For those that don’t know, Obama’s budget proposition includes a $30 billion revenue creation effort by closing the “loopholes” on oil and gas companies, namely through the elimination of the ability to expense drilling costs and removal of the depletion allowance. While this sounds great to many people – under the guise of let’s punish “Big Oil” – my personal opinion is that it will decimate the domestic natural gas and oil industry by restricting the ability to raise capital in a risky business where traditional financing is not available.
This whole issue is wildly complicated because it involves tax law and specifically the treatment of expenses/revenue (is it an expense versus a capital item? or is it revenue versus a capital gain?). Because of the complexity - it is too easy for the general public to boil this down to talking points that ignore the essential details of the proposal.
I thought this was a very good explanation of why this is a monumentally unfair proposition regardless of your politics.
Open Choke Blog
Ultimately, we need a energy policy that encourages investment in all forms of energy.