Recent changes in federal regulation and
legislation are estimated to add $3.2 billion in annual taxation on
the petroleum industry and related industries, according to the
American Petroleum Institute.
Proposed alterations in federal regulations and legislation
within the next two years could add between $10 billion and $17
The study, which was completed in November, breaks down possible
taxation issue by issue.
- Reduction in the quantity of lead in leaded gasoline.
The U.S. Environmental Protection Agency prescribed new
standards limiting the lead content of leaded gasoline to 0.1 grams
The agency has estimated the lead phasedown will cost the
refining industry about $500 million per year from 1986 to 1990.
- Implementation of the Federal Tax Reform Act of 1986.
The petroleum industry will be directly affected by limitations
on expensing intangible drilling costs in the year incurred,
percentage depletion changes and passive loss limitations, according
to the study.
The nation's business sector will pay increased taxes through
changes in the depreciation schedules, repeal of the Investment Tax
Credit, changes in the taxation of foreign source income and tax
The study expects these alterations to be only partially offset
by the lower corporate tax rates.
In the next five years, the cost of these tax alterations will
average $2 billion annually, the study reports.
- Increased revenues for Superfund.
Congress reauthorized funding for the Hazardous Substances
Response Trust Fund, or "Superfund," and increased the funding level
from $1.4 billion over the previous five year period to $8.5 billion
over the next five years. A new underground tank fund will add $500
million over the next five years.
A tax on petroleum provided $200 million for the initital
program. Petroleum taxes estimated at $3.25 billion will contribute
to the reauthorized program. With the addition of the industry's
portion of the new corporate tax rates, the American Petroleum
Institute estimates the industry will face an added tax burden of
The Environmental Protection Agency, Congress and the Department
of Transportation have proposed several additional pieces of
legislation that could place more taxes on the industry within the
next two years.
- Inclusion of exploration and production wastes as hazardous
under the Resource Conservation and Recovery Act.
High volume wastes associated with exploration and production of
oil and natural gas are not considered hazardous wastes under the
act, according to the study. Drilling muds and produced water are
high volume wastes.
In August 1987, Congress is set to receive an Environmental
Protection Agency report to determine whether high volume wastes
should be included under hazardous waste regulations or under the
less stringent solid waste regulations.
If the high volume waste designation changes to include them
under hazardous wastes, costs could equal $15 billion initially and
$5 billion annually, industry sources told the institute.
- Additional Acid Rain Legislation.
Congress considered a bill last session that would impose
additional costs to refiners, according to the study. …