According to Dallas Congressman Martin Frost of the 24th Congressional District of Texas, a supporter of the president, President Obama is going to lose credibility on the oil and energy issue because Mr. Obama's claims of big oil subsidies, amounting to $4 billion in tax breaks - are simply untrue and without merit - because the subsidy in question was was repealed 36 years ago.
Last evening, Mark Levin, known as a constitutional lawyer and a nationally syndicated broadcaster, blasted Mr. Obama for pointing to tax breaks that don't benefit Big Oil and haven't for more than three decades. Levin pointed to Frost's quote:
I’m a supporter of the President’s. I’m concerned that he’s going to lose credibility on this oil and gas issue because he’s not telling the truth entirely. What he is saying is that you need to eliminate four billion dollars worth of tax breaks for major oil companies because major oil companies have obscene profits. The problem with this is that one of the big tax breaks that he’s citing -intangible drilling costs- excuse me -percentage depletion- was repealed by Congress, excuse me, in 1975, 36 years ago, as it affects major oil companies. The only ones that get percentage depletion anymore are domestic independents who drill most of the wells in the United States and employ four million people.
Democrat Congressman Dan Boren explained and agreed with Frost that Mr. Obama needs to get his facts straight while pointing out that the Obama energy solution would
- hike the cost of oil production
- hike foreign oil dependency
- hike the burden on smaller, independent energy producers
- and leave Big Oil - among them Exxon, Shell, BP, Phillips and Conoco untouched:
Specifically, the Administration is seeking to repeal the “percentage depletion” and “intangible drilling costs (IDCs)” tax incentives.
The removal of these provisions would negatively affect domestic independents who utilize them to attract the capital necessary to drill new oil and gas wells inside the United States.
It is estimated that eliminating percentage depletion and IDCs for domestic independents would reduce U.S. drilling by 30-40 percent, thereby increasing the nation’s dependence energy from foreign sources.
[About Mr. Obama's "percentage depletion" solution:] Furthermore, the major oil companies are barred by law from receiving percentage depletion altogether, as it only is given to domestic independent producers.
[About Mr. Obama's “intangible drilling costs" solution] The IDC preference is only available for domestic drilling activity, and as the major oil companies drill primarily outside the U.S., the domestic independent sector of the industry will yet again bear the brunt of losing this critical provision.
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