More on the story in today’s Business section about politics and oil
Tax bill rising
Brook Simmons, a lobbyist who represents the Oklahoma Independent Petroleum Association in Washington, said the oil and natural gas industry will be impacted by a tax bill that already cleared the Senate and is headed through the House. It proposes leaving a production activity expense deduction at its current amount instead of allowing it to increase, changing the taxes levied on foreign oil and gas extraction income, and extending and increasing the oil spill tax. Together, these measures would raise an extra $8.8 billion for the federal government.
It also, though, does a couple of good things for the industry — extending a tax suspension on income made by marginal wells, and providing credits for carbon dioxide capture and re-injection into the ground. Simmons said the tax increase measures are intended to impact “integrated majors,” companies typically referred to by Congress as “Big Oil.”
“But it allows the camel’s nose into the tent,” he said.
An attack
When Chesapeake Energy Corp. announced it would curtail its drilling and production for the next two-plus years because of soft natural gas prices, the Wilderness Society quickly reacted.
“Chesapeake’s actions and attitude typify the ‘public be damned’ manner in which the oil and gas industry in this country operates,” said Wilderness Society Senior Policy Advisor Dave Alberswerth. While the industry and Republicans were busy convincing American consumers and Congress that the key to lowering energy costs was more drilling, one of the nation’s biggest independent producers made plans to cut its drilling and operations because of concerns about profits, he said.
Industry officials, though, say Chesapeake is just protecting investors’ dollars by slowing production. It would be unreasonable for the American public to expect a company to put itself into bankruptcy to create lower energy prices, they noted.
“They know what they are doing,” said Mike Terry, president of the Oklahoma Independent Petroleum Association. “It is a business, and they are going to do what they can to maximize their returns. But they are going to continue to drill. It is not like they are going to quit.”
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