A great deal of attention been focused on the generous tax incentives for the renewable energy industry that were added to the "fiscal cliff " legislation during the closing hours of negotiations. Those provisions have a net cost of over $12 billion, according to Congressional Research Service (CRS) estimates. It was an enormous victory for wind and solar energy developers. Left out of that debate were provisions in the tax code that are essential to the oil and gas industry.

Within the coming months, Congress will start the process of reforming the tax code. The chairman of the House Ways and Means Committee, Representative Dave Camp (R-MI), has announced that his committee will move forward regardless of the president's agenda. Provisions in the code that have been central to the oil and gas industry will be a major target of the White House and Democrats on the tax writing committees. Wiping out most of those tax expenditures would save $38.5 billion over the next decade (according to CRS). The Administration has proposed a framework for tax reform, which includes repealing the oil and natural gas industry's ability to expense intangible drilling costs and the percentage depletion allowance for oil and natural gas wells. Recently, Senator Dick Durbin (D-IL) said "I can tell you there are still deductions, credits, special treatments under the tax code which ought to be looked at very carefully." Those provisions that have long favored oil and gas companies will be at the top of the list.