Tags: oil | industry | breaks | economic

Oil-Industry Breaks May Be Casualty of Fiscal Cliff Bargain

Tuesday, 13 Nov 2012 01:05 PM

By Stephen Feller

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House Speaker John Boehner, R-Ohio, may be open to eliminating certain oil-industry tax breaks to prevent the necessity of tax increases.

Republicans have started examining the tax code in their effort to raise revenues without actually raising rates, and breaks for many of the largest companies in the country could be on the chopping block, reported The Hill.

“The details will have to be negotiated. Not going to speculate on what a final package may look like,” said Kevin Smith, a spokesman for Boehner.

Oil companies receive about $4.4 billion in tax breaks every year, according to USA Today. Democrats and the White House have put forth several proposals in the last year that would eliminate breaks and bring the federal government between $24 billion and $44 billion over the next decade.

Republicans, as well as Democrats in oil-rich states, have shot down most of those efforts on behalf companies in their districts.

Companies currently can write off the cost of domestic drilling and depletion allowances which allow oil to be considered equipment. Many also receive tax incentives for exploration and development of wells.

President Barack Obama and members of congress have discussed eliminating tens of billions of dollars in breaks for the industry. According to Oil Change International, the government spends about $52 billion annually on tax breaks and to protect pipelines and shipping lanes.

Steve Kretzmann, executive director of the organization, said those funds are ripe for cutting in the current political environment.

“I think on the shortlist of things that may be politically possible to raise revenues from, the very profitable and very successful fossil-fuel industry in the United States is on it,” Kretzmann said. “There is political space, for sure.”

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