Sen. Joe Manchin Has Been Fighting to Keep Billions in Subsidies for Fossil Fuel Industry
"A package of legislation that represents a last chance to avoid severe climate crisis impacts was dramatically defanged late last week by conservative West Virginia Democratic Sen. Joe Manchin...
Despite Manchin’s cost-conscious approach — he has demanded a reduced $1.5 trillion price tag for the bill — he has fought to preserve domestic fossil fuel industry subsidies. On the potential repeal of international oil and gas subsidies put into place during the Trump administration, Manchin has been silent.
Among them is a subsidy called the deduction for “intangible drilling costs.” Manchin singled out his desire to preserve the subsidy in a memo to Senate Majority Leader Chuck Schumer, which was leaked to Politico.
The subsidy essentially works by allowing oil and gas companies to write off the costs of drilling from their tax bill right away, even before they have produced any oil or gas. If oil prices are high, over the coming decade that subsidy is poised to boost the profitability of new oil and gas fields by 32 and 33 percent, respectively — a bigger impact by far than any of the 15 other major domestic fossil fuel industry subsidies analyzed in a recent study by the Stockholm Environment Institute and Earth Track. If oil prices are low, the subsidy significantly incentivizes new oil and gas drilling that may not happen otherwise...
Another subsidy is known as “percentage depletion” for oil and gas wells. It allows 15 percent of many oil and gas producers’ income to go tax-free. The deduction is meant to account for the cost of developing the well, but the set percentage in many cases exceeds the actual costs.
The deduction is set to boost profitability of new wells by about 3 or 4 percent over the next decade, according to the Stockholm Environment Institute and Earth Track study..."