Savings from Repeal of Oil & Gas Subsidies

The savings from repealing oil and gas tax subsidies would more than offset the cost of extending 18 other tax provisions directed more toward clean and renewable fuels, netting the treasury an additional $12.3 billion over 10 years, the Joint Committee on Taxation said March 23.

The Senate is expected to vote March 26 to limit debate on the bill (S. 2204), allowing senators to begin consideration of the Democrats' latest attempt to extend tax incentives for clean-energy goods and production.

The repeal of tax subsidies for the major integrated oil companies would save taxpayers nearly $24 billion over a 10-year period, JCT said in its estimate of the bill.

The energy-related tax provisions to be extended would cost about $11.7 billion over 10 years.

Some of the provisions that would be extended include incentives for biodiesel and renewable diesel, the production credit for refined coal, and the renewable electricity production tax credit.

The bill would prohibit the oil companies from claiming the tax code Section 199 domestic production deduction for their oil, natural gas, or other primary products; end deductions for drilling and development costs; and stop the companies from using the percentage depletion allowance for oil and gas wells.