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Rep. Katie Porter dissects oil exec’s lies about special taxes fossil fuels

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Porter asked Murphy whether or not the technology and costs of drilling had become more streamlined since his grandfather first received big tax breaks to offset those costs 100 years ago. Murphy gave a mealymouthed answer saying some costs went up and others went down—of course he didn’t mention how his profits have been fantastic for 100 years. This led to Murphy’s condescending attempt at questioning Porter’s understanding of royalties versus profits, and dug Murphy’s grave just that much deeper.

As her time came to a close, Rep. Porter asked about one of the special incentives that make Murphy and Strata’s business model completely rigged in comparison to other business models—Intangible Drilling Costs. Intangible Drilling Costs (IDCs) are one of the largest tax breaks available specifically to oil companies, allowing companies to deduct most of the costs of drilling new wells in the United States.” They are above the line tax deductions that allow fossil fuel companies to deduct up to 70% of their costs right up front. It’s important to also understand that depending on the estimate, drilling costs make up 60-90% of IDCs, to which Murphy gave an incomprehensibly fraudulent answer, saying that the oil industry did not receive any different tax breaks or structures than any other business or industry.

It may be true that the tax breaks Murphy and his daddy and his daddy’s daddy received have continued to make their business model almost risk free for decades, but that’s not the way it is for the rest of us. A clearly frustrated Porter cut Murphy off for a reality check:

REP. KATIE PORTER: You do benefit from special rules. There’s a special tax rule for intangible drilling costs that does not apply to other kinds of expenses that businesses have. You get to deduct 70% of your costs immediately, and other businesses have to amortize their expenses over their entire profit stream. So please don’t patronize me by telling me that the oil and gas industry doesn’t have any special tax provisions. Because if you would like that to be the rule, I would be happy to have Congress deliver.

The argument for IDCs has always been that oil and gas exploration is an expensive proposition and we need to incentivize “investment” in it. Of course, these incentives were thought of 100 years ago, and made a lot more sense than back when no one really had any idea where they might find gas or oil. Better technology means easier and deeper drilling and extracting, and better success rates on where to drill. The oil industry has been established and now it is time to spend some of the government incentivizing power on renewable energy, because climate change is very real.

Surprise, surprise, after decades where the fossil fuel industry has received ten times as much taxpayer money as the U.S. education system, gas and oil men have been spending lots of time and lobbyist money whining about the renewable industry’s tax breaks and incentives being unfair. There are many reasons why the fossil fuel industry sided with an overt white supremacist and incompetent Trump administration. But the reality we all face is that the world must move away from fossil fuels and that process must take a one direction approach—contraction, not expansion. 

One of the maneuvers that the rich and powerful of our country have relied on for decades is corporate welfare, in the guise of tax breaks, incentives, and special deductions that allow them to hide their profits and deduct their costs. The initial reasons for incentivizing these industries is always the same, and not bad on paper. These industries are going to provide services and jobs that will make all of our lives better, rising tide and boats and all of that. The problem always reveals itself the same way: after that initial incentivized investment, the industries squash competition, do not share in the egregious profits they make off of people, and then fight tooth and nail to do as little as possible to grow their business and make it independent of government welfare.

Deepwater Horizon got lots of incentives and still allowed greed to ruin it for us all.

The rich and their corporations are the lazy people they claim everyone else will become if we all get even a sliver of aid to ease stagnant wages and rising costs. Their laziness and the lack of accountability, coupled with the pretend mythology that these leaders of industry carved out their fortunes all alone in some rugged-individualist bootstrap factory, evolves their organizations into unsafe and fragile businesses. This leads to environmental disasters like the DeepWater Horizon oil spill because of corner-cutting, and cost-cutting.

It’s the reason why rich CEOs like Trump’s Treasury Secretary Steven Mnuchin seemed to only have an aptitude for hiding money from the American public and not giving out the way that Congress required him to do. In some cases, certain industries, like the telecom industry and the fossil fuel industry get special incentives and tax breaks. The reason that energy companies were given these tax incentives initially was because of the common good their innovations and ability to find and produce fossil fuel-based power to people was considered worth incentivizing. 

That is no longer true, and if they cannot make money being oil barons then maybe they need to do something else.

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