Various provisions in the federal income tax treat energy producers more or less favorably than other businesses. By changing the after-tax rate of return on investments in the energy sector, the Tax Code may alter the long-run supply of specific types of energy.
In general, the income of all participants in the energy sector is subject to income tax of one form or another. Two notable exceptions arise in the generation and sale of electricity. Governmental agencies (such as the Tennessee Valley Authority, the Bonneville Power Administration, and municipally owned power companies) account for approximately 14 percent of the electricity sold in the United States. (more…)
Sir Arthur Eddington’s general address on subatomic energy at the 1930 World Power Conference in Berlin stirred the imagination of every scientist and engineer present. The challenge was clear: find a practical means of accessing, controlling, and using the enormous energy locked in the atom as predicted by Einstein’s remarkable mass–energy relation, E=mc2. On December 2, 1942, Enrico Fermi transformed Eddington’s visionary challenge into reality by producing the world’s first controlled, self-sustaining nuclear reactor, Chicago Pile 1. Six decades later, nuclear energy now produces 16% of the world’s electrical power. (more…)
Most major oil and gas firms engage in both upstream (i.e., hydrocarbon exploration and production) and downstream (i.e., hydrocarbon refining and marketing) businesses as well as related activities such as chemicals, and their R&D activities serve the needs of these businesses. During the past decade or so, the R&D spending of oil and gas firms has generally declined. According to a DOE survey, R&D spending by major energy producers within the United States declined from $3.05 billion in 1994 to $1.33 billion in 2000. Although not true of all producers internationally, the broad global trend over the past decade or so seems to be along similar lines. (more…)
