"Don't patronize me": Rep. Katie Porter analyzes oil managers' lies about particular taxes on fossil fuels
Porter asked Murphy if the technology and costs of drilling had been streamlined since his grandfather first received large tax breaks 100 years ago to offset those costs. Murphy gave a floury answer, saying that some costs went up and others went down – of course he didn't mention how fantastic his profits have been for 100 years. This led to Murphy's condescending attempt to question Porter's understanding of royalties versus profits and dig Murphy's grave much deeper.
As their time ran out, Rep. Porter asked about one of the special incentives that completely manipulated Murphy and Strata's business model compared to other business models – the intangible cost of drilling. Intangible drilling costs (IDCs) are "One of the largest tax breaks specifically available to oil companies, allowing companies to deduct most of the cost of drilling new wells in the United States. " They are higher than the tax deductions that fossil fuel companies can use to deduct up to 70% of their costs directly in advance. It's also important to understand that depending on your estimate, drilling costs are 60-90% of IDCs, to which Murphy gave an incomprehensibly fraudulent response, saying that the oil industry has not received any different tax breaks or structures than any other company or industry.
It may be that the tax breaks Murphy and his father and his father's father received have made their business model near-risk-free for decades, but for the rest of us, it's not. A clearly frustrated porter interrupted Murphy for a reality check:
REP. KATIE PORTER: You benefit from special rules. There is a special tax rule for intangible drilling costs that does not apply to other types of expenses companies have. You can take off 70% of your expenses instantly, and other companies will have to amortize their expenses across their entire profit stream. Please don't patronize me by telling me that the oil and gas industry has no special tax rules. Because if you want that to be the rule, I would be happy if Congress did.
The argument in favor of IDCs has always been that oil and gas exploration is expensive and that we need to incentivize "investing" in it. Of course, these incentives were considered 100 years ago and made a lot more sense than they did when no one really had any idea where to find gas or oil. Better technology means easier and deeper drilling and extraction, and better drilling success rates. The oil industry was started and now it is time to get some part of the government to incentivize electricity for renewable energy as climate change is very real.
Surprise, surprise, after decades of taxpayers' money ten times that of the fossil fuel industry than the U.S. education system, gas and oil men have spent a lot of time and lobbying money learning about the renewable energy industry's tax breaks and incentives whine that are unfair. There are many reasons why the fossil fuel industry has sided with an overt white supremacist and an incompetent Trump administration. However, the reality we all face is that the world needs to move away from fossil fuels and that this process needs to be one-way – contraction, not expansion.
One of the maneuvers our country's rich and powerful have relied on for decades is corporate welfare under the guise of tax breaks, incentives and special deductions that allow them to hide their profits and deduct their costs. The initial reasons for incentivizing these industries are always the same and not bad on paper. These industries will provide services and jobs that will improve all of our lives, rising tides and boats and all that. The problem always shows up the same way: after these initial incentives, the industries beat the competition, don't participate the tremendous profits they make from the people and then struggle with all their might to do as little as possible for the growth of their business making it independent of the welfare of the government.
Deepwater Horizon received many incentives and allowed greed to ruin it for all of us.
The rich and their businesses are the lazy people they claim will become everyone else if we all get even a little help to alleviate stagnant wages and rising costs. Their laziness and lack of accountability, coupled with the feigned mythology that these industry leaders worked their fortunes in a rugged, individualistic bootstrap factory, turn their organizations into insecure and fragile companies. This leads to environmental disasters like the DeepWater Horizon oil spill due to corner and cost reductions.
This is why wealthy CEOs like Trump's Treasury Secretary Steven Mnuchin apparently only had the ability to hide money from the American public rather than divulge the way Congress asked him to. In some cases, certain industries, such as telecommunications and fossil fuel industries, receive special incentives and tax breaks. The reason energy companies originally received these tax incentives was for the common good that their innovation and ability to find and produce electricity for people based on fossil fuels was seen as an incentive.
That is no longer true, and if they cannot make money as oil barons they may have to do something else.