Oil and gas companies say Biden’s push to cut tax breaks runs counter to his call for more domestic production.
President Joe Biden reiterated his calls to cut energy subsidies for “big oil” companies in his fiscal year 2024 budget proposal, which was released Thursday.
The administration sees the elimination of fossil fuel tax breaks as part of the administration’s stated efforts to reduce the budget deficit. Director of the Office of Management and Budget Shalanda Young said at a press conference: “This year’s budget cuts the deficit by almost $3 trillion over the next decade, inviting the rich and large corporations to start paying their fair share and cutting wasteful spending on big Pharma, Big Oil and other special interests.
Biden’s budget plan calls for removing or changing more than a dozen fossil fuel tax policies, which the administration says will cut the budget deficit by about $3 billion a year and nearly $30.8 billion over the next decade.
Some of the most significant proposed changes include ending the use of percentage depletion associated with oil and gas wells, which would reduce the deficit by more than $13.8 billion over the decade, and removing the write-off of intangible drilling costs, which would reduce the deficit by almost $8.5 billion. dollars for the same period.
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Notably, these policies will have little effect on reducing the budget deficit, which is expected to widen further over the next decade. The impartial Congressional Budget Office recently predicted that the federal budget deficit will double from about $1.41 trillion in 2023 to $2.851 trillion in 2033.
The American Petroleum Institute (API), a trade group that represents all aspects of the U.S. oil and gas industry, has criticized the Biden administration’s push to increase the tax burden on the sector and has also urged energy companies to ramp up production. contradictory.
“The presidential budget represents yet another example of the administration’s inconsistencies in energy policy,” said Lance West, API’s vice president of federal government affairs. “The White House calls for more US oil and natural gas to meet consumer demand, then refuses to enter into leases and discourages future investment by proposing new discriminatory taxes.”
“The administration must focus on pursuing policies that continue to generate important tax revenue for education and environmental programs while ensuring safe, reliable, and affordable American energy,” West said.
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While rarely enacted into law by Congress en masse, presidential budget plans often contain provisions that can be enacted in consolidated spending bills. They serve primarily as a messaging document and rallying point for the administration’s preferred policies, and can, in turn, signal to markets the White House’s views on certain industries highlighted in the document.
Biden has been a longtime critic of the oil and gas industry, a trait that has stayed with him since his inauguration as president. During his speech before Congress last month, Biden took the opportunity to criticize the oil companies but did not discuss the issue of subsidies.
“You may have noticed that Big Oil just reported record profits,” Biden said. “Last year they made $200 billion in the midst of the global energy crisis. It’s outrageous. They invested too little of that profit to increase domestic production and lower gas prices. Instead, they used this record profit to buy back their own shares. , rewarding their CEOs and shareholders.”
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Biden has repeatedly criticized oil and gas companies since taking office, saying “They have 9,000 drilling permits” and “Why aren’t they drilling?”
Late last month, the Bureau of Land Management (BLM) revised the number of approved but unused permit applications from an estimated 9,000 to less than 6,700.
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BLM, which is under the jurisdiction of the Department of the Interior, told Fox News Digital: “As of February 2023, companies have more than 6,600 approved and unused drilling permits on federal lands. This number has been updated to reflect the report. discrepancy as a result of the transition to a new database in mid-2020.”
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