I fail to see the special exemption. The general rule for taxation of capital assets is you deduct expenses as they occur. While a drill bit may have a lifespan of only a few hours, a building may have a lifespan of 50 years. The drill bit you deduct immediately as an expense. The building has to be deducted on a schedule as a long term capital asset. You are not allowed to deduct the full cost of the building in year one. You get a small percentage of the expense as a tax write off each year, according to the type of asset and the schedule put out by the tax department. Cars, buildings, machinery, etc. So, are there unique tax rules for oil and gas exploration? Of course. Other businesses do not incur the unique expenses associated with oil and gas exploration. Are these unique rules unfair? Well, that question very much depends on how you define fairness, and how you choose to measure it. That is an issue of policy. It is a choice made along political and economic lines, a strategic choice just as much as an economic choice. Do you want more oil and gas, or less oil and gas? If you say the drill bits which only last for hours have to be depreciated over a multi-year schedule as capital machine assets, that would be unfair. If you say an oil rig, which can last for twenty years, can be fully expensed in year one, that would also be unfair. However, it would also maximize the rate at which new oil rigs can be built, which grows your strategic oil reserve faster, which arguably is a strategic asset for any nation to control. Nations with oil cannot be held hostage over oil prices by other nations with oil, as the OPEC oil cartel did to the United States during the 1970's oil crisis. They want to raise oil industry taxes, which will be inflationary and hurt the entire economy. It will lead to job losses across the entire economy. They want to pin the blame for that on the oil industry, instead of accepting the responsibility for their own failure. Abusers always blame the victim. They were asking for it.