The House-Senate “super-committee” tasked with selecting $1.2-1.5 trillion in additional cuts to the federal deficit by the end of the year should look first at breaks for the oil and natural gas industry, said 12 environmental and conservation groups in a letter to Senate and House leaders.

Reducing or eliminating oil and gas “subsidies should be a priority” as the super-committee looks to further cut the federal deficit, wrote the presidents of the National Resources Defense Council, Sierra Club, The Wilderness Society and League of Conservation Voters, as well as the heads of several other environmental groups. Both Democrats and Republicans sit on the super-panel.

“The unique tax treatment for America’s richest industry, the oil and gas industry, include the oil and gas percentage depletion allowance, special accounting rules (last in first out), intangible drilling costs alone that alone cost approximately $100 billion over 10 years,” they said.

“These unnecessary subsidies, which are found both in spending programs and the tax code, harm public health and our natural resources while doling out hard-earning taxpayer dollars to mature industries that need no government assistance. There is no rationale for continuing these subsidies at a time when middle- and lower-income Americans are being asked to make sacrifices and when all federal spending is being subjected to deep cuts.”

Earlier this month, oil and natural gas producers dodged — at least temporarily — a bullet in the deficit-reduction package that President Obama and congressional leaders hammered out (see NGI, Aug. 8).

The package proposed to cut the deficit by $2.4 trillion over 10 years and increase the debt ceiling by at least $2.1 trillion. It did not call for any tax increases — something that Obama wanted, especially for producers — but it created the super-committee to identify an additional $1.2-1.5 trillion in cuts to the deficit, and one of its targets could be tax reform. Broad-based tax reform could mean the repeal of certain producer breaks.

The super-committee is required to report legislation identifying further deficit cuts and possible tax reform by Nov. 23 (the day before Thanksgiving), with Congress to vote on it by Dec. 23 (two days prior to Christmas), according to the schedule laid out by the White House.

“Although industry tax increases were not included in the deficit-reduction plan, this administration continues to target America’s oil and natural gas producers with tax hikes. We anticipate these tax provisions will be raised again during future budget and deficit debates,” said the Independent Petroleum Association of America, which represents independent oil and gas producers, when Obama signed the deficit-reduction package earlier this month.

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