Windfall Profit Tax and vertical integration in the petroleum industry

Journal Article · Thu Jan 01 04:00:00 EST 1981 · South. Econ. J.; (United States)

DOI:https://doi.org/10.2307/1057372· OSTI ID:6485979

Bolch, B W; Damon, W W

An analysis of the combined influence of the corporate income tax and a percentage depletion allowance on the decision to integrate vertically in the petroleum industry was presented in a recent issue of this Journal. In that paper it was shown that the combined effect of these two aspects of the corporate tax structure was the encouragement of downstream integration into refining and marketing for the crude-oil producer. A logical conclusion of that earlier analysis was that the repeal of the percentage-depletion allowance for large oil and gas producers (e.g., the tax reform which disallowed percentage-depletion tax deductions for tax years subsequent to 1974) would have the effect of slowing, and ultimately reversing, the trend toward vertical integration in the petroleum industry. The purpose of this note is to demonstrate that the effect of the combination of the corporate income tax and the windfall profit tax may be to encourage vertical integration, depending upon the interpretation and viability of the constructive sales clause of the windfall profit tax bill.

• Research Organization: Vanderbilt Univ., Nashville, TN
• OSTI ID: 6485979
• Journal Information: South. Econ. J.; (United States), Journal Name: South. Econ. J.; (United States) Vol. 47:3; ISSN SECJA
• Country of Publication: United States
• Language: English

Related Subjects

02 PETROLEUM
020700* -- Petroleum-- Economics
Industrial
& Business Aspects
021000 -- Petroleum-- Legislation & Regulations
29 ENERGY PLANNING, POLICY, AND ECONOMY
294002 -- Energy Planning & Policy-- Petroleum
294003 -- Energy Planning & Policy-- Natural Gas
DEPLETION ALLOWANCES
ECONOMICS
FINANCIAL INCENTIVES
INDUSTRY
PETROLEUM INDUSTRY
TAXES
VERTICAL INTEGRATION
WINDFALL PROFITS TAX