New Tax on US Oil/Gas Drillers
I got an email from a friend that was trying to get people to sign a petition against a new tax on US drillers. It makes me think my Canadian drillers are "safer" plays. Here is the explanation:
When President Barack Obama announced his FY2010 budget request last week, he also unveiled a tax increase of over $30 billion for US natural gas and oil production investment, which is the most devastating tax proposal in the history of America’s oil and natural gas industry. Already the second largest revenue stream for the U.S. Treasury, the oil and gas industry is a large employer, tax payer, and revenue stream for Federal, State and Local Governments.
“I am greatly disturbed by this most recent attack on our Industry,” LOGA President Don Briggs said today. “The oil crash in the mid eighties was a cakewalk compared to what this could be,” Briggs also said. “The eighties crash was due to a crash in oil prices. Today, we are experiencing a crash in oil prices, natural gas prices, world recession, tight investment capital and now a proposal to rescind all economic incentives of the oil and gas industry.”
Natural gas and oil provide 65 percent of America’s energy. America’s independent natural gas and oil producers develop 90 percent of US wells, produce 82 percent of US natural gas and produce 68 percent of US oil. Independent producers reinvest over 100 percent of American oil and natural gas cash flow back into new American production. Lower natural gas and oil prices and the tight credit market are limiting investment capital; drilling activity is down over 25 percent since a year ago. (Source: Independent Petroleum Association of America)
For Louisiana, which prides itself in being THE Energy State, a slow down in drilling activity translates into fewer jobs, less investment in community, and less state and local revenue from producing companies.
In a time of global insecurity, it is imperative that the United States become independent from foreign oil sources, to ensure our Nations’ security. The oil and gas industry supports the development of alternative fuels as an important part of our future. However, as we encourage that growth, we cannot ignore the vital role this industry plays in our present. Removing natural gas and oil from the equation of a varied, comprehensive energy structure for the United States is not practical or feasible.
President Obama’s proposed tax increase, aimed at increasing revenue from the oil and natural gas industry, flies in the face of the goal of creating the comprehensive energy proposal that utilizes all sources of energy.
FY2010 Budget Proposals Include:
· Repeal Expensing of Intangible Drilling Costs
· Repeal of Percentage Depletion
· Repeal Marginal Well Tax Credit
· Repeal Enhanced Oil Recovery Credit
· Increases Geological and Geophysical Amortization Costs
· Excise Tax on Gulf of Mexico Production
· Repeal of Manufacturing Tax Deduction
· Implement a $4/acre fee on Gulf leases designated as non-producing
