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Politics : Politics of Energy -- Ignore unavailable to you. Want to Upgrade?

To: Alastair McIntosh who wrote (24846)	1/15/2011 12:12:34 PM
From: Road Walker	1 Recommendation Read Replies (2) \| Respond to of 86354

You do realize that it is only a timing issue. Timing is huge, and can be manipulated. Say you are going to make $1M this year and pay $300K in taxes. Or you can invest that $300K in a oil well, before the fact, and pay no tax. You know what your accountant is going to say? The government is, in essence, financing the drilling. That is a huge subsidy, and many oil wells wouldn't be drilled without it. And yes accelerated depreciation is also a subsidy, just not as fast or blatant and not permanent. ICD is a sweetheart deal only the oil industry enjoys.

To: Alastair McIntosh who wrote (24846)	1/15/2011 3:26:40 PM
From: russet	Respond to of 86354

It could be argued that all site preparation, drilling and completion and tie in costs are operating costs and should be expensed in the same year they occur. The ability to spread those costs over the next 5 years is then the aberration particularly considering current well depletion rates. If anything is salvagable and sold after the well is closed and the site reclaimed then that should be income in the year it is sold. If the salvagable items are reused in company operations then that lowers the costs of subsequent years activities.