President Obama, once again, is urging congressional leaders to eliminate long-term tax incentives for the oil and gas industry. He also said that he wanted to work with Congress to develop a comprehensive energy strategy for the future in order to reduce U.S. dependence on foreign oil. The President expressed concern regarding the potentially negative impact of high oil and gas prices on the struggling economy. He noted that, there is no “silver bullet” to address rising gas prices in the short term, but that there are steps that can be taken over the long term.
One of the steps Mr. Obama proposes to take is to eliminate what he believes to be unwarranted tax breaks accorded to the oil and gas industry. No specific details were provided in the President’s letter to Congressional Leaders; however, the President has previously indicated that the intangible drilling costs deduction and percentage depletion deduction tax incentives should be eliminated.
Republicans, however, are critical of the proposal to eliminate the tax breaks. Senator Orrin Hatch (R-Utah), in response to the President’s proposal, said “...Tax hikes on domestic energy producers will yield higher prices at the pump for consumers in the long run and further impede our nation’s ability to achieve energy security and independence.”
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