Energy Investing - Biden Plan to End Fossil Fuel Subsidies Faces Big Challenges - Energy Investing - InvestorVillage
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Msg  299247 of 306397  at  12/1/2020 6:02:20 PM  by

Hombre77


 In response to msg 299246 by  Ed Ajootian
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Re: Biden Plan to End Fossil Fuel Subsidies Faces Big Challenges

"At worst its just a timing issue"
 
That's true, but deferring the write-off of intangible drilling costs will hurt well economics.  In Canada intangibles are written off on a 30%/yr declining balance basis, maybe Biden's people are considering something like that instead of the current 100% write-off in year 1.  Accountants (I'm not one) would argue that a system such as that would do a better job of matching costs with revenues, which is a big thing in the accounting world.  
 
The term "intangible drilling cost" might sound like some kind of flaky, made up subsidy to some, but it actually captures all drilling costs that aren't directly associated with tangible assets such as casing, wellheads, etc.  Intangibles include lease construction, drilling rig costs, drilling services, etc. 
 
These are legitimate business costs, and in no normal universe should deducting these costs for tax purposes be considered a subsidy.  Of course in the alternate universe that's inhabited by an increasing number of people, all costs associated with climate change are viewed as a subsidy to the oil & gas industry.  


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Replies
Msg # Subject Author Recs Date Posted
299253 Re: Biden Plan to End Fossil Fuel Subsidies Faces Big Challenges mktownson 47 12/1/2020 7:07:55 PM
299284 Re: Biden Plan to End Fossil Fuel Subsidies Faces Big Challenges Ed Ajootian 12 12/2/2020 8:45:10 AM








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