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Politics : Politics of Energy
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To: Road Walker who wrote (24845)1/15/2011 10:45:32 AM
From: Alastair McIntosh  Read Replies (2) of 86354
 
You do realize that it is only a timing issue. The company taking the deduction for "intangible drilling costs” in the current year pays lower taxes that year but higher taxes for the following years until the costs are all written off. The total amount taxes paid is the same.

Governments around the world use this method to stimulate economic activity. It is the same sort of thing as accelerated depreciation for equipment or software or anything else that is purchased in one year but is used for several years.

As an aside, I don't understand why the drilling costs are described as "intangible". The fact that costs such as wages and fuel have no salvage value doesn't mean they are any less "real".
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