Taxes Hurt

At a time when America needs economic stability and increased energy security, the government should not impose new taxes and fees on the oil and natural gas industry.

Congress is considering at least $80 billion in new taxes on the oil and natural gas industry, which were proposed recently in President Obama’s fiscal 2011 budget.

Raising taxes as the economy is trying to recover from a deep recession is a recipe for disaster—placing the burden on hard-working Americans and their families. Higher energy taxes that reduce production and increase costs will take money from every American household:

• New taxes kill jobs. With America trying to recover from a deep recession, new taxes could hurt workers by depressing job creation just when employers would otherwise be looking to add employees.

• New taxes hurt consumers and businesses. Historically, higher taxes result in less domestic energy, and restrained supplies often lead to higher energy costs for consumers. In today’s economy, that could not only stifle a recovery but also leave Americans more dependent on foreign oil and natural gas, result in fewer jobs for workers and mean less oil and natural gas for consumers and businesses.

• The U.S. oil and natural gas industry is one of the success stories of the American economy, supporting 9.2 million workers in good jobs that offer good wages and benefits. These workers include welders, electricians, truckers, gas station attendants and small business owners who work hard to bring energy to America’s homes, factories, hospitals and cars. Additional taxes would likely drive these jobs overseas at a time when America needs to create jobs.

• Millions of Americans have seen their retirement savings shrink. Billions in new taxes on U.S. oil and natural gas companies will hurt millions of Americans whose retirements depend on mutual funds, pension and retirement plans that own oil company shares.

• Plans to strengthen America’s energy security would be undermined since higher taxes would lead to less—not more—domestic oil and natural gas production. All reputable forecasts show that oil and natural gas will be required to meet the majority of America’s energy needs for decades to come. As the economy recovers, America will need all the energy we can produce. Higher taxes would rob the industry of the capital it needs to invest in alternatives and reduce supplies of the oil and natural gas needed as a bridge to the future.

• Current tax policies do not provide taxpayer subsidies to the oil and natural gas industry. The G-20 nations’ agreement to eliminate fossil fuel “subsidies” should not be used as an excuse to raise taxes, and the assertion by the Obama Administration that tax provisions intended to help companies recover their costs have resulted in overproduction of oil and natural gas is ludicrous. Such wrong-headed policy prescriptions suggest that Americans must make an unwise and unnecessary choice between green energy and traditional oil and natural gas. Americans will need all energy sources in the future and such false choices would only hurt workers, businesses and the economy.

• There is a better way than saddling a troubled economy with new taxes that hurt American families.  The oil and natural gas industry should be allowed to develop the vast energy resources that belong to the American people. It would improve America’s energy security, create jobs and grow federal, state and local tax revenues. In fact, a recent ICF International study found that developing the vast domestic oil and natural gas resources on federal lands that had been kept off-limits by Congress for decades could generate $1.7 trillion in government revenue. At the same time, tax policies should give America’s oil and natural gas industry the tools they need to compete against giant foreign oil companies often owned by their governments.

At a time when other countries are providing incentives to develop their own energy resources, the U.S. is the only country actively discouraging it. The bottom line is that what happens in the oil and natural gas industry reverberates throughout the economy. See what energy taxes would mean to your state.

In outlining their agenda for energy and the environment, the administration has declared that they want to reduce America’s dependence on foreign oil by creating millions of new jobs in the energy sector, encouraging the development of renewable and alternative sources of energy and promoting the responsible production of domestic oil and natural gas resources. The oil and natural gas industry agrees with this approach.

Unfortunately, recent actions don't match the rhetoric; and too often the rhetoric is used to confuse the reality of America's energy challenges.

Tell Congress to oppose these increased taxes and fees on the industry.

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