Tax Breaks for Natural Gas Pipelines on the Chopping Block

  • Susan Phillips

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.
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