The tax deal struck between President Obama and congressional Republicans last week does not appear to have any adverse “pay-fors” for oil and natural or an increase in taxes for energy, said an official with a producer association.

“I haven’t seen any pay-fors for anything, much less [requiring] oil and gas” to pay for tax breaks for others, said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America. Nor he said has he seen any tax increases proposed for energy as part of the bill.

The deal would extend the suspension of net income for percentage depletion for marginal oil and gas wells through 2011. The depletion allows for independent producers to recover capital investment over time. It is a tax deduction calculated by applying the allowable percentage to the gross income from a property. For oil and gas the allowable percentage is 15%.

However, the change in the estate tax could take a toll, he noted. “A lot of our members are small businesses and could be affected by the estate tax,” which would increase to 55% on all estates next year. There currently is no estate tax. “If you have a family owned business, taxes can force the sale of [an oil and gas] business to pay for the estate tax,” Fuller said.

The bill also is expected to include credits for natural gas vehicles and incentives for renewable energy. The Senate has scheduled the measure for a procedural cloture vote Monday. Debate would be limited to 30 hours if 60 senators vote to invoke cloture. If cloture is not invoked, the bill would not come to the Senate floor for consideration.

“There’s a lot of opposition to this [tax] package” primarily from liberal congressional Democrats, Fuller said. But he believes there’s a “good chance it will be passed unless Democrats are willing to go against Obama.”

In Fuller’s estimation, “it [the tax package] looks like about the only compromise the president could negotiate if he wants to pursue some of his issues this year.”

The American Gas Association (AGA), which represents natural gas utilities, said it was encouraged by the deal extending the Bush-era tax cuts, including a reduction in the maximum dividend tax rate to 15% for an additional two years.

“This agreement preserves current lower dividend tax rates, providing needed certainty for America’s energy utilities and their investors who rely on stable, predictable dividend income. AGA also looks forward to working with all parties to support the president’s stated long-term goal of creating tax parity between dividends and capital gains, and taxing them at lower rates than ordinary income,” said AGA CEO David Parker.

“To ensure that all investors are protected, Congress should quickly pass this legislation and send it to President Obama for his signature,” he said.

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