Energy
Wednesday, September 4th, 2024 2:20 pm EDT
Key Points
- Record U.S. Oil Production: In 2023, the U.S. set a new global record for oil production, reaching 13.4 million barrels per day by August 2024, up from a low of 5 million barrels per day in 2008 due to technological advancements in horizontal drilling and fracking.
- Biden Administration’s Renewable Energy Push: The Biden administration has expanded subsidies for renewable energy through the Inflation Reduction Act of 2022, which includes $369 billion in funding, primarily through tax incentives to combat climate change.
- Fossil Fuel Subsidies: Despite the focus on renewable energy, the fossil fuel industry continues to benefit from substantial tax incentives, such as the intangible drilling costs tax credit, which is expected to provide $1.7 billion in benefits in 2025 and $9.7 billion through 2034, according to the White House Budget for Fiscal Year 2025.
In 2023, the U.S. set a new record for oil production, surpassing all previous global records, according to the U.S. Energy Information Administration. This surge is attributed to significant advancements in horizontal drilling and hydraulic fracturing (fracking) technologies, which have greatly enhanced oil extraction efficiency. U.S. oil production, which had dropped to 5 million barrels per day in 2008, has skyrocketed to 13.4 million barrels per day by August 2024. This unprecedented production level reflects the dramatic impact of these technological innovations on the oil industry.
This increase in oil production occurs amid a broader energy policy shift under the Biden administration, which has been focusing on expanding subsidies for renewable energy projects through the Inflation Reduction Act of 2022. This act, which allocates $369 billion to address climate change, predominantly uses tax incentives to support renewable energy deployment. Despite this push towards green energy, the fossil fuel industry continues to benefit from substantial tax incentives as well.
One significant subsidy for the fossil fuel sector is the intangible drilling costs tax credit, which supports oil and gas companies by providing tax breaks for expenses related to drilling operations. According to Amy Myers Jaffe of New York University’s Energy, Climate Justice and Sustainability Lab, this credit is one of the most significant subsidies for the industry. The White House Budget for Fiscal Year 2025 estimates that this tax break will benefit the oil and gas industry by $1.7 billion in 2025 and $9.7 billion through 2034. This demonstrates how both renewable energy and fossil fuel sectors are supported through various tax incentives, highlighting the complexity and dual focus of current U.S. energy policy.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/04/how-fracking-us-oil-production-record-renewable-energy.html
