Washington is slowly drifting toward fiscal sanity, more by accident than by design. There is now semi-serious talk of curtailing or eliminating subsidies to the oil exploration industry. The gentle defense of tax credits for small explorers is disingenuous. Small explorers who hit a big find would immediately achieve a size that makes them ineligible for such an oil depletion allowance, so such a distinction could easily disincentivize smaller explorers.
The simple economic fact is that only one incentive matters to oil explorers: the market price of oil. America would be better off getting rid of the oil depletion allowance in its entirety. This would effectively "bunker" America's remaining high-cost oil resources until the market needs them. It would also immediately make renewable energy more cost-competitive. Sanity awaits. It's ours for the taking.
The simple economic fact is that only one incentive matters to oil explorers: the market price of oil. America would be better off getting rid of the oil depletion allowance in its entirety. This would effectively "bunker" America's remaining high-cost oil resources until the market needs them. It would also immediately make renewable energy more cost-competitive. Sanity awaits. It's ours for the taking.