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Tom Jackson is in a 12-step program for recovering sports writers; as part of his rehabilitation, he writes a column centered on the people, politics, passions and peculiarities of Pasco County. Email

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The Jax Files: With Tom Jackson in Pasco

Pasco County News | Breaking News

Targeting Big Oil for spite and political gain

Posted May 14, 2011 by Tom Jackson

Updated May 14, 2011 at 12:34 AM

The U.S. Senate and its fawning media pets have been harmonizing about socking it to Big Oil all week, but while the coverage has been long on ending “tax breaks” to oil and gas producers, there’s been precious little explanation of what exactly those breaks are, or how desperately they’re draining the federal treasury.

It took some poking around, but The Jax Files finally found what appears to be the gritty details. So, here we go. From the Senate’s Joint Economic Committee report, chaired by Pennsylvania’s Bob Casey, key portions of “End Tax Breaks For Big Oil (Reduce the Federal Deficit Without Increasing Prices at the Pump).”

Repeal the 2004 Section 199 credit (effectively reducing corporate income tax rate up to 9 percent for all manufacturers) but ONLY for oil and gas companies, whose credit was one-third less than other manufacturing companies to begin with. Gee, that sounds equitable.

Eliminate “intangible” drilling costs. This would prevent oil and gas companies from deducting in the year they are purchased certain capital equipment items (derricks, tanks, pipelines) that have no salvage value; instead, companies would have to “capitalize” equipment, and deduct their expenses over a period of years. The change sure incentivizes those companies to rev up extraction operations. No doubt Congress will be targeting other capital-intensive industries that enjoy similar tax treatment too, right? Anybody? Anybody?

Similarly, would prevent oil and gas companies from expensing in the year they’re purchased certain “tertiary injectants” – chemicals used to help coax oil and gas into their pumps. The change would force them to expense the cost of the injectant over the life of the well, reducing the deficit by a whopping $7 million annually (or less than a couple of minutes of federal borrowing).

Finally, the report recommends creating, for oil and gas companies exclusively, provisions preventing them from deducting foreign royalty payments (a tax by another name) from their U.S. corporate income taxes. The report says this will reduce the deficit by $429 million in 2012. More than likely, it will simply keep oil company profits made overseas offshore and beyond the grasp of the IRS, as many U.S.-based multinational companies do now. Instead of bringing dollars home to invest domestically, they’ll stay in the Middle East or the North Atlantic countries where those royalties were paid, creating jobs there, not here.

Now that I have a better idea what’s at stake (a pittance; not even a rounding error) and how when you get right down to it these “breaks” aren’t exactly exclusive to Big Oil, it makes sense. I totally get it.

This amounts to nothing more than classic congressional grandstanding, the opportunistic targeting of an industry that makes about 6 cents on a dollar of revenue. All because gasoline is $4 a gallon … largely as a result of Washington’s long-standing policies designed to limit domestic production and refining. Cool.