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That article was written by Drilling Info and reads like a lobbying piece. Here's some info on that company: Drilling Info has more than 2,700 accounts globall

That article was written by Drilling Info and reads like a lobbying piece. Here's some info on that company: Drilling Info has more than 2,700 accounts globally with more than 20,000 users. Drilling Info members produce more than 90 percent of domestic oil and gas in the United States. They're in the oil and gas business -- of course they want to "debunk" any info about the subsidies given to that industry.

kingnothing 6y ago
I'll take one point from that article as an example of BS: "Intangible Drilling Costs ($3.5 billion “subsidy” – low estimate is $780 million) - Intangible Drilling Costs are essentially the cost of drilling a new well that have no salvageable value. Currently, most exploration companies are allowed to deduct 100% of the costs in the year they are incurred with the majors able to deduct 70% of the costs immediately with the remaining 30% amortized over 5 years. In what world would money spent that may or may not be recovered be capitalized as an asset?" Plenty of companies spend plenty of money on R&D every year that goes nowhere. For some reason, the oil & gas industry gets a refund on their exploration but other companies don't. I work in R&D in tech -- should the government fund my complete salary for projects that turn out to not be viable? Sounds great if you're an entrepreneur -- start all the companies you want and get refunded by the government for all of your misses.
- hcurtiss 6y ago
  LOL - They don't get a refund. They get to deduct those as business costs exactly like R&D expenditures. The argument from the *those are subsidies" camp is that they should have to capitalize them as a purchased asset (and depreciate them on the usual schedule) and not be able to deduct them in the year of expenditure, which would be like treating R&D the same as purchasing a building. As the article says, that doesn't make any sense at all. And allowing a deduction of intangible drilling costs much like all other business deductions is in no way a "subsidy."

kingnothing 6y ago

I'll take one point from that article as an example of BS: "Intangible Drilling Costs ($3.5 billion “subsidy” – low estimate is $780 million) - Intangible Drilling Costs are essentially the cost of drilling a new well that have no salvageable value. Currently, most exploration companies are allowed to deduct 100% of the costs in the year they are incurred with the majors able to deduct 70% of the costs immediately with the remaining 30% amortized over 5 years. In what world would money spent that may or may not be recovered be capitalized as an asset?" Plenty of companies spend plenty of money on R&D every year that goes nowhere. For some reason, the oil & gas industry gets a refund on their exploration but other companies don't. I work in R&D in tech -- should the government fund my complete salary for projects that turn out to not be viable? Sounds great if you're an entrepreneur -- start all the companies you want and get refunded by the government for all of your misses.

hcurtiss 6y ago
LOL - They don't get a refund. They get to deduct those as business costs exactly like R&D expenditures. The argument from the *those are subsidies" camp is that they should have to capitalize them as a purchased asset (and depreciate them on the usual schedule) and not be able to deduct them in the year of expenditure, which would be like treating R&D the same as purchasing a building. As the article says, that doesn't make any sense at all. And allowing a deduction of intangible drilling costs much like all other business deductions is in no way a "subsidy."