Official report to the House of Representatives of the 58th Legislature of Texas Page: 10 of 94
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We, as the largest producing state, now fac
serious threat ever to the depletion allowance. A'!. we are
likely to hear from now on is that the depletion allowance
is a loophole. What we will not hear will be, first, that
at least one hundred other minerals have a depletion allowance;
second, that with every barrel of oil or ton of coal or
pound of uranium sold, that is just a barrel or a ton or a
pound less for the owner to sell. To stay in business, the
owner must replace these resources, just as the manufacturing
industry must replace its worn out equipment.
The manufacturing industry is allowed to retain part of
its earnings through a depreciation allowance to replace
worn out or obsolete equipment. In the same way,
mineral industries are allowed to retain a part of their
earnings to locate new reserves to replace those which
have been used up. If, when an oil well went dry, the
people who owned it could just go out and buy another one,
just as you would replace an old truck, perhaps, the depletion
allowance would be set at a comparable figure, but
that isn't the case. Each year the cost of finding oil goes
up, as wells go deeper and labor and material prices continue
to climb. The facts are that each year the industry
spends more money on developing new reserves than it is
able to retain by depletion allowance. Yet, in spite of increased
cost of production, a gallon of gas costs less today
than it did in 1926 and the product is a lot better. Nothing
would be more dangerous than to let the industry be misguided
by those who would like to weaken the industry on
Certainly it is not the intent of this Committee to show
favoritism toward the majors or the independents, nor is
it the purpose of this Committee to prejudge or condemn
any man before he has been tried according to law. This
Committee does not indict, does not condemn, it does not
pass judgment. This Committee believes that laws are to
be made for people and not that people are made for the
laws. It believes that government should be the servant of
people and not their master. The Committee's only purpose
is to determine the facts as the evidence may show
them to be to the end that our system of law may be improved
for the benefit of every citizen of this state.
The first witness was William J. Murray, Jr., chairman of the Railroad
Commission, State of Texas.
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Texas Legislature. House of Representatives. General Investigating Committee. Official report to the House of Representatives of the 58th Legislature of Texas, book, 1963; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth5869/m1/10/: accessed March 29, 2017), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; .