A continuing column which provides short summaries and updates of recent events that affect oil and gas taxation. This issue's topics include: Loss Limitations; Drilling-related expenses and Interest Arrangements; Depletion; Windfall Profit Tax.

Current Developments in Oil and Gas Taxation. Mark, Richard S., Summer 1988, pp. 1‑7.

A continuing column which provides summaries of updates in the area of financial accounting. This issue's column includes a discussion of AICPA's new statements and FASB statements.

Developments in Financial Accounting. Brock, Horace R., Summer 1988, pp. 8‑9.

With the instability in the crude oil markets, producers, refiners and users need a system to minimize their exposure to price fluctuations. A number of producers and others are finding that petroleum futures options can enable them to avoid the adverse effects of price fluctuations. This article is an introduction to the use of options in the oil industry.

Hedging with Petroleum Futures Options: An Introduction. Johnson, David M., Summer 1988, pp. 10‑31.

The New York Mercantile Exchange provides a wide variety of instruments for managing cash flows from crude oil and related products. This article, extracted from a speech by Rosemary McFadden, President of the New York Mercantile Exchange, surveys the alternate financial instruments available on the NYMEX and the way those instruments may be used to protect producers and others against price fluctuations for crude oil and related commodities.

Oil Futures and Options: A Means of Managing Price Instability in the Oil Market. McFadden, Rosemary T., Summer 1988, pp. 32‑40.

Although the Crude Oil Windfall Profit Tax of 1980 is not generating any revenues current for the government, the tax is still on the books and reports must be filed. Messrs. Byrden, Schwarz and Grove analyze the crude oil prices that must be realized between now and 1991 for the tax to generate revenues for the government. They conclude that given the low probability of attaining these prices, the tax should be repealed.

The Repeal of the Windfall Profit Tax. Byrden, John P.; Schwarz, Jonathan R.; and Grove, Hugh D., Summer 1988, pp. 41‑56.

The costs of carrying crude oil and product inventories are highly significant to integrated producers. With added price volatility, carrying large inventories becomes a very risky business. This article shows how Conoco manages its inventories through spot market trades and through use of the financial instruments now available for trading in crude oil.

The Trading Game. Snelling, Henry T., Summer 1988, pp. 57‑61.

After a long period of development, the Minerals Management Service issued new regulations on the pricing of oil and gas severed from Federal leases for royalty valuation purposes. These new regulations will have an impact on virtually every producer on Federal lands. Mr. Roach covers these regulations to provide guidance to those concerned with revenue accounting and regulatory compliance.

Revised Final MMS Royalty Valuation Regulations. Roach, Howard A., Summer 1988, pp. 62‑71.

Changes in the structure of the natural gas industry, including changing regulations, price instability and increasing competition are viewed with particular concern in an industry which traditionally has depended on steady income streams to support dividend payments. This article surveys the managers of natural gas companies about their views on the importance of maintaining dividend levels for shareholders as well as the perception of managers about shareholders' preferences for stable dividend policies.

Natural Gas Industry Dividend Policies. Marple, Cynthia J. and Copan, Jay A., Summer 1988, pp. 72‑92.

The stock market is known to react to news of importance to an industry. Sometimes it is difficult for individuals to select from among varieties of information that which is of significance to investors. Professor Glascock reviewed two events believed important to the industry (the Penn Square bank failure and the collapse of the 1982 Vienna OPEC meeting) to see if investors did, in fact, react to these events. Interestingly, the Penn Square failure had no discernable effect on prices. However, as the results show, OPEC's activities do affect oil company security prices.

Petroleum Industry Returns and Two July 1982 Events: The Penn Square Failure and the Vienna OPEC Meeting Collapse. Glascock, John L. and Karafiath, Imre, Summer 1988, pp. 93‑103.

The recent decline in the fortunes of the oil and gas industry have had a severe adverse economic impact on regions which depend on this industry. Professor Brendler conducted an economic analysis of different regions in Louisiana to measure the effect of the price decline on different segments of that state's economy. His analysis finds that the adverse events not only affected the aggregate income in a region, but resulted in significant changes in the distribution of income across different classes. In effect, the middle income class was most severely affected by the oil price decline.

Oil Prices and Income Distribution: The Case of Louisiana. Brendler, Michael D. and Jones, Charlotte W., Summer 1988, pp. 104‑118.

This report is a survey of operating results for oil and gas producers in 1987. The report is drawn from the Institute of Petroleum Accounting's data base. It shows results of overall company operations, oil and gas operations, reserve data and standardized measure data for the industry and compares 1987 with 1986 on several important dimensions. Per barrel or mcf and per share data are presented together with year-to-year change statistics for the industry as a whole and for primary industry segments. The results are useful to those wanting to see how the industry performed, generally and to compare their own firm performance with the industry averages.

Financial Performance of the U.S. Petroleum Industry. Deakin, Edward B., Summer 1988, pp. 119‑133.