U.S. lawmakers' proposal for a new minimum tax on corporations and methane emissions fees could squeeze small oil and gas companies, according to Pioneer's CEO Scott Sheffield.
The Inflation Reduction Act, which the U.S. senate passed this week, will soon go before a House vote. If passed, thousands of small U.S. drillers could be in jeopardy, Sheffield told Bloomberg Markets: European Close this week.
According to Sheffield, the new minimum tax and methane emissions fees could ultimately wind up curtailing the number of wells that are drilled. "It may put a lot of them out of business," Sheffield explains.
As one might expect from companies with extra deep pockets, large U.S. drillers haven't been as loudly opposed to such measures as the smaller drillers. Pioneer, for one, has crafted a plan to ban routine flaring by 2025, so it would not be subject to such methane emissions fees, Sheffield said. But not all smaller players have the capital to spend on those emissions measures-and they could end up paying for it in the form of fees thanks to this new tax bill, if it passes the House.
This could pressure some of the smaller independent oil and gas companies-the mom& pop shops of the energy world-into oblivion.
The bill passed in the Senate on Sunday, and on Tuesday, Speaker of the House Nancy Pelosi said that she would ask the members of the House to pass the $430 billion Inflation Reduction Act as-is.
The legislation, which covers the topics of climate change and prescription drugs, is critical for the Democrats, who are facing tough mid-term elections in the face of skyrocketing energy prices.
U.S. gasoline prices have fallen roughly 66 cents over the past month, relieving some pressure on the Biden Administration. They are still, however, more than 80 cents higher than this time last year.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More