There is no question that tax reforms are needed.
However, two provisions that continue to be debated are the percentage depletion allowance and the intangible drilling costs deduction, (IDCs).
The oil and gas industry depends on these two provisions. The provisions are not identified to be subsidies or loopholes.
To the oil and gas industry, these provisions are important for producers to have capital sustainability and to have a vibrant sector. With improved cash flow, the industry can invest money into economic development and jobs that are so critical to the US.
Studies have shown that by repealing the percentage depletion and the IDCs the US would face the impact of less wells being drilled, less jobs, and less production. There is no doubt that this impact could be dramatic at a time when the industry is moving forward aggressively.
It has been estimated that over 190,000 jobs would be lost within one year if both provisions are repealed.
These two provisions are cost recovery measures. This is a time when US policies should strengthen our development of this country’s great sources of oil and gas.
Economic stability is closer to being within reach when the US has a strong energy sector. According to the latest Business Executives for National Security’s report entitled “Security in the New Energy Landscape: Assessing the Geostrategic Impact of the Unconventional Oil and Gas Revolution”, “the US shale boom is unique, from its origins to its tremendous global implications. The combination of accessible geology, cost-effective technology, and a robust support and investment system fostered a new industry not replicable anywhere else in the world. The boom helps meet rising demand for hydrocarbons in the developing world by increasing global supply elasticity. New jobs are invigorating the American economy and the US might even become an energy exporter for the first time in decades. Moreover, the US security portfolio is adapting.”
As US Congressman James Lankford recently stated, “The tax policy for energy exploration is similar to every other American manufacturing business. It allows companies to deduct business expenses to incentivize private capital investment and spur growth in high-paying American jobs.”
America’s energy sustainability can only be achieved with the right incentives and right provisions being in place. America Needs America’s Energy!
Together we can create the People’s Energy Plan! Go to www.peoplesenergyplan.com to join the effort. Facebook: America Needs America’s Energy with over 8500 supporters plus and growing. — America Needs America’s Energy: Creating Together the Peoples’ Energy Plan!