U.S. energy leadership is obvious but not guaranteed. While the United States is the world’s top producer of oil and natural gas, driven by millions of hard-working people, vast resources, cutting-edge infrastructure, and unmatched innovation, more work is always needed to maintain our advantage. As President Donald Trump has made explicit, the decisions we make now will determine whether we achieve energy dominance or allow nations such as Russia and China to gain ground.
With lawmakers working to make permanent key expiring tax cuts, it’s time to focus on commonsense policies that will strengthen America’s energy future. Smart pro-growth tax policies and permitting reform will give energy producers the certainty and flexibility to invest in new wells, build critical infrastructure, and expand development, which will drive even more job creation and economic growth.
Two key pieces of tax legislation, the Promoting Domestic Energy Production Act and the Accelerate Long-Term Investment Growth Now Act, are critical to this effort.
Oil and natural gas companies are currently unfairly penalized for writing off certain drilling expenses more quickly, expenses that could otherwise be reinvested to boost production, because of a Biden-era corporate alternative minimum tax on oil and gas production. PDEPA levels the playing field by ensuring energy companies receive the same treatment as other capital-intensive manufacturing industries and businesses that can deduct normal business expenses. This is a top priority for America’s independent energy producers, who risk being unfairly captured and trapped under the new minimum tax.
The ALIGN Act restores a tax provision known as 100% bonus depreciation for qualifying capital expenses for all businesses. For energy companies, it would allow the immediate expensing of certain drilling equipment, pipelines, and other essential infrastructure. Bonus depreciation doesn’t reduce the tax burden on a company. It just empowers companies to immediately deduct normal capital costs, which fuels faster investment. Restoring the full depreciation benefit and making it permanent ensures companies can quickly invest in infrastructure, technology, and jobs, which sustains long-term growth and development. As Trump made clear in his speech to Congress last week, bonus depreciation was one of the main reasons why his first-term tax cuts were so successful.
GAS PRICES: FUEL COSTS CONTINUE TO FALL ACROSS THE COUNTRY
The stakes are high for our economy since the oil and natural gas industry supports nearly 11 million American jobs. In Oklahoma alone, the industry supports more than 350,000 jobs and adds $60 billion to the state’s economy. Keeping these benefits strong requires sustained investment in new production, infrastructure, and innovation, supported by millions of great workers and sound tax policy.
Passing these two critical tax reform bills, preserving the 21% corporate tax rate, and enacting other pro-growth tax policies will ensure the strength of America’s energy sector and support critical investments here at home. Congress must act now to secure our jobs, economic growth, and energy security for generations to come. Lawmakers have a critical opportunity to build on Trump’s energy agenda and make America first in energy dominance.
James Lankford represents Oklahoma in the U.S. Senate. Mike Sommers is president and CEO of the American Petroleum Institute.
This article was originally published at www.washingtonexaminer.com
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