While fuming about assaults on the oil and gas industry, US Representative Dan Boren, a devout Blue Dog Democrat from Oklahoma, told the Natural Gas Roundtable why his quest to fend off tax hikes is personal.
"If you took away intangible drilling costs, it would decimate the industry. If you took away the depletion allowance, it would be terrible," he said at this week's roundtable session. For the uninitiated, intangible drilling costs are expenses incurred while exploring for gas and oil. Federal tax law lets producers write off those costs. The depletion allowance includes deductions from gross income that are allowed by the federal tax code to investors in commodities like oil for the depletion of the minerals deposits.
To drive home his point, he said, "My stepfather is an independent (producer) in east Texas," he said. "The only way he has been able to survive through all these years is to have the intangible drilling costs written off. If he didn't he would have gone broke."
In his proposed budget submitted last May, President Obama said he wanted eight changes to the tax code "to cut unjustified tax loopholes that benefit oil and gas corporations." The administration argues that "ending these subsidies would raise about $26 billion over the next 10 years."
In addition to intangible drilling costs and depletion allowances, the president also said he wants to eliminate the enhanced oil recovery credit, the marginal well tax credit, the deduction for tertiary injectants, the passive loss exemption for working interest in oil and gas properties, and the manufacturing tax deduction for oil and gas companies.
Boren also noted that some in Congress oppose the practice of hydraulic fracturing. "If you take away hydraulic fracturing, if you take away intangible drilling costs and depletion allowance, we won't be talking about this 118-year supply of natural gas," he insisted. "We won't have it."
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