Energy Producers Warn that Carried Interest Tax Hike Would Threaten American Energy Dominance
Mike Moncla, Louisiana Oil & Gas Association: “The current capital gains tax treatment [of carried interest] properly reflects the nature of these entrepreneurial risks, and changing it would unfairly penalize those who are building America’s energy future.”
WASHINGTON, D.C. – Organizations representing the domestic American energy industry are speaking out against proposed tax hikes on carried interest capital gains, which would threaten American energy independence and economic growth. The Texas Independent Producers & Royalty Owners Association (TIPRO), the Louisiana Oil & Gas Association (LOGA), and private equity firm EnCap Investments L.P. have recently written letters to Congress highlighting how the current tax treatment of carried interest capital gains has fueled investment into domestic energy production. Over the past ten years, private equity has invested over $100 billion in the American oil and gas industry, helping to create job opportunities and strengthen American energy independence.
- Texas Independent Producers & Royalty Owners Association (TIPRO) president Ed Longanecker wrote about the strong partnerships between private equity and energy producers in a letter to Congress: “Nowhere is this model more embedded –– or more vital –– than in the Gulf Coast states, where these partnerships drive innovation, economic growth, and energy resilience.”
- Louisiana Oil & Gas Association (LOGA) president Mike Moncla warned about the risks of raising taxes on carried interest in his letter: “Over the last decade, private equity firms invested nearly $12 billion through 32 deals with Louisiana-based companies alone. … Changing the tax treatment of carried interest would disproportionately burden the very same partnerships that have fueled this growth.”
- EnCap Investments L.P. managing partner Jason M. DeLorenzo, in a letter to Congress, described how the carried interest structure incentivizes investment in smaller producers: “In our sector, smaller independent producers often rely on partnerships with private capital to fund drilling operations, adopt new technologies, and navigate commodity volatility. These partnerships are especially vital in states like Texas, where energy production is not only a core industry but a key driver of local jobs and innovation.”
Rep. August Pfluger (R-TX) reiterated the importance of carried interest for American energy security at a recent event hosted by the American Investment Council and Punchbowl News: “We are only energy dominant because of provisions like carried interest in the Permian Basin.” Partnerships between private capital and American energy producers are mutually beneficial as they provide small companies access to the long-term capital they need to expand their operations and improve productivity.
These are some of the key facts about private equity investments in American energy:
- The U.S. is currently producing more crude oil than any country, simultaneously supporting over 10 million American jobs while contributing $2 trillion to the American economy.
- U.S. crude oil exports are averaging a record high of approximately 4.1 million barrels per day thanks to these investments.
- The private equity industry has invested more than $84 billion in the oil and gas industry and completed over 430 deals across the country since President Trump’s pro-growth 2017 Tax Cuts and Jobs Act (TCJA).
Last week, Dr. Charles Swenson from the University of Southern California Marshall School of Business released a new report outlining how raising taxes on carried interest capital gains would increase the deficit, kill jobs, slow housing construction and threaten American innovation.
Read each energy letter at the links below:
- Texas Independent Producers & Royalty Owners Association (TIPRO) letter
- Louisiana Oil & Gas Association (LOGA) letter
- EnCap Investments L.P. letter
