Oil industry officials are starting to lay the groundwork for policy fights in 2025 over corporate tax rates, across-the-board import tariffs and the fate of energy tax credits worth tens of billions of dollars.
Tax policy is set to dominate debate next year no matter which party controls the White House because of the year-end expiration of tax cuts expected to cost more than $4 trillion to retain. Oil industry officials are preparing to go on the defensive against legislative efforts to pay for those tax cuts with policies that would fall on the industry, such as higher corporate tax rates or scrapping tax credits that are driving investments in clean hydrogen and carbon capture.
"There's going to be a major fight here in Congress that is going to require some really smart, bipartisan cooperation to solve," American Petroleum Institute chief executive Mike Sommers said today at an event held by the think tank the American Council for Capital Formation.
Republican presidential candidate Donald Trump has promised to repeal many of the energy tax credits in the Inflation Reduction Act (IRA), in addition to cutting taxes for some corporations to 15pc from 21pc and making other tax cuts. Democratic presidential candidate Kamala Harris argues the US will "have to raise corporate tax rates" but has pledged to create "America forward tax credits" that target growth for specific industries.
"We will invest in the industries that, for example, made Pittsburgh the steel city, by offering tax credits for expanding good union jobs in steel and iron and manufacturing communities," Harris said on Wednesday in a speech in Pittsburgh.
Oil industry officials say avoiding an increase to corporate tax rates will be a key priority for next year, as will fighting tax policies they oppose as expanded tax credits for electric vehicles that were part of the IRA. But Sommers said the industry also plan to defend parts of the IRA that were "great provisions," such as the 45Q carbon capture tax credit and 45V clean hydrogen tax credit. ExxonMobil has stressed to policymakers that the hydrogen tax credit will support a "valuable business" that will be good for shareholders and communities, ExxonMobil Low Carbon Solutions vice president of advocacy Erik Oswald said.
"There's a lot of investment that that's driving that's in Republican states, so I would say that's a good thing if you're a Republican lawmaker," Oswald said on Wednesday.
Trump's proposal to impose a tariff of up 20pc on all foreign imports has also raised concerns among oil industry officials, who say such a policy would raise the cost of imported materials and possibly set off a trade war that would affect energy exports. American Fuel and Petrochemical Manufacturers president Chet Thompson said he believes Trump's tariff remarks may be "bluster" but said if enforced they could pose issues for US refineries configured to run on imported crude.
"A universal tariff that impacts everything, including crude that we take into our system, would have real consequences," Thompson said. "This would have an impact on consumers, to be sure, and our refining kit."
The push by the oil sector and other industries to save some of the tax credits in the IRA has support from some Republicans. Although the Republican-led US House of Representatives last year voted to repeal nearly all of the clean energy tax credits in the IRA, 18 House Republicans last month said they opposed a "full repeal" of the law that they said would undermine recent investments in their districts.
"If we do go back into the majority, and I think we will, we will look at the IRA, but I hope we look at it in a surgical way and not just take a sledgehammer to it," said US representative Buddy Carter (R-Georgia), who was one of the signatories on the letter and whose district is the site of a new Hyundai electric vehicle plant.
