This changed in 2016!
At the G-20 Summit in Pittsburgh President Obama agreed to phase out
subsidies for fossil fuels. The oil, gas, and coal tax preferences the
Administration proposed to repeal are claimed to "distort markets by encouraging more
investment in the fossil fuel sector than would occur under a neutral
system." This market distortion is claimed to be "detrimental to long-term energy
security and is also inconsistent with the Administration’s policy of
supporting a clean energy economy, reducing our reliance on oil, and
reducing greenhouse gas emissions. Moreover, the subsidies for oil,
natural gas, and coal must ultimately be financed with taxes that cause
further economic distortions including under investment in other, potentially more productive, areas of the economy."
President Trump's Administration has followed suit in its FY 2017 Revenue Proposal.
The proposal would repeal: (1) the enhanced oil recovery credit for eligible costs attributable to a
qualified enhanced oil recovery project; (2) the credit for oil and gas produced from marginal
wells; (3) the expensing of intangible drilling costs; (4) the deduction for costs paid or incurred
for any tertiary injectant used as part of a tertiary recovery method; (5) the exception to passive
loss limitations provided to working interests in oil and natural gas properties; (6) the use of
percentage depletion with respect to oil and gas wells; (7) the ability to claim the domestic
manufacturing deduction against income derived from the production of oil and gas; (8) two-year
amortization of independent producers’ geological and geophysical expenditures, instead
allowing amortization over the seven-year period used by integrated oil and gas producers; (9)
expensing of exploration and development costs; (10) percentage depletion for hard mineral
fossil fuels; (11) capital gains treatment for royalties; (12) the ability to claim the domestic
manufacturing deduction against income derived from the production of coal and other hard
mineral fossil fuels; and (13) the exemption from the corporate income tax for publicly traded
partnerships with qualifying income and gains from activities relating to fossil fuels.