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In a political year it's possible some may try to politicize tax policy as it pertains to the oil and natural gas industry. Let's start with some facts on energy and taxes:

• The tax treatments industry receives are not subsidies, as often is claimed by some.
• Deductions available to our industry are similar to those that allow other industries to deduct operating expenses. In the oil and gas business, outlays to drill and prepare wells are direct investments in the U.S. economy and jobs, and they help industry supply the energy our country needs.
• Our industry contributes about $60 million a day on average to the federal government in income taxes, rents, royalty payments and fees.

The first point above is important, because folks who know better or should know better often refer to legitimate tax deductions available for use by industry as subsidies. They are not.

The s-word†frequently gets bandied about in discussion of the deduction for intangible drilling costs or IDC. The IDC is a cost-recovery mechanism that has allowed oil and natural gas companies to deduct the upfront costs of well preparation, drilling and other related expenses since 1913. It's similar to the deduction that permits pharmaceutical companies and biotech firms to recover research and development costs.

In our business the cost of exploration, drilling and other associated expenses typically accounts for 60 to 80 percent of the cost of a well. Being able to recover those costs through the deduction is key to maintaining cash flow that helps companies drill more wells, keep producing the energy our country needs and to create jobs. A study a few years ago showed that repealing the IDC deduction would hinder investment and likely result in lower energy production neither of which would be good for the U.S.

Another favorite target of those who would raise taxes on a vital domestic industry is theView Full Article