POLICY
A Fascinating Discussion With a Former Democratic Congressman By: David Blackmon
I
’ve debated with myself about writing about this call since I gained a degree of respect for the former congressman, a Democrat from an oilproducing state, who called me out of the blue in early October. He had read a story I wrote for another publication back in August, in which I discussed his political party’s fraudulent allegations that oil and gas companies enjoy tax “subsidies” from the federal government. Here, in part, is what I wrote then: The oil and gas industry does not receive “subsidies” of the type that wind, solar and electric vehicles enjoy, i.e., direct transfer payments from the government to enormous corporations like Tesla, General Motors and Ford totaling billions of dollars every year. Some in the industry—mainly small producers and royalty owners—do benefit from the expensing of intangible drilling costs, which is similar to appliance manufacturers or pharmaceutical companies expensing their own cost of goods sold every year. Small independents and royalty owners also benefit from percentage depletion, a provision that is similar to depreciation of inventory in other industries. Biden proposes to single oil and gas out by repealing those oil and gas-related provisions, which have existed in the tax code for more than a century. In all, (Biden’s) Green Book contains a whopping total of $147 billion in new industry taxes, which would negatively impact mainly the red states where oil and gas is produced in the U.S.: Texas, Alaska, Wyoming, Montana, Louisiana, North Dakota, Ohio and Pennsylvania. In most respects, it is the same nakedly political move that was attempted during all eight years of the Obama/Biden administration without success. We’ve seen it all before, most of it, anyway. (End) I’ve written about this subject for many years. I spent my first 15 years in the oil industry as an accountant for several companies. I know this stuff like the back of my hand. Trust me, these are not “subsidies” by any honest definition.
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SHALE MAGAZINE NOV/DEC 2021
Anyway, this former congressman is a lawyer—turns out that he is actually a law professor at a state-run university in his home state who served a couple of terms in congress recently but then lost a bid for re-election. I won’t identify him by name or the state he’s from because we had a respectful discussion, and I respect his privacy. Here’s what he wanted to talk about: Throughout his entire time in Congress, he was told by his staff, his colleagues, the Democrat party leadership and activists who visited his office that these long-time, century-old tax treatments specific to oil and gas were the same kinds of subsidies that wind and solar and EVs get and that most of those alleged oil industry subsidies actually go to major, integrated companies like Exxon. That’s literally what he believed when we began our discussion. When I told him that Exxon does not, in fact, benefit in any way from those treatments and neither do any of the other major oil companies, he told me he didn’t believe me and was frankly a little belligerent about it. But I assured him I was right and also told him the respective years in which those treatments were taken away from integrated oil companies and even many large independent producers—1975 for percentage depletion, 1992 for deduction of intangible drilling costs. He was incredulous when I told him that. Why? Because he and all of his colleagues were told exactly the opposite by people they trusted. In fact, the religious dogma spread by the climate alarmists alleged these “subsidies” were an invention by evil Dick Cheney and W. Bush in the 2005 time frame. Abject nonsense. Pure fantasy. I told him to go do a little research, and he would see I was right and referred him to an expert he could check with in Washington, DC, if he wanted to do so. That at least mollified him a bit. But then it got even better. “But,” he said, as he got down to his apparent existential dilemma, “but, here’s the thing: if what you’re saying is true, then the Democrats in Washington are
intentionally trying to harm the domestic oil industry just for pure political reasons.” “Well…yes,” I replied. “They are.” How could that possibly come as a surprise to him? “But…but that can’t be,” he said. “The oil industry employs millions of people. Our economy is still hugely dependent on oil and gas.” “Well…yes. Yes, it is.” “But…but if what you are saying is true, and the Biden people know this, and Pelosi and Schumer know this, then they are trying to intentionally damage the U.S. economy,” he continued, as he followed this all out to its inevitable logical conclusion. “Well…yes,” I said again. I have to admit I was chuckling at this point. “But that doesn’t make any sense!” “Well, it does if your goal is to intentionally
