Energy Tax Subsidies

The federal government gives the oil industry numerous tax breaks in place to be sure domestic companies can compete with international producers and that gasoline prices are inexpensive for American consumers.

The following are Federal Tax Breaks which benefit oil companies:

• Percentage Depletion Allowance (a subsidy of $784 million to $1 billion per year)

• Nonconventional Fuel Production Credit ($769 to $900 million), immediate expensing of exploration and development costs ($200 to $255 million)

• Enhanced Oil Recovery Credit ($26.3 to $100 million), foreign tax credits ($1.11 to $3.4 billion), foreign income deferrals ($183 to $318 million), and accelerated depreciation allowances ($1.0 to $4.5 billion).


There are also State Tax Subsidies since state income taxes are based on oil companies reduced Federal Tax bills. This results in State Tax receipt reductions of between $125 to $323 million per year.

Some states impose fuel excise taxes that are lower than regular sales taxes, amounting to a subsidy of $4.8 billion per year to gasoline retailers and users.

New rules under the Taxpayer Relief Act of 1997 are likely to provide the petroleum industry with additional tax subsidies of $2.07 billion per year.

In total, annual tax breaks that support gasoline production and use amount to $9.1 to $17.8 billion.

Those of us who use the product ought to pay the fare - End Oil Subsidies Now!

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