US lawmakers’ proposed new minimum corporate tax and methane emissions rates could squeeze small oil and gas companies, according to Pioneer CEO Scott Sheffield.
The Inflation Reduction Act, which the US Senate passed this week, will soon move to a vote in the House. If approved, thousands of small U.S. drillers could be at risk, Sheffield told Bloomberg Markets: European Close this week.
According to Sheffield, the new minimum tax and methane emission rates could end up reducing the number of wells being drilled. “It can put a lot of them out of business,” Sheffield explains.
As you’d expect from companies with deeper pockets, big US drillers haven’t opposed these measures as strongly as smaller drillers. Pioneer, for example, has designed a plan to ban routine twisting by 2025, so it wouldn’t be subject to those methane emissions rates, Sheffield said. But not all of the smaller players have the capital to spend on these emissions measures, and they could end up paying for it in fees thanks to this new tax bill, if it passes the House.
That could pressure some of the smaller independent oil and gas companies—the mom-and-pop shops of the energy world—into oblivion.
The bill passed the Senate on Sunday, and on Tuesday House Speaker Nancy Pelosi said she would ask House members to pass the $430 billion Inflation Relief Act as is.
The legislation, which covers the issues of climate change and prescription drugs, is critical for Democrats, who face tough midterm elections amid rising energy prices.
U.S. gas prices have fallen roughly 66 cents over the past month, easing some pressure on the Biden administration. They are still, however, more than 80 cents higher than at this time last year.
By Julianne Geiger for Oilprice.com
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