SECTION 29 TAX CREDITS were $1.083 an mmBtu last year. The IRS is expected to make a formal announcement in April
The United States offers the tax credit as an inducement to look in unusual places for fuel. The credit can be claimed by anyone producing gas from coal seams, tight sands, Devonian shale, geopressured brine or biomass or producing synthetic fuel from coal. The amount of the credit is adjusted each year for inflation.
The credit will phase out automatically if oil prices return to levels reached during the Arab oil embargo in the late 1970’s. The average wellhead price for domestic crude oil last year was $21.86 a barrel — well short of the level that oil prices would have had to reach for the credit to phase out. The phaseout would have occurred last year if oil prices had moved across a range of $49.15 to $61.71 a barrel.