Inhofe introduces bills to repeal Section 526, tax break exclusion

US Sen. James M. Inhofe (R-Okla.) introduced bills on Jan. 21 to repeal Section 526 of the 2007 Energy Independence and Security Act, and to accelerate the domestic manufacturing tax deduction's phase-in and allow oil and gas companies to take advantage of it.

Inhofe, who is ranking minority member of the Environment and Public Works Committee, said that EISA Section 526 prevents the US Department of Defense from buying fuel produced from Canadian tar sands where there are an estimated 180 billion bbl of oil. It also prevents the US Air Force from using coal-to-liquid or natural gas-to-liquid fuels, he indicated, adding that Tinker Air Force Base in Oklahoma has a pilot program to fuel B-52 tankers with gas-to-liquid fuels. Sen. Tom Coburn (R-Okla.) is co-sponsoring this bill, Inhofe said.

He said that the second bill would accelerate the phase-in of the federal tax code's Section 199 deduction for domestic production to the current year and repeal Section 401 of Public Law 110-343 which prevented US oil and gas firms from using the Section 199 tax benefit.

"Greater energy independence does not come from unreasonably penalizing those firms that produce our domestic energy, and this bill would correct the wrongheaded provision by allowing our nation's oil and gas companies to take advantage of the Section 199 deduction just as every other business in the nation can," he said.

Inhofe and Rep. Dan Boren (D-Okla.) also reintroduced their bill aimed at protecting marginal US oil wells. "This legislation will reduce our dependence on foreign oil by streamlining and clarifying government regulations, prolonging economic feasibility and enhancing production from wells which produce 15 bbl or less daily. In addition to reducing our dependence on foreign oil, a producing well provides both state and federal taxes, pays royalties to land and mineral owners, and keeps jobs on American soil and in American pockets. A plugged well provides none of this," Inhofe said.

"Even though energy prices have fallen recently, we cannot let that deter us from enacting sound energy policy that increases our domestic energy supply and helps reduce our dependence on foreign energy. Congress must ensure that we are taking full advantage of every option available to us. This bill achieves these goals by prolonging and enhancing production from marginal wells," Boren said.

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