Tax Breaks for Natural Gas Pipelines on the Chopping Block

Susan Phillips

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Susan Phillips tells stories about the consequences of political decisions on people's every day lives. She has worked as a reporter for WHYY since 2004. Susan's coverage of the 2008 Presidential election resulted in a story on the front page of the New York Times. In 2010 she traveled to Haiti to cover the earthquake. That same year she produced an award-winning series on Pennsylvania's natural gas rush called "The Shale Game." She received a 2013 Alfred I. duPont-Columbia University Journalism Award for her work covering natural gas drilling in Pennsylvania. She has also won several Edward R. Murrow awards for her work with StateImpact. In 2013/14 she spent a year at MIT as a Knight Science Journalism Fellow. She has also been a Metcalf Fellow, an MBL Logan Science Journalism Fellow and reported from Marrakech on the 2016 climate talks as an International Reporting Project Fellow. A graduate of Columbia School of Journalism, she earned her Bachelor's degree in International Relations from George Washington University.

May 29, 2013 | 4:27 PM

Kim Paynter / WHYY/Newsworks

Bulldozers clear land for a Marcellus Shale gas pipeline in Northeast Pennsylvania.

E&E Daily reports today on how the oil and gas industry finances a large part of its infrastructure through a corporate tax-free structure called a “master limited partnership.” These MLP’s have grown in recent years to keep up with the shale boom. But E&E reports some congressional tax-reformers want to eliminate the “MLP’s.”

Capital spending by energy companies organized as master limited partnerships, or MLPs, in and around the nation’s major shale oil and gas plays is expected to hit $25 billion this year — bringing the total since 2007 to $113 billion, according to Barclays Capital. Wall Street and energy interests are lining up to make their case to Congress that MLPs are essential to funding the oil and gas boom.

E&E reports that industry argues the shale boom needs the MLP’s.

A cross-section of political and financial analysts and congressional staff members say that Congress is more likely to expand the partnership tax break to include renewable energy than it is to scrap MLPs altogether. Many think that the most likely outcome is no change at all, given political realities on Capitol Hill.

And since MLP’s are so popular among investors, there’s a good reason the reformers may not prevail.

According to Alerian [a company that tracks MLP performance], MLPs had a 10-year total return of 341 percent through April 2012, compared to 58 percent for the Standard & Poor’s 500 stock index.

For more, check out the full article here.