The EIA Short Term Energy Outlook (STEO) was published recently. A summary in chart form.
A brief comment on this last chart. I agree with Ovi that the STEO forecast for US Lower 48 C+C output looks optimistic. My guess is that output will be relatively flat from April to September 2025 and then will decline due to low oil prices in late 2025 and in 2026.
I’m curious what people think of the two tax benefits for domestic oil companies: depletion allowances and intangible drilling costs.
Large companies, who use accrual accounting, typically allocate capital costs over the life of the investment. Sometimes government allows them to accelerate depreciation in order to promote a favored industry, or compensate for external social benefits not otherwise accounted for (e.g., national security needs for oil production in wartime).
My understanding is that depletion allowances & intangible drilling cost deductions are this kind of thing, and they’ve been controversial ever since they started in the 1920’s, even though depletion has been limited to small companies for several decades. Are they reasonable? Excessive? Completely unwarranted?
You need to differentiate between cost depletion and percentage depletion.
Percentage is on allowed on the taxpayer’s first 1,000 BOEPD. Percentage depletion doesn’t relate to actual expenses incurred in drilling the well.
Cost depletion does relate to the actual intangible costs of the well.
Okay, let’s talk about intangible drilling costs. Is this a fair description?
Intangible costs:
Labor: Wages for workers involved in the drilling process.
Fuel: Costs of fuel used to power drilling equipment.
Repairs: Costs of repairing drilling equipment.
Supplies: Costs of various supplies used during the drilling process.
Site preparation: Ground clearing, drainage, and other site preparation activities.
Consulting fees: Costs for professional services like geological survey
Tangible costs:
the costs of the drilling equipment and machinery, such as the drilling rig itself.
So, the next question is how large IDC (intangible drilling costs) are?
Online sources suggest about 70% of drilling costs are IDC.
“According to the Committee for a Responsible Federal Budget, this makes 60% to 80% of total drilling costs tax-deductible.
This is one of the largest tax breaks available to the oil industry. Repealing the deduction would save U.S. taxpayers an estimated $13 billion between 2024 and 2033, according to estimates by the Joint Committee on Taxation.
It also reports that it is a rare case of a tax deduction that can be taken in its entirety in the year the costs are incurred. Most similar corporate tax breaks are spread out over five years.”
https://www.investopedia.com/terms/i/intangible-drilling-costs.asp
Does this sound about right?
I have just published the 2nd part of my post on a potential oil supply crisis in East Asia during a possible military conflict around Taiwan, seen with Australian eyes
Australian Diesel imports update January 2025 data. Preparing for surprises in the Strait of Taiwan (part 2)
https://crudeoilpeak.info/australian-diesel-imports-update-january-2025-data-preparing-for-surprises-in-the-strait-of-taiwan-part-2
Is it just me, or have gasoline prices not fallen much? I see the STEO sees them barely budging despite a steep drop in Brent/WTI.
The increase in total liquids production is great news for more than a billion people who have been able to move to using LPG in cooking and heating.
https://www.iea.org/reports/a-vision-for-clean-cooking-access-for-all/executive-summary
2 billion people who eat food cooked a wood burning stoves don’t care what global crude oil production is. Being able to buy LPG which is a vital product of the oil and gas industry is everything to them.
It has been calculated that for about 0.1% of global wealth, all flared gas and NGLs could be processed and distributed cheap enough to eradicate solid fuels use.
The illness and deaths prevented would lift millions out of poverty.
https://www.who.int/news-room/fact-sheets/detail/household-air-pollution-and-health
Give an argument as to how valid it would be to replace the classic stove/range/oven with dedicated electrical appliances such as microwave/hot-air-fryers/rice makers/slim-pizza-skillets. Saving space is not an issue because storage is used by the space a massive range took. This is for a small family unit – not for big parties.
That’s the premise — how does DeepSeek respond?
Replacing a classic stove/range/oven with dedicated electrical appliances (microwave, air fryer, rice cooker, pizza skillet, etc.) can be a valid and efficient choice for a small family, provided cooking habits align with the capabilities of these appliances. Below are key arguments supporting this setup:
1. Efficiency & Energy Savings
Targeted Cooking: Smaller appliances heat up faster and use energy only for the specific task (e.g., air fryer for roasting, rice cooker for steaming), whereas an oven/stove wastes energy preheating and maintaining large cavities.
No Wasted Space: A full oven is often overkill for small meals, whereas an air fryer or microwave handles small portions efficiently.
2. Faster & More Convenient
No Preheating Needed: Air fryers, microwaves, and skillets reach optimal temps in minutes, unlike conventional ovens.
Easier Cleanup: Many countertop appliances (like rice cookers and air fryers) have nonstick, dishwasher-safe parts, while stove cooking often involves multiple pots/pans.
3. Versatility of Modern Appliances
Air Fryers → Can roast, bake, and even “fry” with little oil (replacing an oven for many tasks).
Microwaves (with convection) → Can steam, reheat, and even bake simple items.
Rice Cookers → Often double as steamers or slow cookers.
Induction Pizza Skillet/Single Burner → Can sear, sauté, and even make flatbreads without a full stove.
4. Space Optimization (Despite No Storage Constraints)
Even if storage isn’t an issue, removing a bulky range opens up counter space for meal prep or other uses.
Modular appliances allow only the needed devices to be out at once (e.g., store the rice maker when not in use).
Potential Downsides to Consider
Large-Batch Cooking: Roasting a whole chicken or baking a big casserole may be trickier (though some air fryers and multi-cookers can handle this).
Simultaneous Cooking: Making multiple dishes at once may require juggling appliances (whereas a 4-burner stove + oven allows more parallelism).
High-Heat Searing: Some electric skillets/air fryers don’t sear as well as gas burners (though induction skillets come close).
Final Verdict: A Smart Choice for the Right Household
If your small family:
✔ Primarily cooks simple, small-batch meals (stir-fries, roasted veggies, steamed rice, reheating leftovers).
✔ Rarely needs to bake large dishes or host big dinners.
✔ Values speed, easy cleanup, and energy efficiency over traditional stove versatility.
Then yes, replacing the range with dedicated appliances is a valid—and possibly superior—option. However, if you frequently sear steaks, bake lasagnas, or cook multi-component meals, keeping at least one high-power burner (induction) + a compact oven (like a Breville Smart Oven) might be a better compromise
Good thoughts.
An induction cooktop is very cheap – as little as $50 in the US and probably cheaper in developing countries – and uses very little power.
Combine an induction cooktop, a little bit of PV and a relatively small battery and you have a clean and cheap solution. Far cheaper, cleaner and more reliable than butane, kerosene, LPG, etc.
To many people, the thought of eliminating gas stoves is nearly equivalent to banning guns. Really has nothing to do with logic, but a reactionary mindset. Next is the 110 volt range, which eliminates the step of rewring
https://apnews.com/article/climate-energy-gas-methane-pollution-emissions-stove-3facc7cc5390b97129dba4cd051206cc
Yup, my great grandfather went from draft animals to a tractor. How much longer will millions be lifted out of subsistence living?