taxes come in. And to figure that out, you really need to go beyond some dude writing for free on the internet.

Venezuela cuts taxes on oil companies. Why?

Venezuela reduced its oil windfall profits tax somewhat today. I think it vindicates my analysis from two years ago, when the tax was raised, which was that the increase was just a way to get some extra money in the slush fund for last year’s election campaign. It also vindicates my recent analysis that cutting that tax was one of the few things a new government could do that wouldn’t stir up the Venezuelan public, though I was assuming in that article that Chávez would no longer be in command. OK, maybe he isn’t. What do we know, anyway?

Anyway, I’m looking forward to Eva Golinger’s take on this tax cut. She said the increase two years ago was good for the Venezuelan people. Now PDVSA has had to turn over a few billion dollars to FONDEN and has fallen even further behind on its responsibilities, and now the tax gets cut. Is this also good for the Venezuelan people?