Budget Omits Gulf Drilling Tax, for Now

WASHINGTON — The Obama administration left a plan to raise $5 billion through a new excise tax on oil and gas production in the Gulf of Mexico out of its proposed fiscal 2010 budget — but may revive those plans when it provides more detail next week.

The White House is sticking with other plans to eliminate $26 billion in tax breaks for oil and gas companies. Half of that would come from eliminating a tax break for domestic oil and gas production. Companies say the tax break keeps jobs in the U.S.

“Oil and, to a large extent, gas are internationally traded commodities, and their prices are determined on the world market,” the White House said in justifying the tax plans. “As a result, domestic oil and gas production subsidies do not significantly reduce the prices that consumers pay for products such as gasoline and home heating oil, resulting primarily in higher returns to the oil industry.”

On the Gulf of Mexico, a White House representative cautioned against drawing any conclusions from the details released Thursday, saying that any new tax proposals would be reflected in materials released next week. That potentially leaves the option of new excises taxes on the table.

WSJ