03 FEB 2015
Just like the movie Groundhog Day, where actor Bill Murray is caught in a never-ending loop of the same day, the national budget proposal released by the White House on Groundhog Day, February 2, 2015, again calls for the repeal of all oil and natural gas industry tax provisions, which came as no surprise to domestic oil and natural gas producers.
“I have to say we expected this,” said National Stripper Well Association (NSWA) Chairman Mike Cantrell. However, when combined with the crude oil price slump, the President’s budget proposal is the “absolute worst-case scenario” for small independent oil and natural gas producers.
“As the small businesses of America’s oil and gas industry, we rely on percentage depletion for capital formation to drill new wells and rework old wells,” Cantrell said. “Once again, President Obama is targeting America’s independent energy producers and workers with the equivalent of a devastating tax increase on mostly small producers and royalty owners.”
Cantrell said that the President’s budget proposal is a “killer of the small businesses of the U.S. energy sector” and that NSWA and IHS Global released an economic impact report in October 2014 which showed that eliminating the percentage depletion tax provision for oil and gas producers would not be a net revenue raiser, and instead would cost the U.S. economy an average of 178,000 jobs per year during the forecast decade. The cost to the federal government will be $2.5 billion in tax revenue by 2025, with another $1.1 billion lost in royalty revenue.