The second break is the “dual capacity” rule. To ensure profits aren't taxed twice, oil and gas firms operating abroad can take a tax credit against their U.S. taxes based on how much they paid abroad. All U.S. companies with international operations get that break.
Then there's the “domestic activities” deduction, affording big companies that create products in the United States a 9 percent deduction. Oil companies get this break for domestically produced oil and gas, but theirs is just 6 percent. This break is designed to keep economic activity onshore.
Finally, there's a “percentage depletion” provision that allows smaller oil and gas companies to take a 15 percent deduction once underground energy pockets go dry. This break is similar to the depreciation deduction companies can take when they make capital expenditures.
The bottom line? The oil and natural gas sector's special tax breaks are standard benefits extended to companies in many different industries.
Note: Current rates still generate huge public revenues. The oil and gas industry paid about $36 billion in federal taxes in 2009 — the last year of data available. If it weren't for the taxes those companies pay, where would Obama get funds to waste on his fruitless green energy competitors?
Matthews is a resident scholar at the Institute for Policy Innovation in Dallas.