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HOUSE CONCURRENT RESOLUTION
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WHEREAS, The oil and natural gas exploration industry has |
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been a significant part of the state's economy since the early 20th |
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century; today, Texas is the leading producing state for oil and |
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natural gas in the country, accounting for 21.3 percent and 27.8 |
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percent of total U.S. production, respectively; and |
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WHEREAS, Texas producers provide more than 200,000 jobs for |
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Texas citizens, with an average pay that is almost three times |
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higher than the average paid by all other industries; during fiscal |
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year 2008, Texas producers paid over $5 billion in taxes and fees to |
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the state's general revenue fund; and |
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WHEREAS, Natural gas is a highly valued, clean fuel that has |
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become a mainstay of electricity production and other industrial |
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operations in Texas, while oil continues to constitute the backbone |
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of the state's industrial sector and fuels virtually all of the |
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state's transportation system; and |
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WHEREAS, Renewable energy sources offer great promise for |
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Texas' long-term energy needs, but the technology that would make |
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these sources abundant is in its infancy, and until that technology |
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is adequately developed, renewable energy sources will remain |
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dispersed and unable to deliver base load capacity; and |
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WHEREAS, Conservation can help satisfy the state's energy |
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needs, and action to reduce customer demand is the quickest way to |
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meet energy needs in the short term, but a growing economy and |
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population will require more energy than can be saved through more |
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efficient energy use; and |
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WHEREAS, To keep pace with increased demand, independent |
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producers completed more than 11,000 wells in Texas in 2008, and in |
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the two-year period 2007-2008, they increased the production of |
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natural gas in Texas by more than 12 percent; and |
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WHEREAS, In addition to generating high-quality jobs, |
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independent producers help to reduce America's dependence on Middle |
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East oil by exploring for domestic resources and providing stable |
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supplies of cost-effective energy to consumers; and |
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WHEREAS, Independent producers rely on longstanding tax |
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provisions to plan their activities and to explore for new wells to |
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offset declining production from older ones; without the |
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development of new wells, energy supplies would decline and the |
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costs to consumers would rise; and |
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WHEREAS, President Barack Obama's initial budget includes |
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provisions deleting the intangible drilling costs deduction, |
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percentage depletion allowance, geologic and geophysical costs |
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deduction, and domestic production activities deduction, and the |
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elimination of these provisions would cripple this state's energy |
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jobs, reduce small businesses' access to capital, and harm royalty |
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owners; and |
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WHEREAS, Intangible drilling costs (IDCs) typically include |
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expenditures for physical items with no salvage value, as well as |
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other costs associated with preparing and completing a well for the |
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production of oil, gas, or geothermal steam or water; producers |
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have long been able to deduct IDCs as current business expenses, |
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rather than depreciate or amortize them over the life of the well; |
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IDCs are actually similar to research and development costs, for |
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which most manufacturing businesses are able to take a tax credit, |
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rather than a deduction; and |
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WHEREAS, The percentage depletion allowance, also known as |
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the small producers exemption, was created in the 1920s to |
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encourage oil and natural gas exploration, which is an inherently |
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high-risk venture; the exemption is available only to the smallest |
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producers and allows them to deduct 15 percent of their gross income |
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from oil and gas properties; and |
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WHEREAS, Geologic and geophysical (G&G) costs relate to the |
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surveys that producers conduct or commission in order to locate and |
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develop oil and natural gas reserves and to minimize unnecessary |
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drilling; G&G costs may be amortized over the first 24 months of the |
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life of a well; and |
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WHEREAS, The domestic production activities provision allows |
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businesses a tax deduction for qualified production activities that |
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are based in the United States; the deduction helps to preserve |
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American jobs and American small businesses; and |
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WHEREAS, Major integrated companies are not eligible for the |
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IDC deduction, percentage depletion allowance, or domestic |
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production activities deduction, and they are subject to a |
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seven-year amortization schedule for G&G work; consequently, "big |
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oil" is not impacted by the proposed budget changes; and |
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WHEREAS, President Obama has stated his intention to support |
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the development of jobs, promote the use of clean-burning energy, |
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and reduce America's dependence on foreign oil, yet his budget |
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proposals would lessen the ability of independent producers to help |
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meet those three goals; now, therefore, be it |
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RESOLVED, That the 81st Legislature of the State of Texas |
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hereby respectfully urge the United States Congress to reject the |
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provisions of President Barack Obama's budget that would eliminate |
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the intangible drilling costs deduction, percentage depletion |
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allowance, geologic and geophysical costs deduction, and domestic |
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production activities deduction and to encourage instead the |
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development of Texas oil and natural gas; and, be it further |
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RESOLVED, That the Texas secretary of state forward official |
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copies of this resolution to the president of the United States, to |
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the speaker of the house of representatives and the president of the |
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senate of the United States Congress, and to all the members of the |
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Texas delegation to Congress with the request that this resolution |
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be officially entered in the Congressional Record as a memorial to |
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the Congress of the United States of America. |