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For Immediate Release
February 12, 2010

WASHINGTON - According to the Office of Management and Budget, President Obama's 2011 Fiscal Year spending and tax proposal "takes the steps to help jumpstart job creation, works to strengthen the economic security of American families." All too often, though, in Washington, rhetoric and action are not aligned. And the president's budget - which calls for tens of billions in new, job-killing tax hikes on the backs of America's independent oil and gas producers - is just the latest example of this doubletalk.

Barry Russell, president and CEO of the Independent Petroleum Association of America (IPAA) - the voice of those responsible for producing 9 out of 10 oil and gas wells across the nation - said this about the Administration's enormous tax increases on the industry that employs more than 9 million Americans:

• "These punitive taxes would reduce investment in new U.S. production by 20 to 40 percent. And, at the same time, it could drive down U.S. oil production by 20 percent and natural gas production by 12 percent; potentially killing thousands of jobs."

IPAA isn't alone in its fight for increased access to job-creating American energy and commonsense tax policies. Sen. John Barrasso (R-Wyo.) took to the pages of Politico this week to highlight the devastating effects of the president's budget, which will discourage the safe, responsible production of homegrown American energy. Under the headline "Budget will hurt job creation in West," Sen. Barrasso - a member of the Energy and Natural Resources Committee - writes:

Tens of Billions in New Taxes on Small Businesses

• The president's new budget includes several measures that will discourage job creation in the West. First, the budget will levy $36.5 billion in taxes on American oil and natural gas production. This includes removing tax incentives that independent oil and gas producers heavily rely on to invest in their businesses. These producers are my constituents. Many of them are small-business owners or employees. In fact, independent producers - not Big Oil - develop 90 percent of domestic oil and natural gas wells. They also produce 82 percent of U.S. natural gas and 68 percent of U.S. oil.

Burdensome, Unnecessary Regulations

• The budget will impose a fee on nonproducing oil and natural gas leases. This policy ignores the fact that successfully bringing a lease to production takes years of research, investment, environmental analysis and bureaucratic-hoop jumping. ... The administration's budget reveals a stunning lack of appreciation for oil and natural gas jobs and a flawed understanding of American energy resources and demands.
  
• Instead of clearing the way for new development, the Department of the Interior will now conduct an additional round of environmental analysis and public comment that duplicates the existing analysis and public input required under current law. These regulations threaten job creation and economic recovery with a maze of additional layers of bureaucracy.

U.S. Energy, Jobs

• American jobs and American energy are good things. Why subject them to political discrimination? We need it all. The federal government should either help or get out of the way. The oil and gas industry supports more than 9 million jobs and generates 7.2 percent of U.S. gross domestic product. Instead of penalizing the industry, we should make it easier for it to hire new workers and fuel our economy. If the president is really focused on jobs, he will replace his plan to punish American energy employers with a plan to promote responsible energy development.

Despite ongoing efforts from the Administration to cripple the U.S. oil and gas industry through massive tax hikes and needless layers of bureaucratic red tape, bipartisan support on Capitol Hill remains strong for independent oil and gas producers who are creating jobs and working to secure America's long-term energy security. In a recent letter to Interior Secretary Ken Salazar, Congressman Dan Boren (D-Okla.) - a key Resources Committee member - writes:

• I am deeply disturbed by this administration's continued hypocrisy with regards to American energy policy. ... Efforts to create additional hurdles such as limiting the use of categorical exclusions, which Congress specifically mandated in the Energy Policy Act of 2005, will significantly undermine the ability of independent producers to utilize these important, common-sense tools.
   
• This top-down approach will add greater bureaucracy and costly delays to an industry so critical to our nation and our future. ... To stifle the growth of this industry in the midst of record-setting national deficit and unemployment levels is not only outrageous, but irresponsible. ... It is impossible to stand by silently while these job-killing proposals further hinder our efforts toward energy independence and have devastating effects on families and small businesses across the nation.
  
• The companies affected by these reforms are not global corporate conglomerates. Rather, they are smaller, independent producers that drill 90 percent of the wells in the U.S. struggling to stay alive in this dwindling economy. To these companies, and the people behind them whose blood, sweat, and tears have helped to build this country, statements such as your "kings of the world" comment are a profound affront.

Academics, newspapers, and business leaders are speaking out, too, about the harmful economic consequences associated with the Administration's job-killing tax hikes.

Dan Juneau, president of the Louisiana Association of Business and Industry, writes this in an Opelousas (LA) Daily World column entitled "Plan could kill jobs in Louisiana":

• What a blow to the Louisiana economy, as well as to the national economy ... Natural gas production in the Haynesville Shale has created an economic explosion in northwest Louisiana, just as it has in other regions of the country which have shale formations. Production of clean-burning natural gas must be the "clean energy" of the next decade, allowing a gradual transition to other forms of energy. What the Obama Administration is proposing will do nothing but kill the domestic oil and gas industry, taking with it over 50,000 Louisiana jobs.

Bernard Weinstein, associate director of the Maguire Energy Institute and an adjunct professor of Business Economics at SMU's Cox School of Business, writes this in a Fort-Worth Star-Telegram op-ed under the headline "Obama's energy policy could use a dose of reality": 

• Unfortunately, rather than looking at the energy sector as a vehicle for reinvigorating the American economy, the president has instead proposed hiking the tax burden on oil and gas companies by $45 billion.
   
• Ultimately, it will be American consumers, workers and businesses that bear the burdens of uncertainty and price volatility as new taxes on the oil and gas industry retard domestic production, increase our dependence on imports from countries that may be unstable or unfriendly, and shift jobs overseas.
   
• Oil and gas companies already generate billions of revenue each year for federal, state and local governments. Obama's plan to further hike taxes on America's energy producers threatens our economy, our security and the environment.

In today's Detroit News, Hillsdale College economics and public policy professor Gary Wolfram writes this in a column entitled "Taxing oil firms will keep jobs well dry": 

• The Obama administration's 2011 budget calls for $36.5 billion in new taxes on the oil and gas industry. This industry already pays more taxes and royalties than any other and supports 9.2 million jobs in the United States, about 5 percent of U.S. employment, according to a recent study by Price Waterhouse Coopers. 
   
• A budget proposal to tax a profitable jobs-producing industry to support an alternative that is not otherwise economically viable won't get America out of a jobs recession. It will encourage production and jobs to move out of the United States and into countries that are politically unstable and, in some cases, threaten our security.

And in an editorial, the Oil & Gas Journal describes the Administration's misguided tax hikes on domestic energy production as "bonkers," writing this:

• Any effort to displace commercial energy with the other kind requires unproductive expenditure certain to shrink net employment. And no such effort will knock oil, gas, and coal out of their dominant positions in the energy market anytime soon. Especially if implemented with punitive taxation, it will only push commercial energy work out of the country-along with supply, jobs, and taxable incomes.