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Obama budget takes aim at fossil fuels

February 15, 2011
The White House released it's budget blueprint Monday, and, once again, the Obama administration is taking aim at the oil and natural gas industry.

As expected, Obama proposed to repeal oil and gas tax provisions that independent producers rely on: expensing of intangible drilling costs, the marginal well tax credit, the enhanced oil recovery tax credit, the deduction for tertiary injectants, the exception to passive loss limitations for working interest in oil and natural gas properties, percentage depletion for oil and natural gas wells, the domestic manufacturing tax deduction for oil and natural gas companies, and geological and geophysical amortization. The budget also proposes to cut the Department of Energy oil and gas research and development program.

Obama is calling for the elimination of a dozen tax provisions for oil, gas and coal companies to raise $46 billion over 10 years. These funds would be diverted to help pay for putting 1 million electric vehicles on the road by 2025, doubling the share of electricity from clean energy by 2035 and increasing the efficiency of energy use in buildings by 20 percent.

The repeal of these tax provisions for oil and gas companies accounts for 30 percent of Obama’s proposed budget savings ($45 billion of $147 billion) over the 2012-2021 time period. The manufacturing tax deduction, IDCs and percentage depletion account for the bulk (about $42 billion) of those estimates.
 
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