Oklahoma U.S. Sen. James Lankford says the minute President Trump signed the One Big Beautiful Bill into law last week, Oklahoma oil and gas exploration companies received immediate relief.
In an interview with OK Energy Today, the Republican Senator explained the OBBB immediately eliminated a tax created by Democrats on oil and gas, the IDCS.
The IDCS, as implemented by Democrats, removed the ability of the oil and gas industry to write or deduct intangible drilling costs as classified by the IRS. As defined, these expenses, incurred during the initial phases of well development, can be deducted from taxable income, providing financial relief to operators. Understanding these deductions is essential for businesses aiming to optimize their tax strategies.
But the tax on the intangible drilling costs was removed when OBBB was signed into law.
“This bill resets that,” said Lankford. “It’s one of the areas that I worked on extensively trying to explain to my colleagues why it’s important that we treat oil and gas the same as every other manufactur of any other product. This product happens to be energy.”
He called it a significant change of shifting back to the deductions.
“It becomes a significant incentive for oil and gas folks to be able to go after additional drilling that’s here because they’ll have the opportunity to be able to write those expenses off where last year they couldn’t write those expenses off.”
And for those who believe the OBBB will result in higher utility and energy costs for consumers, Sen. Lankford was firm, ‘I think that’s a big no on that actually.”
He noted the criticism has been that it will result in higher energy costs because of the elimination of renewable energy tax credits.
“There’s not an opposition to wind and solar—we’re just taking incentives away from what is intermittent power and moving incentives to saying what is base power,” added the Senator. “So it’s neutral on what those things would be. So whether it be nuclear, whether it be hydrogen, whether it oil and gas and coal, whatever it is, that’s base power that can provide us more power all the time.
Entire interview can be viewed here