Bill Overview
Title: Close Big Oil Tax Loopholes Act
Description: This bill limits or repeals tax and royalty relief provisions that benefit certain large oil companies. It modifies foreign tax credit rules applicable to such companies and limits deductions for intangible drilling and development costs, percentage depletion, enhanced oil recovery, and other tax preferences. The bill repeals the outer Continental Shelf deep water and deep gas royalty relief provisions. Any savings resulting from this bill must be used for federal budget deficit reduction or, if there is no current budget deficit, for reducing the federal debt.
Sponsors: Sen. Menendez, Robert [D-NJ]
Target Audience
Population: People affected by changes to large oil company tax policies
Estimated Size: 500000
- The global oil industry employs millions of people worldwide, including workers directly in oil companies and those in related industries.
- Changes in tax policies affecting large oil companies can have downstream effects on their employees, shareholders, and communities where they operate.
- The oil industry impacts a wide range of sectors and economies globally, given its size and scope.
Reasoning
- The proposed bill targets tax preferences and deductions heavily utilized by large oil companies, potentially leading to reduced profitability for these firms.
- Limited or reduced profitability may lead to reduced investments in new projects, downsizing, or cost-cutting measures such as layoffs and wage freezes.
- Communities dependent on oil companies for employment and economic stability could face negative impacts if companies reduce operations.
- Workers in the oil industry typically receive competitive wages and benefits; changes could affect their financial well-being directly, impacting their families and local economies.
- On the flip side, closing tax loopholes may generate savings that help reduce the federal deficit, indirectly benefiting the broader economy.
- Not all individuals working in the oil industry may feel an immediate impact, considering the diversity of roles and levels of reliance on tax benefits.
Simulated Interviews
Petroleum Engineer (Houston, TX)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- The policy could make the company streamline operations, potentially jeopardizing jobs.
- Concerned about future investment in major capital projects if profit margins shrink.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 5 | 7 |
| Year 10 | 5 | 7 |
| Year 20 | 7 | 8 |
Oil Rig Worker (Midland, TX)
Age: 33 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 13/20
Statement of Opinion:
- Worried about job security due to potential cost-cutting by firms.
- Hopes any layoffs will not touch operations but understands risk is there.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 3 | 5 |
| Year 3 | 3 | 5 |
| Year 5 | 4 | 5 |
| Year 10 | 5 | 6 |
| Year 20 | 6 | 7 |
Offshore Maintenance Supervisor (New Orleans, LA)
Age: 57 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Thinks the industry will adapt but might experience a rough patch initially.
- Not significantly worried as he is close to retirement, though he worries about younger colleagues.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 6 |
| Year 10 | 6 | 7 |
| Year 20 | 7 | 8 |
Geologist (Oklahoma City, OK)
Age: 41 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Concerned that exploration budgets might be reduced, impacting job role or projects.
- Believes reducing large company profits might help smaller oil firms.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 5 | 7 |
| Year 5 | 5 | 7 |
| Year 10 | 6 | 8 |
| Year 20 | 7 | 8 |
Environmental Scientist (San Antonio, TX)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 15.0 years
Commonness: 7/20
Statement of Opinion:
- Excited about potential for more sustainable energy transitions if oil companies adjust strategies.
- Sees potential for job growth in renewable energy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 8 | 6 |
| Year 3 | 8 | 6 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 9 | 7 |
Community Leader (Baton Rouge, LA)
Age: 52 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 20.0 years
Commonness: 14/20
Statement of Opinion:
- The community could face economic challenges if jobs reduce, affecting local businesses.
- Pushes for community resilience plans and diversifying income sources.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 4 | 5 |
| Year 2 | 4 | 5 |
| Year 3 | 4 | 5 |
| Year 5 | 4 | 5 |
| Year 10 | 5 | 6 |
| Year 20 | 6 | 7 |
Senior Financial Analyst (Dallas, TX)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- Sees potential risks for clients who rely on major oil companies for partnerships.
- Believes market adjustments will create new opportunities eventually.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 6 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 8 | 8 |
Retired Oil Company Executive (Denver, CO)
Age: 62 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 6/20
Statement of Opinion:
- Believes the policy could modernize the industry and its practices, benefiting it in the long run.
- Not directly impacted due to retirement but interested in potential projects post-policy.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 9 |
Oil Company Shareholder (Los Angeles, CA)
Age: 37 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- Worried about the potential for reduced dividends.
- Hopes companies refocus on profitable ventures instead of tax breaks.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 8 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Investment Banker (New York, NY)
Age: 40 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 15.0 years
Commonness: 6/20
Statement of Opinion:
- The policy might lead to short-term stock volatility, posing risks and opportunities.
- Long-term view: opens door for sustainable investments and innovations.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 7 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 9 |
Cost Estimates
Year 1: $50000000 (Low: $30000000, High: $70000000)
Year 2: $48000000 (Low: $28000000, High: $68000000)
Year 3: $46000000 (Low: $26000000, High: $66000000)
Year 5: $42000000 (Low: $22000000, High: $62000000)
Year 10: $35000000 (Low: $15000000, High: $55000000)
Year 100: $5000000 (Low: $0, High: $20000000)
Key Considerations
- Potential reduction in domestic oil production investments due to decreased tax incentivization.
- Effects on the job market, both directly within oil companies and indirectly in regions reliant on oil industry activity.
- Global oil market reactions could affect policy outcomes and tax revenue assumptions.
- Deficit reduction prioritization implies potential fiscal benefits from reduced government borrowing.