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For Immediate Release
February 19, 2010

Administration's massive oil, gas tax hikes "not punishing fossil fuel
producers as much as American consumers"

WASHINGTON - This week, a study commissioned by the National Association of Regulatory Utility Commissioners (NARUC), and sponsored in part by IPAA, determined that the "U.S. economy will lose $2.4 trillion over the next two decades" if current federal policies continue to keep billions of barrels of domestic oil and trillions of cubic feet of natural gas reserves off-limits. Conducted by independent experts from the Science Applications International Corporation (SAIC) and the Gas Technology Institute, the study also determined that the U.S. "is expected to pay the Organization of the Petroleum Exporting Countries (OPEC) $607 billion for an extra 4.1 billion barrels of crude."

Here are key findings from the study: 

• Domestic crude oil production is projected to decrease by 9.9 billion barrels - an average annual decrease of nearly 15 percent in production.
• Imports from OPEC for oil are projected to increase by 4.1 billion barrels, an average annual increase of nearly 19 percent, resulting in increased cumulative payments to OPEC of $607 billion.
• Domestic natural gas production is projected to decrease by 46 Tcf - an average annual decrease of nearly 9 percent in production.
• Total net natural gas imports (LNG and pipeline) are projected to increase by nearly 15.7 Tcf - an average annual increase of almost 75 percent.
• Employment in energy intensive industries is projected to decrease by nearly 13 million jobs - an average annual decrease of 0.36 percent.
• Housing starts are projected to decrease by nearly 200,000 - a 0.46 percent average annual reduction.

News outlets and congressional leaders from coast-to-coast have weighed-in on this study and the need to expand access to job-creating, American oil and gas reserves that are currently off-limits as a result of misguided federal policies.

The (LA) Advocate reports this today in a story entitled "Report says US must drill":

• U.S. Rep. Bill Cassidy, R-Baton Rouge, lauded the study and called for President Barack Obama, who this week expanded nuclear energy programs, to do the same with drilling on federal lands and in offshore waters. Cassidy charged the Obama administration with installing a de facto ban on such drilling.

Under the headline "Drilling Ban To Cost Trillions," Investor's Business Daily editorializes this about the study's findings:

• A new study shows that our reluctance to develop domestic energy will cost the beleaguered U.S. economy trillions in opportunity costs, reduce our gross domestic product and increase our trade deficit.
  
  
• The net effect of our energy inaction will be a reduction in gross domestic product by $2.36 trillion cumulatively through 2029 ... We'd also be forgoing hundreds of thousands of high-paying energy and construction sector jobs here in the U.S. as well as missing a golden opportunity to sharply cut our trade deficit.
   
• We back an all-of-the-above approach and so, apparently, do the American people. Comments on a Bush-era rule to expand domestic drilling, held up by Interior Secretary Ken Salazar, ran 2-to-1 in favor of drilling here and now.
   
• So just why are we leaving this job-creating economic windfall in the ground?

And in an editorial this week, the Pittsburgh Tribune-Review writes: 

• America must maximize its abundant, cost-efficient domestic energy resources -- among this nation's greatest strengths -- not cast them off. ... It will be years -- if ever -- before alternative energy sources are sufficiently productive and cost-effective to count on. In the meantime, America must make the most of its own conventional sources and the technology that makes those sources ever more clean.

Accessing, safely producing and delivering homegrown oil and gas reserves to the American economy and the families that rely on these resources in the form of affordable energy has never been more important.

This study confirms that if the status quo policies that have increased our dependence on unstable and unfriendly regions of the world to keep our economy moving remain in place, we will continue to hemorrhage billions of dollars to nations overseas, which will weaken our national security.

And speaking of national security: Earlier this week, Mackubin T. Owens - professor of national security affairs at the Naval War College - writes this in a column that appeared in both the New York Daily News and the Boston Herald under the headlines "Stop the war on oil and gas" and "Obama budget plan pulls plug on energy," respectively:

• While calling for an end to oil and gas "subsidies," the White House in reality would raise taxes on oil and gas by $36.5 billion ... Fossil-fuel producers are not exactly under-taxed. In 2008 alone, they paid $95.6 billion in total income taxes ... Oil and natural gas producers also paid $12.5 billion in U.S. production taxes.
   
• [This tax hike] would reduce investment in the fossil-fuel industry by 20 percent to 40 percent and cause domestic jobs to be lost to foreign countries.
   
• Another proposal in the budget would eliminate the "expensing" of intangible drilling costs, which make up about 70 percent of all drilling costs. These include the cost of labor, supplies, contractors and fuel. Oil companies now can write off these costs against other income in the year those expenses are incurred, rather than depreciating them over time.
   
• In proposing to eliminate the manufacturing tax deduction for oil and gas companies and repeal expensing of drilling costs, the Obama administration is not abolishing a tax subsidy, but is instead imposing a tax penalty. In so doing, it is not punishing fossil fuel producers as much as American consumers.