November 2, 2024
U.S. oil and gas tax breaks are likely here to stay, even with upcoming political changes. Both Harris and Trump recognize these incentives are crucial for supporting jobs, maintaining energy independence, and keeping swing states happy. With global tensions high and the economy relying on domestic energy, cutting these tax advantages would be a risky move. For investors, this means U.S. oil and gas remains a steady and appealing option.
With the 2024 election coming up, the question of oil and gas tax breaks has surfaced as both Vice President Kamala Harris and former President Donald Trump lay out their plans for America’s energy future. But despite their differences, it’s unlikely that either administration would truly eliminate these tax advantages. Here’s why oil and gas tax breaks are likely to stick around—and what it means for investors.
Oil and gas tax breaks—like the Intangible Drilling Costs (IDC) deduction and the Percentage Depletion allowance—aren’t just perks for big energy companies. They also support millions of jobs across the U.S., particularly in states that rely on oil and gas production. Removing these breaks could risk job loss in areas heavily reliant on fossil fuel employment, a move neither administration would take lightly.
Why It Matters: Swing states with strong oil and gas economies could see significant impacts if tax breaks are removed. For any administration, keeping these states onside can be crucial in a tight election.
With global tensions high—especially between Europe and Russia, as well as the U.S. and China—energy independence remains a priority. Oil and gas tax incentives encourage domestic production, which helps reduce reliance on foreign imports and ensures a steady supply even during international conflicts. Dropping these tax advantages could mean relying more on imports from geopolitically complex regions.
Why It Matters: For both Harris and Trump, keeping the U.S. energy-secure and independent is a top priority. Reducing tax breaks could make us more vulnerable to international supply disruptions.
Elections are won on promises—and one promise both sides know resonates with voters is energy security. Politicians across the aisle recognize the importance of balancing green energy with affordable energy costs and stable employment in the oil and gas industry. Rolling back tax advantages could mean breaking promises to maintain energy security and economic stability.
Why It Matters: Swing states, especially in the Midwest and South, where the economy is closely tied to oil and gas, play a big role in U.S. elections. Tax policies that protect these industries are often seen as essential to keeping voters on board.
Tax incentives make oil and gas a more appealing choice for accredited investors. With potential changes around the corner, the U.S. government is likely to think twice about removing these breaks, which drive significant capital into domestic energy production.
Why It Matters: Investors want to see consistent, predictable tax policies that make the U.S. an attractive place for oil and gas investments. Removing these breaks would make investing in domestic energy less appealing, potentially driving capital elsewhere.
Despite political differences, both Harris and Trump recognize the value of oil and gas tax breaks for jobs, energy security, and investor confidence. While each administration may talk about energy reform, it’s unlikely they’ll make drastic cuts to these tax advantages anytime soon. For accredited investors and energy sector stakeholders, this stability means U.S. energy investments will likely remain a solid option.