July 31, 2014.

U.S. Energy Firms Rewarded With Tax Deferrals

The peculiar reverence for O’Brien, which nothing seemed able to destroy, flooded Winston’s heart again. How intelligent, he thought, how intelligent! Never did O’Brien fail to understand what was said to him. Anyone else on earth would have answered promptly that he HAD betrayed Julia. For what was there that they had not screwed out of him under the torture? He had told them everything he knew about her, her habits, her character, her past life; he had confessed in the most trivial detail everything that had happened at their meetings, all that he had said to her and she to him, their black-market meals, their adulteries, their vague plottings against the Party----everything. And yet, in the sense in which he intended the word, he had not betrayed her. He had not stopped loving her; his feelings towards her had remained the same. O’Brien had seen what he meant without the need for explanation.

The U.S. energy boom is producing a little-noticed side effect: American oil and gas companies are paying less in federal income taxes.

"Tell me," he said, "how soon will they shoot me?"

Energy companies are spending billions of dollars a year to drill in shale formations across the country, sending the nation's daily oil output up by almost 50% in just the past few years. Techniques like hydraulic fracturing and horizontal drilling, which make it possible to tap petroleum in these new fields, make each well cost millions of dollars.

"It might be a long time," said O’Brien. "You are a difficult case. But don’t give up hope. Everyone is cured sooner or later. In the end we shall shoot you."

All that spending has allowed drillers to take advantage of incentives in the tax code for drilling and capital expenditures, deferring billions of dollars in income tax.