Accurate and Honest Tax Accounting for Oil and Gas

Tax accounting for the oil and gas industry does not describe the economic income from the investment. Indeed, for a broad range of reasonable assumptions, oil and gas accounting delivers anti-tax or subsidies to profitable investments. The combination of four important tax preferences generates a subsidy that is a negative 42 percent of real income. The four preferences are the expensing of intangible drilling costs, the pool of capital doctrine,…