Republican and Democratic lawmakers in the House of Representatives have joined forces to introduce legislation aimed at reversing a provision of the Inflation Reduction Act (IRA) that targets oil and gas producers.
The new measure, named the Promoting Domestic Energy Production Act, is led by Reps. Mike Carey (R-Ohio) and Vicente Gonzalez (D-Texas). The bill appears to have bipartisan support, as more than a dozen members of Congress added their signatures.
The bill aims to restore tax deductions on Intangible Drilling Cost (IDC) for oil and gas producers, which the IRA effectively eliminated with its book minimum tax. Without the deductions, oil and gas drilling activities become much more expensive.
Rep. Carey believes this is a unifying issue for Americans that transcends political ideology. “American energy independence is neither a right nor left issue, but one that should unite us all,” said Carey in a statement. “Our bipartisan legislation fixes a provision within the Inflation Reduction Act that unfairly penalizes America’s energy producers.”
Rep. Gonzalez highlighted the importance of having a strong domestic energy sector. He stated, “Our country must be ready to face the energy challenges of the next few decades. This commonsense bipartisan bill promotes our nation’s domestic energy production capabilities—ensuring we keep and create American jobs, lower energy prices, and decrease our dependence on foreign energy sources.”
The media release additionally clarified that IRS tax deductions for the oil and gas industry are not subsidies. Instead, they are a way for companies to recoup some of their exploration costs, which are, according to Carey’s office, “costly and risky.”
This new legislation opposes the current trend of the Biden administration, which has issued billions of dollars in funding and tax credits for various green energy projects in the past few months. The hope is that the Promoting Domestic Energy Production Act will find support among both Democrats and Republicans, enabling Congress to pass it either as part of a standalone bill or broader tax package when it reconvenes after the summer recess.
Other lawmakers who signed the bill include Reps. Henry Cuellar (D-Texas), Alex Mooney (R-W.Va.), Ryan Zinke (R-Mont.), Dan Meuser (R-Pa.), Greg Pence (R-Ind.), and Tom Cole (R-Okla.), who is also the chair of the House Rules Committee.
It’s too early to tell whether this legislation will become law. However, advocates for the American oil and gas industry are celebrating it as a step in the right direction as they seek more equitable tax treatment compared to other industries.