US President Barack Obama's plans to scrap a host of tax breaks for oil and gas producers are already facing strong resistance from several Democratic and Republican lawmakers in Congress.

Critics of the measures -- part of Obama's 2011 budget proposal -- say they could take a serious toll on domestic oil and gas production.

Many lawmakers have also spoken out against White House proposals to toughen up the corporate tax code -- a measure that would affect all industries.

However, administration officials defended the tax hike during Congressional hearings last week, arguing that it is necessary to give clean energy a boost.

The White House budget request for 2011 seeks to remove tax breaks for intangible drilling costs, depletion, marginal wells, tertiary injectants, geophysical costs and enhanced oil recovery.

It would also eliminate financial protections built into the tax code that benefit oil and gas firms and scrap tax breaks for manufacturing in the petroleum sector (IOD Feb.2,p3). The various measures would increase the industry's tax burden by an estimated $36.5 billion over 10 years.

Resistance in Congress has focused in particular on the proposed elimination of credits for intangible drilling costs and depletion of oil and gas reserves.



http://www.energyintel.com/DocumentDetail.asp?document_id=657800