>In the United States, oil companies can take a tax deduction for a large portion of their drilling costs. Not a tax lawyer, but based on my reading of the lin

>In the United States, oil companies can take a tax deduction for a large portion of their drilling costs. Not a tax lawyer, but based on my reading of the linked regulation, the "take a tax deduction" characterization is very misleading. The key phrase is "intangible drilling and development costs incurred by an operator [...] in the development of oil and gas properties may at his option be chargeable to capital or to expense". This doesn't mean the government refunds their development cost, or even a portion of it. It just means oil company can immediately deduct drilling expenses from their tax returns, rather than spreading it out over several years. It's similar to IRC Sec. 174 changes for software development expenses. Is it a benefit to oil companies? Yes, most definitely, due to the time value of money. However, it's misleading to call it a "tax deduction". A more accurate statement would be "oil companies can deduct their drilling costs sooner".