IPAA independent petroleum association of america, america's oil and gas producers

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For Immediate Release
June 4, 2010


When You're in a Hole, Stop Digging

Report details the devastating economic effects offshore oil, natural gas moratorium will have on La.'s economy, as White House pursues $40 billion in new, job-killing taxes on American energy production

WASHINGTON - As the nation remains squarely focused on the tragic incident in the Gulf of Mexico, recent actions and proposals from some in Washington - particularly at the White House - may be best described by Southern Methodist University's Bernard Weinstein, associate director of the school's Maguire Energy Institute: "It may be good politics, but it is bad economics."

"Never allow a crisis to go to waste." That's what White House chief of staff Rahm Emanuel said in November of 2008. Unfortunately, the White House is working to leverage the ongoing crisis in the Gulf into a nearly $40 billion tax increase on American oil and natural gas producers. At the same, the Administration has put a halt on certain areas for offshore energy development.

These taxes would be overwhelmingly shouldered by America's independent producers - who are responsible for drilling 9 out of 10 wells nationwide. In addition to the proposed tax hike, a new report finds that "Oil-and-gas companies, local workers and state and local governments stand to lose hundreds of millions of dollars from President Barack Obama's six-month ban on deepwater offshore drilling."

But the Independent Petroleum Association of America (IPAA) is fighting to ensure that more jobs, revenue and energy security are not lost as a result of these short-sighted tax hikes and new regulatory burdens. UPI reports this following a statement from IPAA president and CEO, Barry Russell:

 An oil industry trade group issued a statement Thursday charging the administration has pledged to impose "billions of dollars in new taxes on American oil and natural gas producers" and arguing such taxes would force small, independent producers out of business.

Independent Petroleum Association of America President and Chief Executive Officer Barry Russell said in the statement U.S. policy "should encourage responsible, American energy production, not shutting the industry down altogether."

"The president's call yesterday for billions of dollars in new taxes on American oil and natural gas producers is not new, and is not good energy or economic policy," Russell said. "While many reports characterize this initiative as taxing Big Oil, it is not."

 Russell said combining higher taxes with moratoria on offshore exploration "seems like the worst option."


Bruce Vincent, chairman of IPAA and president of Swift Energy, makes the case for America's independent producers - who on average employ only 12 workers - in the New York Times this week:


Bruce Vincent, president of the Independent Petroleum Association of America, which represents both deep-sea and shallow-water drillers, said Wednesday that he was concerned about a "domino effect" sweeping through Washington, with new regulations now under discussion threatening to cut oil production, jobs and industry profits.

"It's amazing to see the impact that one company can have for all sorts of other people," he said. "When a plane crashes, you don't just shut down every airline in the fleet until you find out what happened."

 And in Gas Daily, IPAA's Dan Naatz, weighs in:

MMS has yet to issue a formal notice of lessees of the new requirements, but the industry is concerned that in the wake of the Deepwater Horizon accident there will be an effort to "punish" industry with "significant new regulatory burdens that don't add any value to protection of the environment, protection of human health, protection of the area," Dan Naatz, vice president of the Independent Petroleum Association of America, told Platts on Thursday.

Others are also speaking out about the damaging economic effects that the White House's proposals could have on America's energy security and our economy. Reuters reports this under the headline "Drilling halt may be worse than oil spill":

Louisiana politicians, including Sen. David Vitter and Governor Bobby Jindal, have sent letters to President Barack Obama urging reconsideration of the May 27 executive order.

"It's the wrong thing to do at the wrong time," said Chris John, a former member of Congress who is now president of the Louisiana Mid-Continent Oil and Gas Association.

"The last thing we need is to enact public policies that will certainly destroy thousands of existing jobs while preventing the creation of thousands more," Jindal wrote in a letter dated Wednesday. Vitter sent a similar letter Thursday.

"Quite frankly, if we can't get the president to reconsider, then the oil on the beach is the least of our worries. Our economy will be decimated," said Charlotte Randolph, president of coastal LaFourche Parish.

"This could have a serious and long-term negative impact on specific regions and industries and wind up increasing our reliance on imported oil," [Bernard] Weinstein said.

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IPAA is the national trade association representing oil and natural gas producers that drill 90 percent of the nation's oil and natural gas wells. These companies account for 68 percent of America's oil production and 82 percent of its natural gas production.