H.R. 8600: To amend the Internal Revenue Code of 1986 to temporarily suspend certain fuel excise taxes for fuel separated during periods in which the national average price of gasoline exceeds $3.99 per gallon, and to prohibit certain credits or deductions for oil and gas companies during such periods.

This bill proposes to amend the Internal Revenue Code to introduce temporary changes related to fuel excise taxes and certain tax credits and deductions for oil and gas companies. The key provisions of the bill are outlined below:

Suspension of Fuel Excise Taxes

The bill aims to suspend the tax imposed on the removal, entry, or sale of certain fuel under specified circumstances:

• If the national average price of gasoline exceeds $3.99 per gallon, the current fuel excise tax will be reduced by 1 cent for each cent that the average price exceeds $3.99.
• This reduction in tax cannot go below zero, meaning the lowest tax rate would be zero during times of high fuel prices.

Funding Trust Funds

To maintain the funding for the Highway Trust Fund and the Leaking Underground Storage Tank Trust Fund despite the suspension of fuel taxes:

• The Secretary of the Treasury will transfer amounts from the general fund to both Trust Funds to make up for revenue losses due to the tax reduction.
• These transfers ensure that both funds continue to receive adequate financial support during periods of elevated gasoline prices.

Prohibition of Certain Deductions and Credits for Oil and Gas Companies

In addition to the tax suspension, the bill also prohibits certain deductions and tax credits for oil and gas companies during the same high-price periods:

• Intangible Drilling Costs: Companies cannot claim tax deductions for costs incurred in any month when gasoline prices are above $3.99.
• Enhanced Oil Recovery Credit: This credit will not be available for expenses incurred during these high-price months.
• Marginal Well Credit: Companies will be barred from claiming credits for oil production during months that meet the price criteria.

Effective Date

The proposed amendments will apply to taxable years beginning after December 31, 2025, meaning that the changes would not take effect until the start of the next year after this date.

Relevant Companies

• XOM (Exxon Mobil Corporation): As one of the largest oil and gas companies, Exxon could see significant impacts on its operational costs due to the limitations on credits and deductions outlined in this bill.
• CVX (Chevron Corporation): Similar to Exxon, Chevron may also face financial impacts from the prohibition of tax credits and deductions during high gasoline price periods.
• OXY (Occidental Petroleum Corporation): The restrictions on deductible expenses could influence the cost structure of Occidental's operations.