A new study released today shows the harmful impacts that would result from repealing the tax deduction for intangible drilling costs (IDCs), API Director of Tax and Accounting Policy Stephen Comstock told reporters this morning.
“The effects of repealing the IDC deduction would be significant and immediate,” said Comstock. “The industry would be forced to make fewer investments, drill fewer wells, employ fewer Americans, and produce less of the energy that fuels our economy.
“The analysis shows an additional 190,000 Americans would be unemployed next year if the IDC deduction is repealed. That is equivalent to taking away an entire month of job creation at current growth rates. Projected industry investment in the U.S. falls by $407 billion over the ten year period, driven by a 15 to 20 percent annual reduction in future domestic drilling. The result is a significant decline in future U.S. energy supply with oil and natural gas production in 2023 coming in 14 percent below current expectations.
“Repealing the IDC deduction would actually lead to long term declines in federal revenues, state taxes, and royalty payments to private landowners. If policymakers want to generate more revenue from oil and natural gas production, raising taxes is the wrong approach.
“A forward-looking program to expand opportunities for domestic oil and natural gas development could create more than a million new American jobs and generate hundreds of billions of additional dollars for the government. We urge Congress and the president to always approach the tax code with an eye toward fairness, job creation, and American energy security.”