April 22, 1986
Today the President called for reforms in several key elements of the Nation's energy policy. He called for repeal of the crude oil windfall profit tax, which was enacted in 1980 to capture for the Federal Treasury part of the difference between the world price of crude oil and then prevailing federally established price controlled levels. This tax is currently scheduled to be phased out beginning January 1, 1991. Due to the decontrol and ensuing drop in world oil prices, however, there is no significant revenue accruing to the U.S. Treasury under this provision.
In addition, the President reaffirmed the importance of deregulating natural gas. Legislation to achieve this goal was recently sent to the Congress by Secretary of Energy Herrington. In connection with the deregulation of natural gas, the President also reiterated his support for repealing several provisions of the Power Plant and Industrial Fuel Use Act which inhibit the free choice of energy sources by utilities and consumers.
The President also pledged his willingness to review measures designed to preserve the viability of marginal production wells, sometimes referred to as stripper wells, as a national energy asset. As part of this review last week, Interior Secretary Hodel announced suspension of production requirements on these types of wells located in areas managed by the Bureau of Land Management.
The President also reconfirmed his support for the current law tax treatment of the depletion allowance and intangible drilling costs contained in the Senate Finance Committee version of the tax reform bill. While the President remains concerned about our energy security, he reaffirmed his belief that lower energy prices are of great overall benefit to the American economy.