API Welcomes Bipartisan Legislation to Enact Pro-American Energy Tax Policy

WASHINGTON, January 23, 2025 — The American Petroleum Institute today welcomed the reintroduction of legislation led by Senator James Lankford (R-OK) and Reps. Mike Carey (R-OH) and Vicente Gonzalez (D-TX) to encourage investments in American energy. The bipartisan Promoting Domestic Energy Production Act of 2025 fixes a tax liability for companies that use accelerated cost-recovery of intangible drilling costs (IDCs). This allows producers to receive the same treatment for IDCs under the corporate alternative minimum tax (CAMT) as under the ordinary corporate tax rate.

“American voters sent a clear message in support of U.S. energy leadership, and this bipartisan legislation is critical to supporting the production of our nation’s abundant oil and natural gas resources,” API Vice President of Corporate Policy Aaron Padilla said. “We applaud the efforts of Senator Lankford and Representatives Carey and Gonzalez to enact this pro-American energy provision in our tax code, and we urge Congress to pass the Promoting Domestic Energy Production Act.”

Industries across the economy are allowed to immediately deduct their non-recoverable investments under the tax code and this legislation ensures that oil and natural gas producers can do so as well.

A recent Rystad Energy analysis found that if accelerated recovery of IDCs were repealed altogether in the tax code, it would decrease our nation’s ability to meet growing energy demand, while jeopardizing U.S. jobs, royalties and economic growth. According to the analysis:

• Production could decrease 5% by 2034--by 1.7 million barrels of oil equivalent (boe) per day.
• 179,000 direct, indirect and induced jobs tied to oil and natural gas production could be lost by 2034, and direct GDP could decline by $16 billion in the mid-price scenario.
• $81 billion of cumulative capital expenditures could be at risk between 2025-2034, an overall decline of 8%.
• 8,000 fewer wells could be completed from 2025-2034.
• $38 billion of cumulative royalties could be at risk from 2025-2034.

API joined the American Exploration and Production Council, Independent Petroleum Association of America and Domestic Energy Production Alliance in sending a letter to the House and Senate tax writing committees urging Congress to address this discrepancy for IDCs and unlock investment in American-made oil and natural gas.

API represents all segments of America’s natural gas and oil industry, which supports nearly 11 million U.S. jobs and is backed by a growing grassroots movement of millions of Americans. Our approximately 600 members produce, process and distribute the majority of the nation’s energy, and participate in API Energy Excellence®, which is accelerating environmental and safety progress by fostering new technologies and transparent reporting. API was formed in 1919 as a standards-setting organization and has developed more than 800 standards to enhance operational and environmental safety, efficiency and sustainability.

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