— Bloomberg News has a good story on how taxpayers subsidize Chesapeake Energy’s profits and executive compensation. The beleaguered company has made $5.5 billion over its history but has paid out just $53 million in taxes. That’s a tax rate of less than 1 percent.

The company and other U.S. oil and gas producers can thank a century-old rule that allows them to postpone income taxes in recognition of the inherent risk of drilling wells that may turn out to be dry. The break may be outdated for companies such as Chesapeake, which, thanks to advances in technology, struck oil or gas in 99.6 percent of its wells last year…
When production from old wells outstrips the expense of drilling new ones, companies that postponed taxes will have to pay up. Chesapeake had a deferred income tax liability of $3.4 billion as of Dec. 31.

“If they’re a growing company, that deferral will get pushed out a long time,” said Michelle Hanlon, an accounting professor at the Massachusetts Institute of Technology and one of the authors of the 2007 study. “If you defer forever, it’s an exemption.”

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.