O’NEAL: Unleash Pennsylvania’s Energy Potential by Fixing This Tax Code Mistake

When we consider what drives prosperity in America, one factor stands above the rest: energy production. President Donald Trump seems to understand this fact, as his agenda prioritizes tapping into our nation’s vast energy resources. Doing so will not only create jobs, it will also help the U.S. remain strong and self-sufficient on the global stage.
As a state representative from Washington County, I want to unleash the full potential of oil and gas production available to us right here in Pennsylvania. But there’s a hurdle in our way. A tax change made under President Joe Biden’s Inflation Reduction Act (IRA) is constraining our independent oil and gas producers and holding back good-paying jobs for Pennsylvanians.
Independent energy producers are the backbone of America’s energy economy, accounting for the majority of domestic production. Yet currently, our tax code treats them unfairly. In most capital-intensive industries, businesses can immediately deduct the costs of doing business, giving them more capital to reinvest in growth and operations. But thanks to a Biden-era provision, independent oil and gas producers now have to wait years to make deductions for their intangible drilling costs (IDCs).
Despite their name, IDCs are hardly “intangible.” They make up as much as 80 percent of the cost of drilling a new well. IDCs include expenses such as wages, equipment repairs, and services required to explore and drill for oil and gas. They represent real work being done by real people – roughnecks, derrickmen, long operators – out in the field. These jobs are the beating heart of Pennsylvania’s energy economy.
Delaying these deductions means producers have less capital on hand – capital they need to keep drilling and developing new wells. That’s a serious problem, because even the most productive wells decline rapidly, dropping up to 50 percent in output after just one year, and an additional 30 percent after two years. That means producers must constantly reinvest in new drilling to maintain supply and stay competitive. Under Biden’s IRA, that’s getting harder to do.
If we want to preserve good-paying jobs for Pennsylvania workers and unlock more of our domestic energy potential, we have to fix this. Restoring full, immediate deductibility of IDCs would put independent producers on equal footing with other industries and give them the tools they need to thrive.
Congress has the opportunity to act. The Promoting Domestic Energy Production Act (H.R. 662/S.224) would correct this mistake and bring fairness back to the tax code. I urge lawmakers – especially the Pennsylvania congressional delegation – to take a leadership role in advancing this bill as part of the current budget reconciliation process.
By passing this legislation, we can support Pennsylvania jobs, strengthen America’s energy independence, and advance President Trump’s America First energy agenda.