July 28, 2005 01:50 PM | Permalink |
The energy bill agreed upon by a conference committee this week would create a host of expensive new corporate tax breaks, mostly targeted toward the oil and gas industry. The bill, HR 6, includes $14.5 billion in new tax breaks over the next ten years. Specifically:
The bill provides special accelerated depreciation rules allowing certain natural gas and electricity properties to be written off even faster than other capital investments, which are already allowed to be written off considerably faster than the assets actually wear out. For example, the bill would allow natural gas distribution pipelines to be completely depreciated over 15 years—far less than the actual useful life of such pipelines. The bill would also allow oil companies to immediately write off costs associated with expanding the capacity of existing refineries. Ten-year cost: $3.8 billion.
Companies that generate electricity from wind, garbage and chicken waste would see an extension of tax breaks that date back to the Carter administration. The cost of propping up an “infant industry” that refuses to grow up $2.7 billion over ten years.
The bill also allows “geological and geophysical” costs associated with oil exploration to be written off faster. Ten-year cost: $1 billion.
A much smaller part of the bill’s overall cost would encourage alternative energy policies such as energy-efficient home improvements and solar energy. Ten-year cost: $3 billion.