Page 4 - NorthAmOil Week 30 2022

NorthAmOil COMMENTARY NorthAmOil

Deal a double-

edged sword for

climate activists

A high-profile piece of US legislation has been tabled that stipulates oil and
gas leasing will be a prerequisite for the issuance of renewable energy permits.

UNITED STATES A bill agreed by US Senators last week proposes evasion ($124bn) and the closing of a carried
a $369bn commitment towards fighting climate interest tax loophole for private equity and hedge
change but comes with the caveat of more oil and fund managers ($14bn).
WHAT: gas drilling permit awards. This represents the largest tax hike for years but
The Inflation Reduction Following weeks of negotiations, Senate falls well short of President Joe Biden’s plans to
Act seeks to reduce Majority Leader Chuck Schumer and Senator reconfigure the tax code system, with the 21%
the US deficit while Joe Manchin from West Virginia outlined their regular corporate tax rate remaining as is.
committing hundreds Inflation Reduction Act (IRA) of 2022 covering Meanwhile, $433bn of spending will be split
of billions of dollars to tax, climate and healthcare on July 27, with the between improving energy security and tackling
renewables, providing planned bill seen as a major breakthrough. climate change ($369bn) and the extension of
that oil and gas leasing However, given the bill’s specific inclusion of the affordable care act ($64bn).
continues. increased drilling rights in Alaska and the Gulf The bill offers significant support for renew-
of Mexico (GoM), it remains unclear whether able energy.
WHY: or not it will be passed by all of the Democrat However, approval for renewable projects on
Its announcement Senators when brought before the split Senate in federal land and water would be contingent on
surprised many and August. Meanwhile, getting passed by the House future sales, a clause that was instantly met with
followed weeks of tense is also no sure thing. criticism by clean energy proponents.
negotiations.
The deal Lease sales
WHAT NEXT: The senators’ 725-page proposal outlines $739bn For the oil and gas sector, perhaps the key takea-
Changes are anticipated of deficit reduction through the imposition of a way is the requirement that the Interior Depart-
before the bill is put 15% minimum corporate tax ($313bn), reform- ment hold auctions for leases in the GoM and
before the Senate. ing pricing for prescription drugs ($288bn), Alaska’s Cook Inlet, just a few months after they
overhaul of the IRS to clamp down on tax were scrapped. In May, it cancelled the auctions,

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