The incentives were designed to spur the industry to increase domestic production. Drill a little deeper, drill a little further out, drill in swamps that were deemed inpentrable, get the equipment in where it was too expensive previously. Congress wanted to reduce our dependence upon foreign oil and simulate employment in the oil patch.
The industry can survive quite well without those incentives, but you won't see them going out of their way to drill difficult locations in the states, and you'll see thousands of people who work in oil laid off. Oh, they'll pay a good, experienced driller and fly him to Egypt or Nigeria, but the roughnecks, the guys who truck in the mud, stack pipe, the guys who clean the pumps, they're all available among nationals over there. So they'll all be working - Americans won't.
The bottom line is that these are businesses and not charities. If I have an easy drill site in Malaysia and a real bear out in the deepest heart of the Atchafalaya, the tax incentives may keep me drilling in Louisiana because my cost drops.
Eliminate the cash bump and I'm going with the lowest E&P cost, which will likely be Malaysia.
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