A person walks past pump jacks operating at the Kern River Oil Field in Bakersfield, California, on January 16, 2015. Source: AP/Jae C. Hong
Washington, D.C. —(ENEWSPF)–May 26, 2016. Last year, Congress decided to phase out the investment tax credit, or ITC, and production tax credit, or PTC, for renewable energy over the course of several years. These tax credits have been useful in promoting the implementation of clean, renewable energy infrastructure. However, with their eventual phase out now written into law, it is time to remove the billions of dollars in taxpayer subsidies currently given to the oil and gas industries.
The Center for American Progress has released a fact sheet highlighting nine subsidies currently enjoyed by the oil and gas industries—many of which have been in place since the industries’ earliest days—that should be removed. Phasing out these nine subsidies would save taxpayers nearly $40 billion over 10 years and provide a level playing field for energy competition.
“Each year, the oil and gas industry pockets billions of extra dollars courtesy of U.S. taxpayers,” said Greg Dotson, CAP Vice President for Energy Policy. “Giving a mature industry this preferential tax treatment just doesn’t make sense. As the United States phases out tax credits for renewable energy, it is time to level the playing field, repeal the oil and gas subsidies, and inject some real competition into the U.S. energy market.”
The subsidies CAP is calling to have removed include:
- Deductions for the costs of drilling wells that are paid upfront, rather than over the life of the well as is common in other U.S. industries. Estimated savings: $13.1 billion over 10 years
- A tax break to incentivize keeping oil and gas production in the U.S. despite that fact that extraction of oil and gas found in U.S. lands and waters cannot, by definition, move abroad. Estimated savings: $10.9 billion over 10 years
- Deductions for the depletion of oil and gas deposits that are based on gross income rather than the actual exhaustion of the resource and can continue even after the company has recovered all costs associated with the depletion of the resource. Estimated savings: $12.1 billion over 10 years
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