reference price
(2) Reduction as oil and gas prices increase (A) In general The $3 and 50 cents amounts under paragraph (1) shall each be reduced (but not below zero) by an amount which bears the same ratio to such amount (determined without regard to this paragraph) as— (i) the excess (if any) of the applicable reference price over $15 ($1.67 for qualified natural gas production), bears to (ii) $3 ($0.33 for qualified natural gas production). The applicable reference price for a taxable year is the reference price of the calendar year preceding the calendar year in which the taxable year begins. (B) Inflation adjustment In the case of any taxable year beginning in a calendar year after 2005, each of the dollar amounts contained in subparagraph (A) shall be increased to an amount equal to such dollar amount multiplied by the inflation adjustment factor for such calendar year (determined under section 43(b)(3)(B) by substituting “2004” for “1990”). (C) Reference price For purposes of this paragraph, the term “reference price” means, with respect to any calendar year— (i) in the case of qualified crude oil production, the reference price determined under section 45K(d)(2)(C), and (ii) in the case of qualified natural gas production, the Secretary’s estimate of the annual average wellhead price per 1,000 cubic feet for all domestic natural gas.