Last night's presidential debate marked the most specificity from Republican nominee Mitt Romney on whether oil and natural gas tax breaks would be eliminated as part of a broader budget deal, putting at least some of the incentives "on the table" as a trade-off for a lower corporate tax rate.

Oil industry supporters were quick to defend their favorable tax treatment, with one representative indicating today that the trade-off Romney envisions could reduce the level of oil and gas development in the United States.

As is typically the case in discussions of subsidies for oil and gas companies, Romney and President Obama disagreed on how much the industry gets from the federal government. Obama cited the figure as $4 billion per year, which he proposed to eliminate in his most recent budget, while Romney said oil and gas companies get only $2.8 billion in federal support. But Romney said those tax breaks could be eliminated as part of a broader tax reform deal that brought the corporate tax rate down to 25 percent from its current 35 percent level.

"Of course it's on the table. That's probably not going to survive if you get that rate down to 25 percent," Romney said, before pivoting to an attack on Obama's support for clean energy subsidies.

Oil and gas industry representatives were hesitant today to read too much into Romney's statement, noting that detailed comprehensive tax reform proposals are not likely to take shape before next spring at the earliest. Industry defenders were also quick to reiterate their long-standing argument that the supports cited by both Romney and Obama are not "subsidies" but are standard business deductions available to a broad swath of industries.

"It is pure political spin to call them subsidies; these are the opportunity for cost recovery because, after all, you don't pay taxes on costs," said John Felmy, chief economist of the American Petroleum Institute, on a call with reporters today.

Felmy said that API had not crunched the numbers to see how the industry would fare under a 25 percent tax rate with fewer or no incentives, but that it was "willing to have discussions" as part of a "broad discussion of taxes," rather than singling out oil and gas companies to lose their incentives as congressional Democrats have proposed several times this year.

Nonetheless, he said, any discussion of eliminating oil and gas tax breaks would be "counterproductive," regardless of the overall tax rate.

A natural gas industry representative said the industry expected its issues would be in play as part of a tax reform deal.

"The debate made it clear that these issues will more than likely be front and center in 2013," said Daniel Whitten, vice president of strategic communications for America's Natural Gas Alliance. "As representatives of the natural gas development industry, we look forward to educating policymakers on the complex issues involved in bringing this clean, abundant, domestic resource to all Americans."

Environmentalists who have long called for the elimination of oil and gas tax incentives didn't give Romney much credit after the debate, noting that the budget proposal from his running mate, Rep. Paul Ryan (R-Wis.), does not propose modifying the industry's tax treatment. Romney's main energy adviser, oil executive Harold Hamm, has testified on Capitol Hill twice this year in defense of the industry's tax breaks.

"Mitt Romney has embraced a budget plan that gives Big Oil billions in tax giveaways and named its author as his running mate. He's tapped an oil executive who's defended Big Oil tax breaks before Congress as his chief energy adviser, and he's let Big Oil help write his energy plan," said Courtney Hight, deputy political director of the Sierra Club, in a statement. "Romney's rhetoric during this debate could not have been more detached from the reality of his policies, and there's no reason to think his position on oil subsidies is any exception."

The figure Romney cited comes from a July 2011 Energy Information Administration analysis. EIA said natural gas and petroleum liquids received $2.8 billion in fiscal 2010, according to the report, "Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010."

EIA included tax incentives that allow oil and natural gas companies' ability to defer costs related to "intangible drilling," well depletion and expensing of refining equipment, among others. It did not count credits such as the so-called Section 199 credit that is available to oil companies alongside other domestic manufacturers or deductions of taxes paid to foreign governments that Obama and congressional Democrats include in calculations they use to arrive at $4 billion in annual tax breaks for the industry.

Don Nickles, a former Republican senator from Oklahoma who now lobbies for oil and gas companies among other clients, said some industry tax breaks could be eliminated in exchange for a lower overall corporate tax rate, but he cautioned against getting rid of credits that amount to allowing the industry to deduct expenses from its tax bill.

For example, the 199 break just lowers the tax rate paid by manufacturers, including oil and gas drillers, so "if you take the rate to 25 [percent], that's kind of a nonissue," Nickles said in an interview this afternoon. But the intangible drilling costs provision allows drillers to deduct costs including employee salaries and unrecoverable infrastructure.

"If you did take that away, that would greatly lessen the oil and gas boom that is going on throughout the country," Nickles said.

Some observers have long been predicting that oil and gas breaks could be eliminated as part of a tax deal. Analysts at the Washington-based consulting firm ClearView Energy Partners put out a note this morning reiterating the firm's prediction from the beginning of this year. The ClearView analysts pointed to the relative lack of oil production in the districts of House Republican leaders, the populist zeal of the tea party, which is nearly as skeptical of big business as of big government, and the ability of even establishment Republicans like Romney to go after big oil companies in an effort to connect with voters.

Kevin Book, a ClearView analyst, says it remains to be seen what companies would be affected if a proposal to eliminate industry tax breaks becomes part of tax reform. For example, he said, eliminating the intangible drilling deduction would hurt small, independent firms more than the largest oil firms, while refiners are especially reliant on the 199 deduction.

The shape of such a proposal will likely occupy plenty of time for industry lobbyists and tax specialists over the next several months.

"It's not clear they lose," Book said. "It's clear that they're at risk."