Texas Senator John Cornyn filed legislation Tuesday that would allow oil companies to temporarily reduce their federal taxes and royalty payments during the coronavirus pandemic.
At a time oil companies are struggling under a volatile energy market, Cornyn is proposing to expand the degree to which companies can deduct drilling costs and other expenses from their tax bill this year, while also reducing the required deposit on the federal fuel tax from 95 percent to 25 percent.
“There’s no doubt many in the energy industry have been hanging by a thread,” Cornyn, a Republican, said in a statement. “These reforms will allow Texas’ job creators to weather this downturn, continue paying their workers, and invest in their infrastructure for years to come.”
Also, rules for reducing royalty rates and granting extensions on federal leases would be streamlined for the duration of the pandemic. And the tax benefit for carbon capture projects would be extended by one year.
The move comes months into a pandemic which has seen crude prices fall into negative territory for the first time in history, as stay-at-home orders kept motorists off the road worldwide.
In recent weeks, oil prices have rebounded, with West Texas Intermediate trading around $40 a barrel Tuesday. But the industry remains under stress, with 14 oil companies filing for bankruptcy in April and May, compared to five over the first three months of the year.