Oh fun! I love when people Dunning-Kruger themselves on accounting (I literally just sat up straight in my chair!)

Let's go through your argument (would you believe I did both read and understand the document I linked!?), but before we do that, let's look at some more traditional subsidies that O&G gets in America: [0]

The GAO has reported extensively that taxpayers have not received a fair rate of return due to outdated fiscal terms. For example, Federal onshore oil and gas royalty rates are consistently lower than on State-issued leases and Federal offshore leases (see Tables 1 and 2); in fact, onshore royalty rates have never been raised. Likewise, bonding levels have not been raised for 60 years, and minimum bids and rents have been the same for over 30 years. If a lease is not sold competitively at auction, for two years it can be sold non-competitively for a modest administrative fee, with no bonus bid required. These noncompetitive leases are frequently less diligently developed as
competitively issued leases. From 2013 to 2019, average revenues from competitive leases were nearly three times greater than revenues from noncompetitive leases.

Underpriced use of public land sure sounds like a subsidy to me!

Ok back to your comment, let's cherry-pick some arguments you made then get into accounting.

>US gas is cheaper than elsewhere in the developed world because a) the US is self-sufficient in terms of supply

Oh, I was unaware that the cheap gas phenomenon started in 2008 when we started approaching energy independence. Thanks Obama, I guess.

>b) US fuel taxes are less.

You're getting dangerously close to agreeing with me on the subsidy point, but I know we won't agree on the politics of pricing externalities, so I'll just move on.

> the paper does not claim that tax revenue would rise more than about $40 billion over about a decade. $4 billion a year is a pittance for a federal government that collected $4.9 trillion in 2022.

It's an amazing logical fallacy to say "one number is smaller than another unrelated number, so the smaller number is unimportant," but even ignoring that, its still a subsidy and that's my entire point. Subsidies big and small are everywhere and this is one of them. I nowhere made an argument that O&G subsidies are going to bankrupt the US, just wanted to make OP aware of the fact that their gas is subsidized.

OK, now on to my favorite topic: why GAAP and cashflow accounting are different and why that actually matters, especially in CAPEX-driven balance sheet businesses.

1) The Intangible Drilling Costs Deduction - You are 100% wrong here. Depreciation and Amortization schedules exist for a reason, it's not just made up to keep EY busy footing 3-statement models. Let's run with this hypothetical: a business looks to build a well when prices are $100/barrel. In that first year of pumping, they successfully discover that the well is wet and they pay way less tax than they otherwise would because they got to amortize everything all at once. Now in year 2, that wet well is still producing but oil prices fall and it no longer makes sense to keep pumping. So now they have a known wet well (a balance sheet asset that they can restart at any time) and all the retained earnings from year 1 that the government never gets to claw back.

Compare this to a world without this subsidy where those expenses are amortized on expected useful life of the well. In this case, not only does the driller have incentive to keep producing even if prices fall, they absorb some of the pricing risk that the US government currently takes on.

If the US government intentionally absorbing pricing risk
(arguably free insurance for O&G companies) is not a subsidy to you then again, we just disagree.

2) Percentage Depletion - In contrast, percentage depletion allows firms to deduct a set percentage from their taxable income. Because percentage depletion is not based on capital costs, total deductions can exceed capital costs. << Enough said

3) Foreign tax - Instead of claiming royalty payments as deductions, oil and gas companies are able to treat them as fully deductible foreign income tax. << Again, maybe you're not following the language here, but this is not "basically, the same amount of taxes are collected but over a longer period of time" it's "less taxes vs. other industries" (if you actually don't follow, tax paid to foreign governments isn't treated as a normal expense, it's usually covered in treaty agreements and is treated as tax already paid)

So yeah, not only are these real honest to goodness subsidies, they amount to billions of dollars a year!

[0]https://www.doi.gov/sites/doi.gov/files/report-on-the-federa...