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In any presidential election year it is inevitable that candidates on both sides of the political spectrum will begin hailing or bashing tax breaks, subsidies, and regulations throughout the US business landscape. No business is more susceptible to these discussions than the Oil & Gas industry. Depending on the date and audience a candidate is speaking to, an observer will hear that the oil & gas industry is subsidized between $10 billion to $52 billion.

Before we break down the numbers behind the claims, let’s first define subsidy. According to Dictionary.com subsidy can be defined four ways:

1. a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like.
2. a sum paid, often in accordance with a treaty, by one government to another to secure some service in return.
3. a grant or contribution of money.
4. money formerly granted by the English Parliament to the crown for special needs.

The definition does not claim that a subsidy is defined as not paying a certain amount in taxes.

Now let’s break down the so-called subsidies. You will see these numbers inflated or deflated depending upon the source. In order to arrive at the $52 billion amount we have to analyze estimates at the higher end of the spectrum. The top six “subsidies” included in the $10-$18.5 billion estimates are as follows:

Master Limited Partnerships ($3.9 billion “subsidy”) – Ending the MLP “subsidy” would result in MLP’s being considered corporations that must be taxed before their distributions are passed along to shareholders. Therefore, any MLP income would be taxed at the corporate level and then again at the dividend level. Distributions to shareholders would be impacted substantially. Preventing double taxation is not a subsidy. MLPs also exist for [entity display=”Real Estate” type=”section” active=”true” key=”/real-estate” natural_id=”channel_2section_63″]Real Estate[/entity] and other industries. Furthermore, the “subsidy” affects people across the spectrum from Pensioners, 401ks holders, to widows and orphans – hardly a “subsidy” for the oil and gas industry.

Intangible Drilling Costs ($3.5 billion “subsidy” – low estimate is $780 million) – Intangible Drilling Costs are essentially...