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  • Writer's pictureAIM Team

Cost Recovery a Necessary Component of Tax Reform

Commentary by Mark Rhoads, Missouri Energy Forum

Americans can agree that creating jobs, energy production and spurring capital investment are an integral part of a thriving economy. The tax reforms that are under consideration by President Trump and Congress can be instrumental in maintaining economic growth.

The oil and natural gas industry is a major driver of the economy and maintaining pro-growth tax policies is essential.  Consider the following:

  1. The industry supports over 10 million jobs throughout the economy;

  2. Domestic energy production has helped stabilize the world markets and resulted in savings for all Americans.  Drivers saved over $550 at the pump in 2015. While lower utility bills, products and other energy-related expenses boosted average household budgets by $1,337.  

  3. Manufacturers, including producers of steel, chemicals, plastics, fertilizers and numerous other products, are saving on power and material costs making U.S. companies more competitive in the world market.

  4. The oil and natural gas industry’s economic activity generates about $70 million a day on average to the federal government in income taxes, rents, royalty payments and fees.

A pro-growth tax policy can accelerate economic investments and create more jobs while keeping energy affordable for consumers. And part of that pro-growth tax policy must be strong cost-recovery provisions to allow new investments. The oil and natural gas industry is a capital intensive business that contributes approximately $232 billion in domestic capital investments every year. Cost recovery provisions are integral to the energy sector’s investment in worker salaries, equipment, structures and technologies.



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