If you're not dead, you have been blasted lately with all sorts of bombast about "oil industry" tax loopholes and subsidies and the gallant efforts underway to do away with them. I thought it might be a good idea to simply explain what these "loopholes" are, how they came into existence, and what happens when we get rid of them.
One important fact to remember is that up until recently, everyone agreed that energy security was important and that domestically-sourced energy preferable to foreign-sourced energy. That is apparently no longer the case.
First, lets establish who this is targeted at and what kind of product it is meant to discourage. If you, like most Americans, think it is targeted at "Big Oil", you would be, lets see if there is a nice way to say this, Dead Wrong. First, Big Oil... the big integrated American Oil Companies that produce less than 12% of the world's Oil (REAL Big Oil is the National Oil Companies owned by the countries that contain the supergiant oil fields), left the US in the late 1970's and early 1980's. Today, they produce only 35% of domestic oil and 20% of domestic natural gas, and drill less than 10% of the wells in the US.
Next, if you are like most Americans, you think that Dirty Oil is the commodity being targeted by this tax proposal, right? Again... DEAD WRONG. 80% of the wells drilled in the US today target Natural Gas. Yep, the "Clean Burning Natural Gas" that Nancy Pelosi enthusiastically endorsed when she jumped on the Pickens Plan.
By now, you are probably thinking "What the Hell? This isn't what I was told at all!" Unfortunately, we seem to be living in a world where truth often takes a back seat to politics and agenda. In any case, now that we have that settled (and, by the way, these aren't "spins" from "an anonymous oil executive", these are basic objective facts), lets go understand Taxes. I have to be crazy to write on something this dry!