Candidate Trump Promised Oil Executives a Windfall. Now, They’re Getting It.

New tallies of the administration’s tax breaks and other incentives add up to tens of billions of dollars of benefits to the fossil fuel industry.

Massive Benefits for Fossil Fuel Industry

· Trump promised oil executives a big return for campaign support. Though they didn't raise the full $1B, the industry is still reaping huge gains.

· A new domestic policy law gives the oil and gas sector $18 billion in new or expanded tax incentives.

· Additional benefits:

o $6B reduction in royalties paid for drilling on public lands.

o $1.5B from delayed methane emission penalties.

o Expanded deductions and accelerated write-offs for drilling operations.

Total Tax and Subsidy Breakdown

· Oil and gas industry already gets $35B+ annually in tax breaks.

· New subsidies:

o $14B for carbon capture tech (used to extract more oil).

o $3.2B for tax treatment on carbon, hydrogen, nuclear, hydropower, geothermal.

o $1.48B in tax breaks for metallurgical coal.

o $1.1B for immediate deduction of certain drilling costs.

Climate and Regulatory Rollbacks

· EPA’s legal basis for regulating greenhouse gases was revoked.

· Funding for climate research and adaptation programs slashed.

· Trump aggressively promoted fossil fuel exports:

o EU trade deal includes $750B in U.S. energy purchases over 3 years.

Reactions

· Industry: Applauds moves; sees Trump policies as meeting "all top priorities."

· Critics:

o Senator Markey: Called it a "Big Oil giveaway."

o Senator Sanders: Proposed repealing $190B in fossil fuel subsidies.

o Environmental groups: Say it’s a major setback for climate action.

Reality Check: Oil Market Struggles

· Despite policy wins, oil companies face:

o Falling crude prices (now ~$60/barrel).

o Tariff-related uncertainty.

o Rig count is at a 4-year low (Baker Hughes).

· Analysts say regulatory relief can’t fully offset low prices.

Statements & Perspectives

· White House: Argues new tech, not tariffs, is reducing rig use.

· Industry groups: Praise for tax provisions, but admit challenges remain.

· Experts: Full impact will take years to assess; short-term investment is subdued.

[ABS News Service/01.08.2025]

During the presidential campaign, Donald J. Trump gathered oil executives at his Mar-a-Lago estate and promised them a powerful return on their investment if they raised $1 billion to help him retake the White House.

The industry never ponied up quite that much, but nevertheless, six months into Mr. Trump’s presidency, oil and gas companies are poised to reap multibillion-dollar windfalls from the administration’s actions so far.

A sweeping domestic policy bill that Mr. Trump signed into law this month includes about $18 billion in new and expanded tax incentives for the oil and gas industry, according to the Joint Committee on Taxation, which analyzes tax policy for Congress. It also includes billions of dollars in tax breaks that aren’t specific to oil and gas but were top oil industry priorities as the law was being negotiated.

It reduces the amount of money that energy companies must pay the federal government for the oil and gas they extract on public lands and waters, a change valued at about $6 billion, according to one analysis. The bill also delays penalties for oil companies that fail to reduce emissions of methane, a powerful greenhouse gas that leaks from wells, representing about $1.5 billion in benefits for the industry, the Congressional Budget Office found.

“The final bill was positive for us across all of our top priorities,” said Aaron Padilla, the vice president of corporate policy at the American Petroleum Institute, the oil industry’s chief lobbying organization.

The benefits for fossil fuels comes as the Trump administration is systematically eliminating federal policies to combat climate change, including this week’s extraordinary move to revoke the Environmental Protection Agency’s scientific justification for regulating greenhouse gases. That move would essentially kill one of the government’s main tools for cutting emissions from power-plant smokestacks, oil and gas wells and automobile tailpipes.

The administration has also been cutting funding for climate research and rolling back programs designed to help millions of Americans prepare for rising sea levels, deadlier heat waves, increasingly intense wildfires and other effects of global warming.

At the same time, Mr. Trump is aggressively promoting the sale of fossil fuels abroad as part of his foreign-policy approach. This month’s sweeping trade deal with the European Union requires the 27-country bloc to buy $750 billion in energy resources from the United States over the next three years.

Asked about Mr. Trump’s promise to energy executives at Mar-a-Lago that their spending on his campaign would benefit the industry, a White House spokesman said the administration had increased American energy production and kept gasoline prices low.

Democrats and environmental groups condemned the new benefits for producers of fossil fuels, the burning of which is chiefly responsible for climate change. The oil and gas industry already enjoys at least $35 billion in annual tax breaks, some of which have been part of the United States tax code for more than a century.

“While families across the country struggle to keep the lights on and fridge stocked, Republicans slipped billions of dollars’ worth of new and expanded Big Oil giveaways into Trump’s Big Ugly Bill,” Senator Edward J. Markey, Democrat of Massachusetts said.

