Washington, DC – Today, American Exploration & Production Council CEO Anne Bradbury issued the following statement after President Biden announced his FY 2025 budget proposal:
“President Biden’s budget is a direct attack on American energy production. By specifically targeting American oil and natural gas producers with massive tax hikes, President Biden’s budget would harm American families and businesses by increasing their energy prices, threaten our energy security by discouraging investment into the future, and empower our adversaries around the world, who would rush to fill the void left by America, to meet global needs for oil and natural gas.
“This budget should not even receive a vote in the House or Senate, and lawmakers in both chambers should craft budgetary policy that does not impede American energy production.”
BACKGROUND:
Biden’s budget includes $45 billion in tax hikes specific to oil and natural gas.
Changes to Current IDC Tax Policy Would be Detrimental to America:
When an operator drills a well, approximately 15 percent of the costs are tangible (pipe, controls, etc.) and 85 percent of the costs are intangible.
Under the corporate tax code, intangible drilling costs (IDCs) allow oil and natural gas companies to recover their intangible costs more quickly, freeing funds up to reinvest in development, resulting in more jobs. Unlike tax credits, IDCs do not reduce the total taxes paid over the lifetime. IDCs allow operators to immediately deduct expenses, which is similar to other tax mechanisms to encourage investment, such as the deduction for R&D expenses allowed for other industries. Drilling expenditures, mainly the jobs provided by exploration and development activities, account for billions of US investment dollars each year, which allows ongoing environmentally protective and safe production of domestic oil and natural gas here in the United States.
IDCs allow oil and natural gas companies to recover their costs under the corporate tax code, which is consistent with the economic reality of their underlying expenses, freeing up funds to reinvest in new projects that support millions of good-paying jobs. And IDCs allow the industry to invest in states where the industry serves as a major economic driver – such as Texas, New Mexico, Ohio, Pennsylvania, and West Virginia.
About AXPC
The American Exploration & Production Council is the national trade association that represents the leading independent oil and natural gas exploration and production companies in the United States. Our member companies represent 50 percent of the nation’s oil production and more than 50 percent of its natural gas production.