All Things Energy – Volume 6 (Oil & Gas Tax)
The current conflict in the Middle East only underscores the need for increased domestic energy production. Unrest in oil producing regions around the world will always cause fluctuations in the price of oil. Markets will always react to uncertainty, whatever the source.
Hi, I’m Tamra Freedman with Breitling Energy, and welcome to a new segment of “All Things Energy”. At its core, U.S. energy independence is about freedom. When the U.S. is not reliant upon oil from conflict regions, we have more flexibility in responding to these inevitable crises.
Current policy on oil and gas tax provisions have produced an American oil and gas revolution that has resulted in a spectacular expansion of domestic energy production. It has moved our country to a point where energy independence is within reach.
U.S. oil imports have dropped from 60% to less than 37% in the last five years. And, thanks to more domestic oil and natural gas development, we are becoming more energy independent every day.
When markets fluctuate due to war and rumors of war, we should respond by increasing our efforts at achieving energy independence. Misguided proposals to eliminate critical oil and natural gas tax provisions would only serve to undermine U.S. energy production. The solution is to allow American oil and natural gas companies to produce at home more of the oil and natural gas we know our nation is demanding. By encouraging more development of our nation’s rich oil and natural gas resources we could significantly enhance our national security. Contrary to what some in politics and the media have said, the oil and natural gas industry currently enjoys no unique tax credits or deductions.
Since its inception, the U.S. tax code has allowed corporate tax payers the ability to recover costs and to be taxed only on net income. These cost recovery mechanisms or tax provisions, also known in policy circles as “tax expenditures”, should in no way be confused with “subsidy” or direct government spending.
Oil and natural gas tax provisions like percentage depletion and IDCs are neither “loopholes” nor “subsidies”, but simply cost recovery mechanisms similar to those used by other industries. These tax provisions are critical for independent oil and natural gas producers to sustain capital availability and formation. The provisions also promote continued oil and natural gas exploration and production activity. Market-created jobs are a key benefit of increased oil and natural gas exploration and production activity. Energy access, not taxes are the key to moving our nation toward energy independence and unlocking new jobs for Americans.
America has spilled far too much blood and treasure in conflict regions due to our dependency on foreign oil. Oil and natural gas tax provisions allow American energy producers to put money back into exploration and development of U.S. oil and natural gas supplies. This in turn creates jobs and strengthens America’s freedom. That concludes this segment of “All Things Energy”. Thanks for joining us.