US Senate News:
Source: United States Senator for Wyoming Cynthia Lummis
Washington, D.C. – Senator Cynthia Lummis (R-WY) and Anne Bradbury (CEO of the American Exploration & Production Council) published an op-ed this week in Oil City News highlighting how we can fulfill President Trump’s pledge to unleash Wyoming and American energy by fixing tax policy surrounding Intangible Drilling Cost (IDCs).
Read the full op-ed here and below.
Oil City News- Bad tax policy is holding back America’s energy engine. Let’s fix it
As the Senate works to advance reconciliation legislation known as “The One, Big, Beautiful Bill,” one critical piece of America’s energy production engine must be addressed: the tax treatment of Intangible Drilling Costs for America’s independent oil and natural gas producers. Allowing for the immediate expensing of IDCs powered domestic energy production for over a century and fixing their treatment remains vital to sustaining the success of energy-rich states like Wyoming — and to U.S. energy security.
IDCs are ordinary business expenses incurred in the exploration, development, and drilling of new wells, including wages, repairs, supplies, fuel, surveying and ground clearing. They can account for up to 80% of a producer’s total costs, the bulk of which are tied to jobs and labor. These costs are real capital outlays that nearly every capital-intensive industry can deduct immediately and, in turn, redeploy as investment. For America’s independent producers, that means hiring more workers, drilling new wells, and expanding energy production.
For decades, the U.S. tax code appropriately allowed independent producers to deduct these essential capital costs in the year they’re incurred. But the 2022 Inflation Reduction Act abruptly changed that by reintroducing the corporate alternative minimum tax and penalizing America’s energy producers as a result. In short, under the CAMT, independent producers can’t immediately deduct their IDCs anymore, resulting in less capital for reinvestment, fewer jobs, lower production, and higher energy costs.
This Biden-era policy not only singles out America’s energy producers but also hurts states like Wyoming that are essential to securing our energy dominance. A targeted legislative fix would restore fair, equitable treatment of these capital expenses that are essential to American energy production and help ensure the long-term strength of American-made oil and gas.
Wyoming is one of the most important energy exporters in the country, producing nearly 12 times the energy it consumes. The state ranks eighth in both crude oil and natural gas production and is the second-largest producer of both oil and gas on federal lands. When Washington changes national energy tax policy, Wyoming’s energy industry and its workers are disproportionally hit.
In 2021, the oil and natural gas industry supported over 58,000 jobs in Wyoming and contributed $5.7 billion in labor income. In 2022 alone, oil and gas generated over $1.7 billion in property and severance taxes for the state. That revenue funds our schools, roads, emergency services, and more. Over the past six years, the industry has delivered more than $11 billion to support Wyoming’s public needs — amounting to about $4,143 in direct benefits per Wyoming resident in 2023. That’s money that helps keep individual taxpayers’ burdens lower than many other states.
These benefits depend on continued investment, which in turn depends on stable, competitive tax policies like the ability to immediately deduct IDCs. Imposing this tax penalty through the IRA made it significantly more expensive to drill new wells – hurting domestic operators, reducing projects, and making us more dependent on foreign sources of energy.
It also hits the American worker. Over 90% of U.S. oil and gas wells are developed by independent producers. Here in Wyoming, that means the operators across our energy-rich counties — like Campbell, Johnson, Laramie, Sublette, and more — that are hiring local workers, reinvesting into their communities, and building the infrastructure that brings reliable energy to American homes and businesses. In Wyoming and across the country, these jobs form the backbone of rural economies and energy communities.
Restoring the immediate expensing of IDCs as the Senate Finance Committee has proposed, is one of the smartest things we can do to ensure our country remains energy independent, economically strong, and geopolitically resilient. It’s critical Congress recognizes the importance of including this tax provision in The One, Big, Beautiful Bill — not just for Wyoming, but for all of America.
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Sen. Cynthia Lummis, R-WY
Anne Bradbury, CEO of the American Exploration & Production Council