Energy Tomorrow Blog
Posted June 4, 2014
If you run a business that sells things produced from raw materials – manufacturers, retailers, wholesale distributors and car and equipment dealers and other industries – chances are good you’re familiar with “LIFO” accounting. The IRS first approved the “last-in, first-out” method for use by taxpayers with inventories in the 1930s. Repealing LIFO, as some in Congress are proposing, could impact the more than 30 percent of U.S. companies, large and small, that use it, as well as the larger economy.
That’s the message a bipartisan group of 113 U.S. House members conveyed in a recent letter to Ways & Means Committee Chairman Dave Camp, who has proposed LIFO repeal as part of his larger tax reform package.
Posted January 29, 2014
Contrary to what some in politics, the media and most recently, the president during the State of the Union, have said, the oil and natural gas industry currently receives not one taxpayer “subsidy,” “loophole” or deduction. Since its inception, the U.S. tax code has allowed corporate taxpayers the ability to recover costs. These cost-recovery mechanisms, also known in policy circles as “tax expenditures,” should in no way be confused with “subsidies” – direct government spending or “tax loopholes.”
Posted December 17, 2013
Last month we made some points on a Senate proposal that would impact America’s oil and natural gas industry with higher taxes and costs. Research has shown that delaying industry’s ability to write off intangible drilling costs likely would mean fewer wells drilled, lost jobs and lower energy production. Doing away with the “last-in, last-out” (LIFO) accounting method used by a number of energy companies would require them to redirect cash or sell assets to cover tax payments.
Now API has been joined by more than a dozen other organizations – representing energy producers, refiners, supporting servicers, equipment manufacturers, marketers and retailers – in challenging proposals that could hinder an industry that already sends $85 million a day to the U.S. Treasury.
In a letter to members of Congress the groups say that while efforts to make the tax code less complicated and more competitive are good, raising energy taxes and increasing costs will work against greater industry investment and activity that would provide broad benefit to the U.S. economy.
Posted November 22, 2013
Today we offer three charts – all associated with the latest congressional bid to raise revenue for the federal government by hiking taxes on oil and natural gas companies.
U.S. Sen. Max Baucus has proposed delaying industry’s ability to write off intangible drilling costs (IDCs) and doing away with the “last-in, last-out” accounting method (LIFO) used by a number of energy companies. More on LIFO below. Here are three charts from Wood Mackenzie’s recent study on the impacts of delaying IDC deductions.
Posted August 28, 2013
Posted April 11, 2013
Let’s dig into the details of the more than $90 billion (over 10 years) in new and targeted tax increases on America’s oil and natural gas companies that President Obama included in his FY2014 budget. Note: The tax provisions below are in no way “taxpayer subsidies” and are not unique to our industry. They constitute standard business deductions (some available to all other industries) and mechanisms of cost recovery – a fundamental and necessary component to a national income tax system. Here we go:
Posted February 6, 2013
Yesterday, President Obama called on Congress to pass a “balanced mix of spending cuts and more tax reform” to avoid the sequester spending cuts scheduled to take effect March 1. White House Press Secretary Jay Carney then followed up with, “That means closing loopholes that give tax advantages to the wealthy and to corporations that average Americans and average businesses don't have…So there's the subsidies to oil and gas companies.”