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Obama FY 2015 budget is a $100 billion tax hike on energy producers
Photo Credit: Forbes Business

Obama FY 2015 budget is a $100 billion tax hike on energy producers

Mar 4 2014, 1:36pm CST | by

President Obama’s FY 2015 budget includes a $100 billion tax increase on energy companies with the majority of the pain falling on oil and natural gas producers. Obama’s tax increases will...

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20 weeks ago

Obama FY 2015 budget is a $100 billion tax hike on energy producers

Mar 4 2014, 1:36pm CST | by

President Obama’s FY 2015 budget includes a $100 billion tax increase on energy companies with the majority of the pain falling on oil and natural gas producers. Obama’s tax increases will make it harder for energy companies to recover their investments, which will make it harder for oil and natural gas companies to redeploy their capital, which will hamstring economic growth and kill jobs.

In sum, do you want capital tied up in long depreciation/amortization schedules or funding new projects and creating new jobs? President Obama and most Democrats choose the former. This cutting off your nose to spite your face mentality is perfectly illustrated by a graph in a new Chamber of Commerce report:

The graph shows that oil and natural gas jobs have increased by 40 percent since the beginning of the recession compared to a minor decline in non-farm job growth. Objectively, raising taxes on the industry buoying the American economy is bad policy. This huge upswing has not only resulted in economic growth in the oil and natural gas sector but has also reduced energy prices for consumers by depressing natural gas prices. Development of shale natural gas has brought home manufacturing jobs and revitalized America’s chemical industry. You would think the Democratic Party would recognize a good thing when they saw it?

To further illustrate the economic impact resulting from lengthening cost recovery periods, look no further than the Obama proposed Intangible Drilling Costs (IDC) repeal. IDCs include things like wages, fuel, repairs and other non-salvageable expenses necessary to get oil and natural gas out of the ground. A Wood Mackenzie study showed that delaying the deductibility of IDC expenses would have numerous negative economic effects and begin to pull down the blue line in the above graph.

According to Wood Mackenzie , the Obama IDC proposal would specifically:

Investment & Jobs
/>

  • Cause investment through the drilling and development of oil and gas resources to decline by $407 billion over the period 2014 to 2023
  • This is driven by a reduction in drilling by an average of 8,000 wells and over 400 rigs per year

Jobs
/>

  • The impact on employment is to lose an average of 225,000 jobs per year of which an estimated 65,000 
would be direct oil and gas industry jobs

Production

  • By 2023 we expect the IDC delay case production to be 3.8 mmboed (or 14%) lower than the current case.

The appropriate tax treatment for all capital investments is immediate, full deductibility in the year the expense occurred. Why should a business that buys a computer be allowed to deduct that purchase in five years while a business that buys a chair has to wait seven years to fully deduct their costs?

Instead of taxing oil and natural gas companies to fund an additional $791 billion in government spending over the next 10 years, President Obama and the Democratic Party should stay out of the way and let the oil and natural gas industry create jobs and impel economic growth.

Source: Forbes Business

 
Update
10

6 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rak ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

Newcastle United Training Session
KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was br ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

6 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin Hussein. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in th ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

6 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 milli ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

6 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minist ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of RM20 mill ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Ba ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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