Lol. That article doesn't tickle your propaganda detector at all?
... It's not even very sophisticated or well written. Bias oozes from every paragraph
And you ought not to expect any different - it's an opinion piece, written by Len Tosoro, "Director of Land Products at Drillinginfo".
Let's break it down, shall we?
* The definition of a subsidy: Len uses dictionary definitions to argue that subsidies aren't equivalent to tax breaks. But experts consider tax breaks or reductions a form of indirect subsidy. A subsidy can be direct (cash grants, interest-free loans, etc.) or indirect (tax breaks, insurance, low-interest loans, depreciation write-offs, rent rebates, etc.). When the government forgoes tax revenue that it otherwise would have collected, this lost revenue can be considered... a subsidy.
* Master Limited Partnerships (MLPs): Len argues that MLPs shouldn't be considered a subsidy for the oil and gas industry, but MLPs are a specific type of partnership that's publicly traded. There's a potential benefit to the oil and gas industry because these entities don't pay corporate income tax, unlike corporations. This structure can allow for lower capital costs.
* Intangible Drilling Costs: The author suggests that because these costs "may or may not be recovered", it doesn't make sense to treat them as assets. However, this misses the point that tax policy is often designed to encourage or discourage certain behaviors. By allowing these costs to be deducted immediately, the tax policy is incentivizing oil and gas exploration, which can be considered a form of subsidy.
* Royalty Payment Reductions: "Drillinginfo" claim that reduced royalty payments aren't a subsidy because income derived from operations is taxed at normal rates. However, this ignores the fact that lower royalty payments mean companies are effectively paying less for the resources they extract, which can also be seen as a form of subsidy.
* Depletion Allowance: The author argues that it's fair for companies to treat reserves as an asset that can be depreciated. However, this allowance lets companies write off more than the actual investment value, which isn't available to other industries, and thus it is often classified as a subsidy.
* Domestic Manufacturing Deduction and Foreign Tax Credit: While these tax breaks are not specific to the oil and gas industry, the fact that this industry can benefit significantly from these deductions can also be interpreted as a form of subsidy.
* Other industry comparisons: Len compares tax rates in the oil & gas sector with the healthcare and pharmaceutical industries. Lol, as if we don't subsidize them unfairly too. Regardless, tax rates depend on a bunch of factors. You can't simply compare them on an industry to industry basis. Also, the criticism towards subsidies isn't just about tax rates but about the environmental and societal impact of fossil fuel production and consumption. You know - the whole they're killing the whole planet thing.
* Taxes paid by oil & gas companies: It's worth noting that just because a sector pays large amounts of taxes, this doesn't mean they don't also receive subsidies. These are not mutually exclusive.
Len is a bit of a moron - is what I would say, if he weren't being paid to spit out harmful propaganda like this. And fuck Forbes too for printing it.