Last Friday, Senator Bernie Sanders, Independent of Vermont, introduced legislation that would repeal what his staff has calculated as more than $190 billion over 10 years in tax benefits and subsidies for the industry, including those in the new law. He cited an analysis by Climate Power, an environmental group, that found the oil industry had spent $450 million on a combination of donations, lobbying and advertising during the 2024 election cycle. A New York Times analysis found that the oil industry and related interests made $75 million in direct donations to Mr. Trump and his campaign committees.

“In return, the president has directed the full regulatory, legal, and financial weight of the federal government toward helping his fossil fuel executive friends get rich at the expense of a healthy and habitable planet for our kids and grandkids,” Mr. Sanders said in a statement.

Mr. Sanders’s bill isn’t likely to get far in Congress, where Republicans control both the House and the Senate. But Democrats, environmental advocates and watchdog groups said they intended to keep the pressure on to expose what they call the law’s transfer of wealth from citizens to some of the most powerful corporations in the United States.

Some of the biggest subsidies in the new law include about $14 billion to encourage oil companies to use carbon-capture technology. While the tax credit was designed to support technology that captures and stores carbon dioxide emissions, the new law gives companies an increased tax benefit for injecting those emissions into wells to help force more oil out of the ground.

It provided about $3.2 billion in special tax treatment for income from carbon capture, hydrogen storage, advanced nuclear, hydropower, and geothermal energy. And there’s a provision, apparently added at the last minute, providing tax breaks to companies that produce metallurgical coal, a type of coal used to make steel that is typically exported. That benefit is worth $1.48 billion to the coal industry, according to a new analysis provided to Mr. Sanders by the Joint Committee on Taxation.

The law allows energy companies subject to a 15 percent corporate alternative minimum tax to deduct certain drilling costs, expected to cost the federal government $1.1 billion over 10 years, according to the Tax Foundation, a nonprofit group. And it includes other items from the oil industry wish list, including allowing oil and gas companies to write off the full costs of starting and operating drilling rigs in one year, rather than spreading those costs over the asset’s lifetime.

Oil executives argue that most industries receive tax deductions, and oil companies write off just a sliver of what they pay in federal taxes.

“This legislation delivers in a big way for the men and women who power our industry,” Brook A. Simmons, the president of the Oklahoma Petroleum Alliance wrote when the law was signed. He said provisions like the deduction of certain drilling costs are “sound tax policy that has enabled independent producers of every size to drill wells, grow payrolls, and expand operations across historic oil and natural gas fields in every corner of our state.”

Despite the new tax incentives and the regulatory relief, though, other Trump administration policies are weighing on the oil and gas industry. Mainly, Mr. Trump’s on-again, off-again tariff talk, which has caused economic uncertainty and slowed production, energy analysts say.

Prices for a barrel of U.S. crude oil have fallen into the $60 range, down more than 20 percent from the start of the administration. That has made it unprofitable for many companies to increase production, according to a survey by the Federal Reserve Bank of Dallas.

A recent report by Baker Hughes, an energy services company, found that the rig count, a census of active drilling rigs in the United States, has fallen to its lowest level in nearly four years. Oil analysts said there had not been sharp declines in production yet, but the oil rig count is considered a leading indicator of future output.

“Oil companies are facing a very different reality than they expected six months into the administration,” said David Carter, a senior energy analyst with RSM, a global consulting group. “‘Drill, baby drill’ has been on hold with the uncertainty around tariffs,” he said.

The White House disputed the idea that oil production is taking a hit because of its tariff policies and argued that more efficient technology has allowed oil to be produced with fewer rigs. It also asserted that a move at the Interior Department to start allowing companies on federal land to use their equipment more efficiently had also reduced the need for more rigs.

“The Trump Administration’s policies are driving streamlined oil and gas production,” Harrison Fields, a White House spokesman, said in a statement. The efforts are “enhancing domestic energy production while keeping gas prices affordable,” he said.

Kevin Book, managing director of ClearView Energy Partners, a Washington-based research firm, said it was too early to judge how the full sweep of the administration’s policies were playing out in the oil industry. “A lot has changed in Washington in six months,” he said, but energy investment takes place on a time scale of decades, not months. It can often be years between the time a company announces its intention to drill and putting metal in the ground, he said.

But he also questioned how much help the provisions in the domestic policy law, along with the repeal of regulations, would be to companies. “Lower prices deter investment, generally speaking, and it’s not clear that regulatory relief can fully offset that,” Mr. Book said. He estimated the industry would need about $71 billion in annual regulatory relief in order to make up for the approximate $15 drop in the price of a barrel of oil over the past several months.

Mr. Padilla of the American Petroleum Institute maintained that the industry was not overly worried. “On balance, we’re doing very well,” he said.